Mortgage products have been changed by the lockdown, and exacerbated by financial uncertainty and the temporary closure of the property market. In recent months, many borrowers have found it more difficult to secure a mortgage, dashing many hopes, and also hiking rates for existing customers. This has caused difficulty for a wide range of mortgage customers who are anxious for stability in an otherwise turbulent time.
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With less products on offer, borrowers may have found themselves forced to opt for a deal they would not otherwise have selected.
However, Nationwide has taken a step which appears to signal a shift in the property market once again.
The building society has relaunched a product which could help thousands of buyers access the market once again.
By returning its 90 percent loan-to-value products, Nationwide has taken a step to return products to the status quo, before lockdown.
Existing mortgage customers with the building society who are moving home will also be able to continue to borrow at up to 95 percent loan to value.
Previously, the lender stated it would temporarily withdraw higher loan to value products.
It said the building society would be focussing on existing applications for a period of time.
However, this appears to be short-lived, perhaps restoring faith in the recovery of the mortgage market.
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Lower deposit mortgages are particularly helpful for those who may be struggling financially, as well as those who are first-time buyers.
Borrowers with smaller deposits are often viewed as risky, or more likely to default on payments so returning these products to the market is a bold move amid current financial uncertainty.
High risk lending signals a change for a market tentatively reopening in all four corners of the UK.
After the financial crash of 2008, higher loan to value products were not made available for a significant amount of time, putting a dent in the property market.
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It also dashed the hopes of many people looking to secure a deal which had good value for money.
Indeed, many mortgage brokers stated they did not expect to see lenders return to higher loan to value products until the financial fallout of COVID-19 became more clear.
With the Chancellor Rishi Sunak’s Budget set for the Autumn, and the government’s support schemes due to come to a close at a similar time, reassessment of the market is expected later in the year.
However, Nationwide has said that while markets remain uncertain, it is vital to bring back this type of product to the market.
Henry Jordan, director of mortgages at Nationwide, said: “First time buyers are vital to breathing life into the housing market and economy.
“We understand one of the biggest barriers to homeownership is raising a deposit. While we will continue to monitor the market carefully, we feel it is the right time to enhance our lending, initially to those looking for their first home.
“We welcome the government’s announcement on stamp duty and hope our combined changes create a positive impact on a market that, despite being in relatively good health, is still recovering.”
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