Mortgage payment holiday extended to October – lenders offer lower deposit mortgages again
In a statement confirming the extension of the scheme, John Glen, the Economic Secretary to the Treasury said: “We’re doing everything we can to help people with their finances at this difficult time, and that includes making sure people get the support they need with their mortgages. “That’s why we’re working with the banks and lenders to extend payment holidays if people need them.
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“Everyone’s circumstances will be different, so when homeowners can pay some or all of their mortgage, they should work with their lender on a plan; but if they are still struggling, I want them to know that help is there.”
Christopher Woolard, Interim Chief Executive of industry watchdog the Financial Conduct Authority added, “Our expectations are clear; anyone who continues to need help should get help from their lender.
“We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.”
Christopher continued: “Where consumers can afford to re-start mortgage payments, it is in their best interests to do so. But where they can’t, a range of further support will be available. People who are struggling and have not had a payment holiday, will continue to be able to apply until 31 October.”
These changes mean that people who have already applied for and started their three-month mortgage payment holiday may be able to extend this by another three months, subject to review and agreement with their lender.
For those people who haven’t yet applied for a mortgage payment holiday, they now have until October 31 to do so. The current ban on repossessions is also extended until the same date.
Mortgage lenders have been deluged with requests for mortgage payment holidays since the beginning of the crisis, with over 1.8million homeowners currently applying for help.
As a result, in order to cope with the underwriting and processing of mortgage payment holidays for existing clients, as well as the movements in the Bank of England base rate, many lenders temporarily withdrew the lower deposit mortgage products in March and April.
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This has proved frustrating for first time buyers and home movers with lower deposits, who have been unable to find a mortgage deal suitable over the past few weeks, and despite the current economic uncertainty, are still keen to purchase a property this year.
Gradually though, lower deposit mortgages are being reintroduced, with more lenders returning to this area of the market.
As of this week, lenders including HSBC, the Melton Building Society, the Chorley Building Society and the Earl Shilton Building society are offering 90 per cent loan to value (LTV) products, with Yorkshire Building Society also extending their purchase and remortgage deals to up to 90 per cent LTV this week. A very small number of lenders, including Nationwide, are even offering 95 per cent LTV products.
Charles Mungroo of Yorkshire Building says, “Following the government’s announcement last week which lifted a number of restrictions on the housing market, we’re delighted to re-launch our 90 per cent LTV range as well as products for New Build purchases up to 85 per cent LTV.”
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Charles continued: “We hope that by being able to offer higher LTV products within a week of physical valuations restarting, we can demonstrate our commitment to homeowners and those looking to get started on the property ladder to ensure they have a range of options to suit their needs.”
Lea Karasavvas, Managing Director of Prolific Mortgage Finances observed: “The week has been full of positive signs from many of the big lenders bringing more and more confidence with each announcement.
“With lenders such as Clydesdale and Virgin announcing a return to 90 percent loan to values as of next week and Accord having already announced 90 percent mortgages available for those borrowing up to £500,000 these are positive steps that show their intent to lend.
“The return of the higher loan to value products also highlights their confidence in values. To return to this kind of leverage so soon indicates lenders have little concern that values will drop considerably.
“If there was a general feeling that property prices were going to fall in excess of 10 per cent, such products would not be returning so quickly through risk of lenders concerns over acquiring negative equity borrowing at this level.”
Lea concluded: “At present, the return of the higher loan to value products and the huge interest shown from buyers are hugely signals that the property sector itself should recover quicker than expected.”
Follow Louisa on Twitter: @louisafletcher
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