The UK is facing a recession, this is pretty obvious for everyone to see. However, I don't think this will be similar to 2008. Banks have money and want to lend which is in stark contrast to the crash of 2008. A recession sounds scary but in reality it's just a technical term. Will it actually affect you on a day to day basis? Hopefully not!
This time around, companies and households are getting bailed out by the government willy nilly. Loans and Grants are being issues which hopefully will soften the blow of which Covid 19 has caused. Yes, people will be losing jobs and companies will unfortunately suffer and go under, however, I honestly don't think the housing market will take too much of a battering. The Monday after the lockdown was eased, we saw an instant spike in purchase enquiries. Rightmove saw almost 5.2million visits as the property market re-opened on Wednesday 13 May - up 4% year-on-year, the property portal has confirmed. Lenders are increasing loan to values and valuers are back out on the road. All positive signs in my opinion.
A second spike could of course change the landscape but I do feel the market and the economy will start to pick up and reach a new normal later on in the year.
Will house prices crash or drop?
I don't think there will be a massive drop no, maybe a small re adjustment but not a big kneejerk reaction which followed the crash in 2008. The Government is throwing a lot of money at compnaies and individuals in a bid to prevent another economic disaster.
Hopefully the UK general public can do their best to prevent a second spike, but we all know this could be tricky. The local parks and high streets already look a bit too busy for my liking. A second spike and a new full lockdown could put us all back to square one. As long as we can get through the next few months and once the hospitality and travel industry can start up again, this in my eyes would be us getting out the other end.
Is it harder to get a mortgage now?
I would be lying if I said no!
If you are furloughed the lender will only use the reduced income, if that. If you are self employed, the lender will want to see business bank statements to evidence any reduction in income. If you have a healthy business bank balance this will of course help matters. This is all new to the enders and the underwriters, so every case is treated on its own merits. Just be prepared to answer more questions, ultimately would you want to take on a new mortgage if you may not be able to afford the payments?
Most lenders have now started to increase their loan to values back to 85% - 90%. This gives everyone great confidence that they are willing to lend and take more risk. Interest rates are some of the lowest I have ever seen and lenders do still lend generously and creatively. The banks want to lend and have money to lend.
A cross-industry guide has been created by the Home Buying & Selling Group (HBSG), in consultation with the Ministry of Housing, Communities and Local Government (MHCLG), to provide advice on reopening the housing market and enabling people to move safely. The collaborative industry guide, 'Reopening the Home Moving Market Safely', sets out in detail how moves can take place while fully complying with social distancing measures. The guide is relevant to property agents, mortgage advisers, property managers, property lawyers and conveyancers, surveryors, energy assessors and home removal firms, as well as contractors involved in property development and management. Recommendations for reopening the housing market safely include those for individual behaviour, client engagement and transparency, ID checks and office attendance.
With more than 85% of mortgages in the UK being via intermediaries, lenders, conveyancers and brokers will play a vital role in the careful rolling out of this new guidance which places safety and wellbeing at the forfront of the house buying process.
There are approximately 373,000 property purchases currently on hold due to COVID-19, worth a combined estimated value of £82b, according to Zoopla UK's UK Cities House Price Index. With all the new measures in place as well as physcial valutaions starting to go ahead again, we all hope transactions can progess swiftly through to completion.
There's no doubting that the mortgage market will take time to get back on its feet, but we've had some hugely encouraging news in recent days, and the options available to advisers and their clients are growing nicely. I am very optimistic about the future and our doors are fully open to help with your enquiries.
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