September 24, 2020

Coronavirus: UK mortgage market goes into lockdown

Have you been thinking about getting a mortgage? You’re going to need to think again as lenders are scrapping their home loan deals.

On Tuesday, Nationwide – one of the UK’s biggest lenders – effectively pulled out of new deals.

Others are doing the same as the home mortgage market goes into lockdown amid the coronavirus which has brought the economy to a virtual standstill.

Nationwide will now only offer home loans to those with 25% equity or more.

It rules out first-time borrowers or existing homeowners with little equity in their home.

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Nationwide said the change will not impact existing applications.

In fact it will allow it to “focus on supporting existing mortgage members, while continuing to process ongoing applications”, it said.

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Nationwide blamed “an extremely high number of inquiries about existing mortgages and ongoing applications”.

“That is why we have taken this decision on a temporary basis although, by continuing to offer home loans up to 75% LTV [loan to value], we can continue supporting the housing market,” it said.

Other lenders that have taken similar action include Santander and Skipton Building Society but many have gone further, by reducing the loan-to-value ratio to 60%.

That means borrowers will need a 40% deposit or equity in their home to be able to get a mortgage.

Lenders that have done this include Barclays, Halifax, Virgin Money and The Family Building Society, while the Coventry Building Society has cut its LTV ratio to 65%.

“With so much uncertainty at the moment, providers seem to initially be focusing on the support that their existing customers may need in the coming weeks.”

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