Just over a year ago, the UK came to a standstill. We saw a virus develop across the globe at the start of 2020, but little did we know that just a few months later the whole world would be in crisis.
As with all areas of the economy, the mortgage market did not escape the impact of coronavirus. Many livelihoods were affected by job losses. Along with furlough, childcare or ill health/self-isolation, the brakes were well and truly on for the housing market.
Many lenders withdrew products from the market, particularly those with a high LTV. First-time buyers were left with little choice, if any.
This left first-time-buyers wondering if they should take the risk of getting onto the property ladder with an uncertain future? The latter mindset was also not helped by the impact of Brexit in January – 2020 was certainly not a year for great timing.
Measures to get the mortgage market moving
House viewings stopped altogether during the first national lockdown. Virtual viewings did come into their own once sellers and estate agents had got back into the swing of things.
A Stamp Duty holiday was announced. This offered ALL home buyers, not just first-timers, a huge saving on the cost of moving home. This has since been extended into the Summer of 2021.
More good news for existing home-buyers came in the form of lower mortgage rates. The Bank of England declared an emergency, lowering their base rate to just 0.1%. For existing borrowers on variable rates, this meant a significant drop in their monthly mortgage payments.
Whilst measures were put in place to get the mortgage market moving, homeowners were worried about the ability to pay their mortgages. Many businesses closed their doors during lockdown, particularly to those working in hospitality and retail.
Lenders introduced extended mortgage holidays to their customers as a sign of goodwill.
This brings a short-term solution but will of course impact borrowers further down the line with repayments to catch up on.
For those looking to get a mortgage, a loss of salary may have meant missing bills or credit card repayments. This could negatively impact their credit score, reducing their chance of being accepted for a mortgage in the future.
How is the mortgage market looking today?
Despite a global pandemic, the various measures put in place have actually helped the mortgage market to retain some stability.
The latest statistics show that house prices have increased by around 6% over the past year. So if buyers had hoped to wait out the pandemic and buy property at a reduced price, the gamble hasn’t paid off.
There is currently a huge demand for property. With the market lying stagnant for a number of months, buyers are now desperate to move and are snapping up property as soon as it becomes available. Great news for sellers who want to move quickly. Not so great for buyers in a chain or first-time buyers who haven’t yet had their mortgage in principle.
Due to added demands, the mortgage process may take a little while longer than usual – worth bearing in mind if you are desperate to put an offer in.
Has covid had any other impact on the property market?
Covid has certainly changed customer demands in terms of what they are looking for when it comes to moving house. Increased time at home, and changes in working environments mean that buyers are looking for larger properties with more space. They want open areas and gardens, or at least easy access to outdoor space. The increase in those working from home means that people are now looking for property that will accommodate office space.
For those who don’t want to move, or simply can’t afford to, this could mean renovating their existing property, many of whom will need to remortgage to do so.
Is it more difficult to get a mortgage after coronavirus?
Affordability has always been key in getting accepted for a mortgage and unfortunately covid has had a huge impact on this for many people. If you are currently in the market for a mortgage but unsure of your eligibility there are two things you should be doing.
Firstly, check your credit report. If you have defaulted on any payments due to coronavirus, this could have impacted your credit score. Being fully armed with knowledge of your financial situation is essential before applying for a mortgage.
Secondly, seek the services of an independent mortgage broker who could save you both time and money. Having someone who knows the mortgage market and is able to search through all the products available is invaluable. A mortgage broker will of course try to get you the best rates, but they will also look at eligibility criteria. This will ensure you are only applying for a mortgage that you are likely to be accepted for based on your circumstances.
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.