Mortgage and Protection Coronavirus Update - OnPoint Mortgages
With the landscape changing daily we cover some of the biggest events to affect the mortgage industry.
Interest Rate Cut
On the 19th of March the Bank of England announced a further emergency cut in interest rates from 0.25% to 0.1%, taking borrowing costs down to the lowest level in history. Some of the high street banks have passed on the full initial cut to customers on their variable and tracker products from the 1st of April, although some trackers have since been withdrawn. We have seen little movement in fixed rate pricing, with banks seeking to limit the amount of new business due to combinations of valuation and legal delays, remote working, furloughed staff and mortgage payment holiday requests.
Products and Loan to Values
It is easy to group lenders together, but there is a wide variety and their circumstances can differ greatly. Generally, we have seen a reduction in loan to values of around 5 to 15% from certain high street and specialist options. This helps to control business volumes but also protects against a potential drop in house prices. Others have gone a step further and temporarily withdrawn all products during this time, although this has mainly been in the buy to let and complex residential sectors. Finally, other providers have continued to lend as normal, although unless they can carry out an online valuation, applications can only progress so far without a survey. Lenders are in a much stronger position than pre-2008 and so far the responses have been sensible and reasonable.
Mortgage Payment Holidays
On the 17th of March the Chancellor Rishi Sunak announced a raft of measures including a three-month mortgage payment holiday for those financially affected by the virus, designed to protect homeowners. The mortgage payment is deferred, the monthly payment set to zero and interest accrues for the period. Thankfully lenders will be speaking to credit reference agencies to ensure that customers utilising this option will be treated consistently on their report. For those wishing to pursue this option, you would need to contact your lender directly. Typically, lenders would need to assess the borrower’s finances, but this is being waived, allowing mortgage providers to implement a more straightforward process.
Protection Insurances
We are experiencing increasing numbers of clients enquiring about their options around protection insurance. These insurances have been historically undersold but can be invaluable and include life, critical illness and income protection. In addition, landlords are keen to explore rental protection insurance. Cover can be bought for 6 to 12 months depending on the length of your AST and the full cost is tax deductible against your rental income. It is important to seek professional advice to ensure any policy will be suitable for your needs.
Lee Langley is the Principal Mortgage and Protection Adviser at OnPoint Mortgages. OnPoint Mortgages a trading style of L&D Mortgages Limited is an appointed representative of The On-Line Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
Your home may be repossessed if you do not keep up repayments on your mortgage. Some forms of Buy to Let and Commercial Lending advice are not regulated by the Financial Conduct Authority
For more information please contact OnPoint Mortgages and they would be happy to assist.
Website: www.onpointmortgages.com
Telephone: 0203 633 4940