The Financial Conduct Authority is reported to be considering offering homeowners up to 12 month’s mortgage holidays.
Currently 1.2m mortgage payment holidays have been offered by lenders to customers impacted by the Coronavirus crisis – that’s equivalent to one in every nine mortgages.
These were expected to be short term.
However The Times this morning says the holidays could be for up to 12 months in a bid to avoid widespread arrears and eventually repossession.
The number of payment holidays currently in place more than tripled in the two weeks between March 25 and April 8 with an average of some 61,000 being granted each day.
For the average mortgage holder, the payment holiday amounts to £260 per month of suspended interest payments, with many benefitting from the option of extending the scheme for up to three months.
Now it appears a longer holiday is on the cards as the virus crisis has further impact on jobs.
The demand for mortgages in April was scarcely a quarter of what it was in March – but the figures show that there’s been an increase each week since Easter suggesting there’s light at the end of the lockdown tunnel.
Technology company Twenty7Tec analyses mortgage statistics and shows that for the week ending Saturday May 2;
– The volume of online searches for mortgage information was 5.36 per cent up on the previous week and 21.32 up on two weeks before;
– The total value of loans granted was up 2.93 per cent on the previous week and up 23.59 per cent on two weeks before;
– Mortgages for new purchases represented 31.74 per cent of the searches made online last week, compared to recent lows averaging 24.5 per cent;
– Searches for mortgages for buy to lets (both to purchase and to reportage) stood at 25.01 per cent of all mortgage searches.
“The data tells us that we are gently on the up again and have been ever since Easter. Across the board, we are seeing higher search volumes, higher levels of documentation prepared and higher total levels of loans requested” explains James Tucker, chief executive of Twenty7Tec.
“Buy to let is probably the story of the week, representing around one-fifth more of the total market than the long-term average [ but] whilst it’s great news that this week’s searches for purchase mortgages continue to rise, the volumes remain considerably down on their January to March peaks. This week’s volumes are only 26 per cent of the weekly volumes in mid-March.”
He continues: “In comparing April to March, it’s worth noting that April had two Easter bank holidays and that March was a day longer, but also that the volume of mortgage products on the market was considerably lower than the month prior.
“Despite the difficult conditions, lenders quickly moved to address the changes in the market conditions and amended, updated and replaced their products at an unprecedented rate. Brokers responded well and were able to focus in on those areas of our industry where volumes remained higher.
TSB has introduced a new range of buy-to-let mortgages.
Available at up to 60% loan-to-value (LTV) there is a two-year fixed rate deal at 1.69%, along with a 75% LTV product at 1.94%.
In addition, there are two buy-to-let five-year fixed rates, starting from 1.99% up to 60% LTV and a 2.24% up to 75% LTV.
All of the products come with a £995 arrangement fee.
With Britain edging closer to its first recession since the financial crisis, a leading property auctioneer is urging property investors, including buy-to-let landlords, to hold their nerve against the spectre of an economic downturn.
The country’s dominant service sector, which accounts for about 80% of the economy, unexpectedly plunged into contraction last month, in a sign of the increasing stress facing the economy as Brexit looms.
According to IHS Markit and the Chartered Institute of Procurement and Supply (Cips),
activity in the sector fell as companies reported a fall in sales, job losses, cancelled and postponed projects and weak investment levels.
There has been a recent rise in properties going into receivership, banks unwilling to lend for construction projects and a decline in tenants looking to rent business or residential properties, according to Mark Bailey, managing director of Landwood Group, who says that a rise in auction sales is also evident, largely down to an increase in repossessions.
He said: “Worryingly, at Landwood we are also receiving more instructions over the past few months than we have done for a year or more – instructions for properties that have sadly gone into receivership.
“It is harder for property owners to let business space and for domestic landlords to find tenants – there’s no doubt that a squeeze is on.
“With each failed building project, banks become more nervous to lend, builders stop building… and we fall headlong into a dreaded recession. Once we do, it’s anyone’s guess how deep it is or how long it lasts.
“The blame for all of this cannot be put at the door of Brexit… well, not entirely. There is no arguing with the fact that this is a period of change – domestically and globally. People err to the negative whenever there is change on the horizon – until events transpire and the scales balance out. The big issue is uncertainty and property is key to all of this. Uncertainty causes negativity, while a solid market has the opposite effect.”
So, if the pointers are all correct and a recession is upon us, what is the advice?
“Sit tight,” said Bailey. “Whether you are a commercial property owner or a domestic landlord, try your best to ride it out, perhaps for six months, before making any business decisions. Look at your borrowings and don’t over-stretch yourself at this time.
“There are always people who benefit from downturns in the market and they tend to be cash buyers. So if you have cash to invest long-term, a ripe time to buy may be about to begin.
“For the rest of us, it’s time to batten down the hatches and ride out the storm – see you on the other side.”