When the coronavirus lockdown was announced, several banks and building societies pulled mortgage deals or only offered loans to those with large deposits to move away from riskier lending.
Just last week Nationwide, Halifax, Virgin and Santander lifted restrictions to make it easier for people to qualify for a loan.
Nationwide stopped offering deals above 75% loan-to-value (LTV) to new customers at the end of March and has now resumed loans at 85% LTV. Halifax raised its LTV level from 80% to 85%. Essentially this means a minimum deposit of 15% – 20% is needed. Virgin Money began offering purchase mortgages again and Santander increased its maximum loan size – from £300,000 to £500,000 – and cut fees on its residential mortgages.
As a result of the uncertainty caused by Coronavirus, lenders were required to reassess the level of risk they were taking, and many have withdrawn deals while they do so.
Like many other businesses at this time, lenders have found ways to deal with initial issues arising out of the impact of the pandemic, including staff resources & a focus on existing customer’s needs.
Valuations are also another one of the biggest problems arising out of the current situation, as properties cannot be visited to be inspected by staff. As a solution, lenders are using drive-by valuations, which are system-generated valuations to get property purchases and remortgages agreed.
Lenders have been able to return due to resolving these issues and through the use of such valuations. The result is that many potential home buyers and those looking to refinance will have greater access to credit.
The willingness to lend now displays hope for the property market and borrowers.