"With growing confidence due to the success of the vaccine rollout and a return to normality on the horizon, lenders appear confident."
The extension to the stamp duty holiday certainly gives breathing room to those already in the house-buying process, and it may attract a few more buyers and sellers to the market. Extension to the furlough scheme for both employed and self-employed people was welcome news for many. However, lenders appear to have anticipated this change with more criteria amends taking place in February than in March.
The other key development from a criteria perspective was the announcement of government backed 95% LTV mortgages. Some lenders have already been considering these top-end LTV products, however the introduction of a guarantee will certainly result in an increase in 95% LTV products over the next few months. In fact, in March, there has been a rise to higher LTVs across a broad range of products.
In March the Knowledge Bank team were busy supporting brokers with demonstrations of the new fully-integrated product and criteria sourcing system launched in conjunction with Iress. Through the new partnership, brokers can now find the exact lender to suit their clients’ needs from both a product and criteria perspective from a single search, saving brokers valuable time and effort.
WC 1st March
The first week of March was a busy one. The spring Budget was certainly of interest to mortgage brokers, and while the impacts of the announcements may not be felt for a few weeks or months, there were still a raft of changes in lenders’ criteria.
Amongst this wave of changes, income and affordability were both areas where lenders criteria tightened. Clydesdale reduced its maximum loan to income (LTI) to 4.49 times income for self-employed borrowers. Skipton for Intermediaries changed its LTI cap for applications above 85% LTV to 4.49 times income. Virgin Money also reduced its LTI to 4.49 times income for 80% and higher LTV products. These restrictions show, despite the increase in LTVs recently, lenders are still being cautious with those who have smaller deposits. Virgin also announced that its 90% LTV products are now available for second time buyers and remortgages.
Buy-to-let lender Landbay launched a new range of products for non-portfolio buy-to-let landlords. With the recent increase in investing in buy-to-let properties this new range caters for these newer landlords. The range is open to landlords with a maximum of three buy-to-let properties.
WC 8th March
The big news this week came from Habito who announced the launch of a new forty-year fixed term product. Available from 60% to 90% LTV, the product starts with a ten-year fixed option and with a maximum term of up to forty years.
Hinckley & Rugby reintroduced its joint borrower sole proprietor (JBSP) mortgage at 90% LTV. The product lets older people put their name on a mortgage to help younger borrowers who can’t afford a mortgage based on income or circumstances. The lender also offers reverse joint borrower sole proprietor mortgages, which allow younger people to support older buyers who are retired or close to retiring.
TSB returned to 90% LTV lending for self-employed borrowers and increased the amount of bonus, overtime and commission income that can be used to support the application.
WC 15th March
The third week of March saw the return of 95% LTV products. This was welcome news for those with smaller deposits, particularly as Rightmove reported that an increase in demand and lack of supply had pushed up the average price of properties coming onto the market.
Accord Mortgages and Bank of Ireland were the first to launch 95% LTV products, with Accord limiting its products to first-time buyers and excluding flats and new-build properties.
HSBC increased the lending limits on its 85% LTV and 90% LTV capital repayment mortgages, with the maximum borrowing at 85% increasing to £750,000, and to £550,000 on 90% borrowing.
WC 22nd March
This week Knowledge Bank added another lender to the platform, with buy-to-let lender MQube’s full range of lending criteria now available. In other buy-to-let news, Vernon Building Society reintroduced top-slicing to its buy-to-let proposition and Skipton International increased its maximum LTV to 75% on all loans up to £1m.
There were further LTV increases in the residential market with another two lenders returning to 95% LTV. Skipton Building Society and TSB increased its maximum LTV to 95%, with Skipton’s product exclusively for first-time buyers. Teachers Building Society and Chorley Building Society both increased their maximum LTV to 90%.
WC 29th March
In the last few days of March, Precise Mortgages increased its maximum loan size on second charge products to £500,000, however the limit reduces to £200,000 when using an automated valuation model.
Another lender launched a 95% LTV product, with Aldermore increasing LTV for residential owner-occupied purchases. Coventry Building Society also re-launched its 95% mortgage range.
This trend for lenders returning to 95% LTV is one that looks set to continue. With growing confidence due to the success of the vaccine rollout and a return to normality on the horizon, lenders appear confident. With the return to some semblance of normal in the coming months, lenders will certainly continue adjusting criteria, potentially loosening restrictions and increasing LTI as confidence continues to build.
