A few weeks ago, I made a pact with myself to start blogging about things that are a little bit more grown-up. Now that my full-time job have said we only need to physically come into the office twice a week, I’ve been thinking a lot about potentially moving closer to London, which means I seriously need to start thinking about how Covid-19 has affected the mortgage market. Some of the ways the pandemic has caused havoc are obvious. Estate Agents are unfortunately not immune t the downturn in the economy, and the number of people buying houses in general has declined, so staff cuts mean it is likely that the process takes longer. But aside from the practical implications, what has been going on in the actual market that could mean a different way of borrowing for you?

Seeing as I have been looking into this anyway, I thought it might be useful for other people in the same boat if I put together some of the information I came across.

It’s harder to borrow

Lenders have been tightening up their criteria year on year anyway, but over the last 18 months it seems like the situation has become more drastic. In June of last year, there were just six fixed-rate 95 per cent LTV products available which is down from eleven a year earlier. According to the Financial Times,  for five-year fixed-rate mortgages at 95 per cent, there were just nine available in June, also down from 11 in May. Less choice is not particularly good news for the consumer, as it potentially means less chance of being accepted.

Interest rates are at a record low

Amid the pandemic, the Bank of England reduced interest rates to a record low of 0.01%. this means if you are looking to remortgage you could actually end up saving some money. The only thing t be mindful of is if there is any change in income due to the pandemic. If you have been furloughed the lender might be a lot more reluctant to accept your remortgage. The situation is the same for first-time borrowers as well. One of the tools I have been using to see how feasible a mortgage closer to London would be on my current wages is https://www.mortgagecalculator.uk/.

The UK government launched a new scheme for first-time buyers

According to Yahoo Finance, the government scheme to help first-time buyers or current homeowners get a mortgage with just a 5% deposit. The scheme opened for applications  in April 2021 and most of the major high-street banks have 95% mortgage products in line with Boris Johnson’s pledge to get more people to buy homes.

You might need evidence of your return to work

If you have been or you are on furlough, it is likely that lenders will want you to return to work before they are happy to give you a mortgage. Some lenders are more helpful than others, with some offering mortgages to people who can provide a firm date they are returning to full-time work, but this is likely to still be a grey area for the next couple of months at least as the furlough scheme does not end until September.

You might get assessed more thoroughly if you are self-employed

It’s not hard to see why lenders are being more cautious, given the way the pandemic has had such a detrimental effect on the economy. This unfortunately means for self-employed people that it is likely that lenders will want to carry out more checks than usual to ensure affordability is guaranteed.

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