Covid-19 Fears Drive Home Search Results

Uncertainty caused by the second lockdown is putting house buyers under increasing pressure and influencing search results as lenders further reduce their willingness to accept risk.

The search for ‘Covid-19 temporary maximum LTV restrictions‘ by brokers featured among the top results in October, according to the Knowledge Bank, following the latest analysis of criteria. This is the sixth successive month that this particular topic has appeared in the ‘top five’ and it reflects the impact the pandemic is having on the housing market.

Matthew Corker, lender relationship manager at Knowledge Bank, believes that as people face up to living long-term with Covid-19, first-time buyers are ‘desperate’ to get a foot on the property ladder. He said he was already seeing evidence that some mortgage products may be withdrawn because of the second lockdown, as lenders’ attitude to risk hardens.

Although there is plenty of evidence, he added, of lenders returning to the market and of new products being introduced, the as yet unknown effect of a second lockdown on employment and the wider economy is creating panic in the housing market and causing buyers an untold amount of stress.

Mortgage term lengthened

For the second successive month, the criterion most searched for by brokers in October was ‘maximum age at end of term‘, the bank’s latest data show. This could indicate that borrowers are trying to increase the mortgage term to keep their repayments as low as possible for the foreseeable future as they ride out the current uncertainty, the bank said.

Associated terms such as ‘self-employed – one year’s accounts‘ and ‘income multiple used for affordability assessment‘ also featured in the top five search results. The bank suggested borrowers were facing difficulties with affordability and were recalculating their income to find ways in which to access the housing ladder.

Bridging and second charge markets

As in the residential sector, the foremost search in both the bridging and second charge markets was for ‘maximum LTV‘, according to the bank. Would-be buyers with smaller deposits continue to be adversely affected with regard to buying or remortgaging property by lenders who increasingly place more stringent restrictions on lending criteria.

Buy-to-let market

However, the latest tracker showing the difficulties in the residential market is in marked contrast to the high degree of confidence consumers demonstrate in the buy-to-let market. In effect, the most searched for topic was ‘first-time landlord‘.

This could be because home buyers, faced with increasing difficulties in the residential market, are exploring alternative methods of accessing the property ladder and becoming a landlord is one such option.

There is currently such great demand for rented property as the housing ladder becomes harder to climb, that buy-to-let is an appealing choice for those desperate to purchase property.

Equity release

In the equity release market, search results for ‘property with annexe, outbuildings, land or acreage‘ once again made top billing. This tendency has been influenced to a large extent by the impact of coronavirus on consumer habits, as concern over affordability leads people to consider buying property with relatives, the bank stated.

This trend is confirmed by data recorded from the self-build market. A surge in searches for ‘purchase of adjoining property‘ typifies the greater impact this is having on the market, with home buyers considering purchasing property either with relatives or moving elderly relatives to live closer to them after the privations of the last lockdown.

As a postscript, Pepper Money has cut rates on its buy-to-let mortgage range in order to help landlords looking for buying opportunities ahead of the stamp duty holiday deadline on March 31. The lender has implemented cuts of up to 0.31pc and introduced new fee options enabling customers to pay lower upfront costs.

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