Coronavirus and Mortgage Payment Holidays

Covid 19 and Mortgages

What a week it has been! I’ve gone from seeing clients in the office two weeks ago to lockdown at home. As most of the country is experiencing such a major change in our lifestyles, hopefully for the short term, I thought I would try and collate some useful information around mortgages.

At the time of writing all of the high street lenders are struggling to process applications due to staffing levels and any mortgage that needs a physical valuation (i.e. a surveyor to look around the property) are effectively on hold as the surveyors are on lockdown.

Barclays this week started to restrict the number of applications they would accept. Refreshing their allocation at 10 am each day. I think the level of applications is going to calm down quite soon, the longer we get into the lockdown zone.

Halifax are restricting applications also, anyone wanting to borrow more than 60% of the property value cannot go to the Halifax at this time.

If you are moving house then these are the guidelines that have been set out:

Home buyers and renters should, as far as possible, delay moving to a new house while emergency measures are in place to fight coronavirus

If moving is unavoidable for contractual reasons and the parties are unable to reach an agreement to delay, people must follow advice on social distancing to minimise the spread of the virus.

Anyone with symptoms, self-isolating or shielding from the virus, should follow medical advice and not move house for the time being

Another big issue is payment holidays and where you stand with those. It does vary from lender to lender but as a rule they will have set up an online process where you can apply to suspend your payments for three months. The interest will be added to your mortgage so your debt will increase, most lenders have said this will not affect your credit rating but do check with your lender.

Here are some links to some lender’s payment holiday sites:

Santander: https://mortgagesignup.santander.co.uk/onlinecredential/mortgage-holiday

Halifax: https://www.halifax.co.uk/mortgages/existing-customers/payment-holidays/request-a-holiday/

Nationwide: https://www.nationwide.co.uk/support/coronavirus/mortgage-payment-holiday

HSBC: https://www.hsbc.co.uk/help/coronavirus/financial-support/

Barclays: https://www.barclays.co.uk/coronavirus/mortgages/

If you are a buy to let customer then you can also apply to your lender for a payment holiday if your tenant is struggling to pay you.

I hope these help but in the meantime please stay safe.

I am open for business and I’m happy to do face to face meetings online, I had a Zoom meeting yesterday that worked well. So if you have any questions or want to talk about your mortgage options then I am happy to help where I can.

How will the Interest Rate cut effect my mortgage?

If I was asked a week ago “Will Coronavirus effect my mortgage?” I would have dismissed it as ridiculous. However this morning the Bank of England have announced a slash of the interest rates by 0.5% to 0.25%. 

These are unusual times as one would not expect the Bank of England to be getting involved in a health crisis. The Chancellor has a lot on his plate when he announces his first budget today. It is widely expected he will announce spending plans as part of Boris Johnson’s election pledges but he also has the backdrop of an economic crisis brought on by the Coronavirus.

Firstly mortgage rates, I expect this cut to be a short term measure and would be surprised if the rate was still 0.25% in the summer. However if the rate remains at this level beyond the summer then there is a reasonable chance we could see headline mortgage rates falling a little. Do bear in mind they are very low already, with five year fixed rates being available from a staggering 1.49% (with the right amount of equity/deposit). 

If you have a tracker mortgage then you can expect your rate to drop from 1st April, do check your T’s and C’s just in case your particular tracker deal has a “floor” beneath which your rate cannot fall.

In the budget later it is expected there will be big spending plans but also there is pressure to reduce the burden on small businesses. I think there might be a reduction in corporation tax and possibly a short term reduction in VAT. The worry for the chancellor must be “how can i cut tax and spend more? Where is the money going to come from ?” I guess he could put an emergency tax on toilet roll and hand gel!

I think for the majority of us the rate cut won’t have a massive effect. If the Coronavirus crisis is short lived then we can all get back to normal and live happily ever after. However if things get worse, as some quarters are predicting, then a reduction in the major household outgoings will be welcomed by the general public and will hopefully mean the UK doesn’t slip into recession.

These are unprecedented times and nobody really knows what will happen. The message I’d like to leave you with is: Wash you hands.