Coronavirus and Bad Credit Mortgages, what a year 2020 has been so far.
We started 2020 with the biggest pipeline we have ever had due to the busiest October-December we have ever had.
January came and it carried on, a record January.
February came and a record February.
March came and it was a record March, even when things had just started to go wrong in the middle of the month.
Our early success in Q1/2020 was reflective of a wider economic environment.
People were buying new homes, people were remortgaging to get better rates and previous (bad credit mortgage) customers had now had some good mortgage payment history and we were in the process of getting them normal market rates and some, even high street rates.
It then slowed down and more or less everything ground to a halt when the lockdown came.
The end of March and beginning of April has seen the Mortgage world turn upside down.
Lenders have been pulling out of the market (Together, Vida etc) in terms of new lending. Other lenders are pulling back on their LTVs and self employed applicants. It appears the LTV cap is mostly down to being able to carry out physical valuations at the higher LTVs.
Can I get a Mortgage in 2020 with Bad Credit?
That really is the question. The market is so volatile at the minute, it is difficult to say for sure.
One thing that we have noticed however is that there are still lenders out there open to adverse / bad credit, but it feels like we have gone back to maybe 2013-14. Better in some ways, worse in others…
The important thing to focus on though is that we are still in a state of ‘flux’ so to speak.
The wider (Global) economy is for want of a better word, somewhat ‘stalled‘.
But once the economic engine gets restarted, momentum will gather pace, the dust will settle and the banks, money markets and non high street lenders will have a clearer picture of the road in front of them. When they have that picture, they can then respond in kind to the opportunities ahead of them.
For those people who cant wait until the dust settles properly so to speak there are still some lenders out there open to adverse credit mortgages.
Although I compared the current level of ‘bad credit mortgage product availability’ to 2013/14, more of todays lenders are prepared to offer near normal rates than they were back in 2013-14. So this is a big bonus.
On the flipside however you currently need a 20% deposit, although ideally 25% to secure those ‘near high street’ rates, rather than 15% that you would probably have needed back in 2013/14.
But again, hopefully once the lockdown is lifted (and the dust starts to settle) that if valuations can be carried out once more, then we may start to see the higher LTVs return into the mix?
Longer term views
It is difficult to say what the landscape for bad credit mortgages will look like in the coming months, given the state of flux we are in so to project that and to look forward into 2021 is far from certain.
Many of the lenders who were active in the specialist adverse part of the market are saying the right things – ie they want to come back and lend, they want to get the LTVs back up and so on.
But in order to do this, they need support similar to what the banks are getting from the government and/or they need the world to get back to normal otherwise the people who fund the specialist bad credit lenders may keep their current restrictions in place for longer. We need people back in work, for them to have customers who can obtain a Mortgage.
Ultimately these lenders need to lend otherwise they will not be earning the money they need, so hopefully things will return to normal and the market can get back to how it was just a month ago. It will be interesting to see what happens when surveys can be carried out as normal, hopefully that will help the mortgage lenders to return to normal.
Everything is still a little in the air at the moment as nobody really knows whether we will fully return to normal in 1 month, 3 months, 6 months or even 12. This uncertainty combined with the inability to do valuations at higher LTVs appears to be causing the most problems.
Hopefully if we can get surveyors back out on the road, that will help to fix at least one problems and we can see if that helps to bring some normality back. Once the virus starts to wain and people return to their everyday lives and the dust settles, that will hopefully also help significantly.
If you would like to have a chat about your circumstances and your chances in the current Coronavirus and Bad Credit Mortgages market, please do get in touch, we are only too happy to help.
There is no denying that the Coronavirus has had an impact on the Mortgage market but in via this page (Specialist lenders stance on Coronavirus), we will issue as much information to inform our customers and the wider public on the latest from the Specialist lenders stance on Coronavirus.