Getting a foot on the housing ladder is tougher in the wake of the coronavirus crisis, but help is available, says Staffordshire’s My Simple Mortgage

/ / Member News

First time buyers are being advised that support from a mortgage advisor is more vital than ever as lending options have been squeezed in the wake of the Covid-19 pandemic.

James Adams, of Basford, Newcastle-under-Lyme based My Simple Mortgage says the market has hardened and there’s a lack of options for buyers who can only fund a 10 per cent deposit or less.

This comes despite a high appetite from people to move home following the lifting of lockdown.

“There’s a desire to buy property right now, with many first time buyers looking to get a mortgage,” said James. “Unfortunately, the banks are struggling to cope in the wake of coronavirus and a staffing crisis has led to a scarcity of mortgages for buyers who have only got savings to pay a 10 per cent deposit or less.
“As brokers, we believe we must react to support first time buyers.”

James said the major banks had cut the availability of mortgages for those with 10 per cent deposits having placed many mortgage underwriters on furlough. He explained: “Lending 90 per cent or more is seen in the banking sector as a major risk and every transaction has to be approved by a senior underwriter. The banks responded to Covid-19 by becoming ultra-cautious; staff have been furloughed and there’s a risk adverse attitude to 90 per cent mortgages and that means there’s hardly any good deals available.

“That’s a blow to the economy at a time when estate agents are reporting a surge in interest in house buying following lockdown. There’s a real will to buy, but the banks are not meeting that demand.”

But support is available by contacting mortgage brokers, such a My Simple Mortgage, based at Basford, Newcastle-under-Lyme.

Added James: “There’s hardly any opportunity right now to arrange a 90 per cent mortgage without going through a broker. The reality is that the major barrier to buying a first home is the need for a sizeable deposit and anything above 10 per cent is prohibitive for many would be first time buyers.”

“House prices are rising at the moment, so it is a good time to buy. We can support these people by using our expertise and by talking to the banks.”

James’ concerns have been mirrored by City of London financiers. One commentator told the BBC that the credit squeeze was tighter than during the global recession 12 years ago.

At present, there is only one two-year fixed-rate mortgage available for borrowers offering a 5% deposit, compared with 137 before the coronavirus crisis, according to financial information service Moneyfacts.

Lenders told the Bank of England Credit Conditions Survey that demand for new mortgages, remortgaging, loans and credit card borrowing had dropped in the three months to the end of May. Consumers had played safe and much of the UK economy was shut down.

All were expecting to see a rise in demand now until the end of August, but supply would be squeezed on all of them.

You must be logged in to post a comment.