The Coronavirus is having a huge impact on everyone and every walk of life right now and the UK’s mortgage market is no different. In the face of an almost total lockdown of business activity, the UK government has had to take a number of steps to help people stay financially afloat. Along with furloughing PAYE wages across the board, mortgage lenders have also been compelled to make things easier for their customers.
Payment Holidays
One way in which mortgage companies are taking some of the strain off of their customers is by providing an optional payment holiday. This means that for up to 3 months, those with mortgages are able to approach their lender and ask for payments to be deferred. According to the BBC, around 1 in 9 mortgage holders has so far taken this offer up.
A payment holiday is something that does need to be applied for, as it doesn’t happen automatically and anyone thinking of taking advantage of it needs to consider the ramifications of doing so. It can increase the amount of your mortgage and increase the cost of borrowing, so it’s a good idea to ask your lender precisely what the knock-on effects are.
Lenders Have Reduced Borrowing Levels
Since the Coronavirus pandemic really took hold, the UK’s housing market has effectively stopped and this has had a huge impact on the amount of mortgage products being offered. A lot of lenders have already withdrawn most of their mortgages because of lack of staff and because the lockdown basically means people aren’t allowed to move.
That’s not to say no mortgages aren’t being offered at all, but some major banks are simply not currently processing mortgages with a loan to value higher than 60%. More can be found on this by following this link to the Guardian.
Very Low Borrowing Rates
Back in mid march 2020, the Bank of England cut the UK interest rate to their lowest rate ever of 0.1%, as can be seen in this BBC story. The knock-on effect of this is that the rates available are the lowest they’ve ever been. Even if you’re not able to move right now, it’s still possible to secure yourself a deal that allows you take advantage of these historically low levels.
The move may well have been one that was made to help UK businesses and the economy in general, but it’s something that is certainly good news for mortgage seekers…though it is bad news for your savings.
Uncertain Times
There’s no doubt that we’re living in uncertain times, but things have a habit of getting better with time and whilst the UK housing market is largely dormant, things will eventually get back to normal. The fact is that it’s an issue that’s being felt in every part of the economy and not merely restricted to the mortgage market.
It is very different in the housing market right now, but it has presented an opportunity to get an amazing fixed rate mortgage deal – the likes of which we may never see again. For many of us though, it’s just about getting through the current situation and while we don’t know precisely when lockdown will end, it will end. It’s just a matter of time.
At Red Star Financial Services, we are a FCA-regulated whole-market mortgage broker and we’re here to help you find the best and most suitable financial products for your needs. Our extensive network of insurers and lenders means that we’ll always be able to find products that suit you perfectly.
If you’d like to know more about anything discussed here, we recommend that you take a look around our website www.redstarfs.com where you’ll find lots of information about mortgages, insurance and a whole lot more. Alternatively, if you’d like to speak to us about any financial planning matter, give us a call on 0161 823 1733 and we’ll do our very best to help.