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Lenders pledge ongoing support for those affected by Covid

Mortgage lenders are committed to supporting borrowers who are reaching the end of a three-month payment holiday to choose the next steps that best suit their needs, according to UK Finance.

This comes after HM Treasury confirmed last week (May 22) that mortgage customers, who were struggling to pay due to the coronavirus, can extend their payment holiday for an additional three months or begin to make reduced payments.

Figures from UK Finance showed that an equivalent of one in six mortgages are currently covered by a payment holiday, with more than 1.82m payment holidays having been issued as of May 20.

The industry body said it was “important that customers receive the support that is right for them” and for those who had already taken a payment holiday, an extension “may be appropriate in some circumstances”.

It encouraged borrowers who are concerned about their ability to pay to contact their lender and consider the “full set of options available to them”.

These include reduced payments, a move to interest-only payments for a period, extending the term of the mortgage to reduce payments, taking a payment holiday if the customer has not already done so or a further extension of the payment holiday.

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Stephen Jones, UK Finance CEO, said: “Mortgage lenders are committed to providing those borrowers nearing the end of their three-month payment holiday with help and flexibility in choosing the next steps which best suit their needs.

“The industry looks forward to regulatory guidance being finalised swiftly to ensure both borrowers and lenders can plan over the coming weeks.

“Meanwhile those borrowers who have already taken a mortgage payment holiday and can afford to make payments are encouraged to do so, as this will reduce the level of their repayments in the long run.”

In response, Vim Maru, retail director at Lloyds Banking Group, said: “We are already proactively contacting our customers who will be reaching the end of their repayment holidays to support them in restarting their payments.

“For those who may continue to be financially impacted, we will offer a range of support based on their current financial circumstances.”

But Dominik Lipnicki, director at Your Mortgage Decisions, said he would welcome a “more uniformed approach from lenders when it comes to the ease of application [of a payment holiday] and how these borrowers are looked at in the future when remortgaging or buying a new home”.

Research from YouGov for Nationwide found that 21 per cent of homeowners in April were worried about not being able to keep up with mortgage payments, and 14 per cent feared losing their home.

Lenders have also committed to continue suspending involuntary repossessions for residential and buy-to-let customers until October 31, as set out in the Financial Conduct Authority’s draft guidance for lenders published last week (May 22).

On the day the FCA published its draft guidance, Nationwide pledged that none of its mortgage customers, who fell into arrears as a result of Covid-19, would see their home repossessed until the end of May 2021, if they worked with the provider to “get their finances back on track”.

Joe Garner, chief executive at Nationwide, said: “As a mutual, founded to help people into a home of their own, this is what building societies have always been about. We hope this additional support will provide extra flexibility to those who most need it, to help get them back on track.”

Mr Lipnicki added: “The fact that repossessions are on hold is a very welcome relief for affected borrowers and I am sure that more flexibility will need to be applied even after October 31”.

By Chloe Cheung

Source: FT Adviser

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Most brokers think lending will recover to pre-COVID-19 levels within 9 months

Three quarters (77%) of brokers reckon mortgage lending will recover to pre COVID-19 levels within 9 months, while half (51%) believe it will happen within 6 months, research from Smart Money People has found.

Appointed representatives are more optimistic than directly authorised brokers, with 59% of ARs predicting that lending levels will recover within six months, compared to just 37% of DAs.

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Michael Fotis, managing director of Smart Money People, said “Tentative steps are being taken to get the economy moving, and many lenders are talking loudly about their appetite to lend.

“That said, with job security likely to be a concern for many consumers, and predictions that house prices may decline by up to 13%, it’s really hard to see customer appetite for new mortgage lending returning until 2021 at the earliest.”

Brokers focused on the equity release market proved to be particularly sceptical of a full recovery, as just 19% felt lending levels will bounce back within six months.

BY RYAN BEMBRIDGE

Source: Property Wire

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UK house prices surge post-election, but Covid-19 dampens outlook

House prices hit a fresh high in February, data published on Monday showed, as consumer confidence improved following last year’s decisive general election.

According to Rightmove, the UK average new seller asking price hit a record high of £312,625, a 1.0% month-on-month increase that pushed annual price growth up to 3.5%.

The number of sales agreed rose by 17.8%, the highest for the time of year since 2016. Overall, properties sold an average of 6% faster nationally and 15 days more quickly in London.

The UK housing market – and the capital in particular – has struggled in recent years. Ongoing political turmoil over Brexit and successive general elections dampened consumer confidence and saw prices dip as sales fell away.

The Conservative’s decisive general election victory and the UK’s subsequent departure from the European Union have helped ease that uncertainty, however.

In London, the price of property coming to market jumped 5.1% year-on-year, to an average of £638,826, the highest annual growth rate since May 2016. The number of sales agreed ratcheted ahead 34.4%, the highest level for four years.

However, the survey conceded that going forward, the outlook was now less certain.

“The market has been waiting for several years for a window of certainty, and 2020 seemed set to be the year when many would look to make a move and satisfy their pent-up housing needs,” said Miles Shipside, Rightmove director and housing market analyst.

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“However, the current fast pace of the housing market could now be temporarily affected by the spread of the Covid-19 coronavirus. We expect that housing market statistics, like other economic indicators, could be prone to volatility over the spring and summer.”

Marc von Grundherr, director at London estate agent Benham and Reeves, said: “London is now back with a bang. An annual increase in asking prices of 5.1% is the highest level that we have seen in years, and is as a consequence of buyer demand coming back strongly in all price ranges.

“Covid-19 is of course a significant issue, albeit that enquiry levels and viewings do seem to be holding up for now, and we should remain optimistic for swift resolution to the pandemic followed by a robust response from markets including property.”

Rightmove measured 111,464 asking prices, which it said was around 95% of the UK market, for its latest monthly survey. The properties were put up for sale between 9 February and 7 March.

By Abigail Townsend

Source: ShareCast