With mortgage holidays, where borrowers in difficulty able to defer payments for up to 6 months and the same on credit arrangements, other loans, overdrafts and suspension of evictions etc, there is massive pressure on the banking system.
The current stamp duty holiday has also stimulated borrowing requests and mortgage applications but lenders are wary of record property prices at present and then people losing their jobs or indeed property prices predicted to fall substantially in 2021. It is no wonder the lenders are hardening their position.
We have seen large loan to value mortgages suspended i.e. lenders wanting bigger deposits of say 25% rather than the usual first time buyer deals of only needing say 10% deposits.
We have seen lenders pull out of the ‘buy to let’ market, first time buyer market and many more.
We are seeing some banks looking to introduce charges on normal current accounts in the same way that they charge for premium bank accounts and of course business banking.
Many lenders are also increasing their standard variable rate i.e. when your fixed rate or discounted period ends, you move onto an SVR whish may be higher and then you get trapped in a mortgage because you cannot remortgage to a new product with your existing lender or new lender. So called “mortgage prisoners”.
We are now also starting to see lenders restrict the time/term when mortgages can run to. For example, one high street lender has said that mortgage applications and the term of the mortgage cannot run past your normal retirement age. Lenders are not allowed to discriminate on mortgage applications based upon age alone but they can specify lending criteria to only allow a mortgage up to retirement age as you may have a different retirement age on your pensions, so it is not specifically age discriminative.
The current pressure on banking groups will continue, expect higher interest rates and penalties, expect securing a mortgage to be harder and expect a property slowdown and price falls in 2021.