How lockdown has affected the financial & housing markets

Open for business despite lockdown

As we enter into a second lockdown, we began to think about the impact that this would have not just on our company, but for everyone in the finance industry and the housing market. From brokers, lenders & borrowers to estate agents and more, here are our thoughts on how we stay open for business despite lockdown.

How lockdown has affected the market

Thanks to the first lockdown in March, many lenders such as banks and building societies continue to operate in safe working conditions, whether that’s from home or in socially distant offices. There has however, been delays in house buying chains due to surveyors & solicitors creating longer mortgage agreement times. 

How lockdown affects lenders

Lenders are also starting to show caution as the number of available products has decreased, with the higher LTV products (i.e. 90 – 95%) have all but disappeared. This is a sign that banks and lenders are factoring in a weaker economy. We are starting to see other products enter the market to combat this issue, for example, 100% LTV guarantor mortgages, however people interested in this type of mortgage are strongly advised to learn more about how these work beforehand.

How lockdown affects Brokers

Here at Friends Capital, we don’t expect a second lockdown to have a significant impact on how we operate, as we too can continue working from home. Due to the previously mentioned mortgage agreement delays, we are still catching up from a backlog in March. We are also beginning to see customers cancel applications as property chains break down and lack of job security. 

Our solution to dealing with this problem is to raise awareness of bridging loans. In a nutshell, bridging loans are high value, short term loans that help prevent property chain breakdown. These work by lending property owners the money they need quickly, so they can move into their new home with the freedom to sell their secured property outside of the property chain. Even if you have no income or a low credit rating, learn more about bridging loans here.

What can borrowers do during lockdown?

If you were hoping to move but are facing issues caused by lockdown, it might be time to consider how else you can add value to your property. Secured loans for property development can help you to add an extension or loft conversion that will increase the value of your property once the market begins to get some wind behind its sails again. Bridging loans can also help finance this type of project. 

Apply for a bridging loan today and make the most of the stamp duty holiday.

In summary, even if the lockdown extends beyond November, we as a company will still function as long as there is a strong demand for mortgages. Mortgage agreements might take longer than usual, but we will always be here to advise whoever comes knocking on our doors (figuratively of course).

Worst-case scenario, a long term lockdown could result in banks ceasing to lend as they did in 2008/9. However, as the impact of this on the economy would be disastrous; it’s unlikely it will happen. The best thing all of us can do is carry on as close to normal as we can.