Banks call for freeze on UK housing market

Banks are pushing for a complete housing market suspension after the UK government has asked buyers and sellers to delay deals due to the coronavirus epidemic.

In discussions between lenders and ministers, the banks expressed concern about the impact of the pandemic on valuations. They are also concerned about lending when the economy is in free fall, according to senior bankers.

They told the ministers that it had become impossible to survey the properties, according to people informed of the discussion. Bank call centers have also been inundated with anxious homeowners asking for mortgage leave.

A government spokesperson said that buyers and tenants “should, as far as possible, delay returning home while emergency measures are in place to combat the coronavirus.

“If the move is unavoidable for contractual reasons, people should follow advice on social isolation to minimize the spread of the virus.”

UK Finance, the industry body, wrote to the lenders asking it to “urgently clarify” the future of the market, “especially since physical real estate appraisals are no longer possible.”

A number of banks and specialist lenders have already withdrawn new mortgages to focus on existing customers and reduce the pressure on understaffed call centers.

Lloyds Banking Group and Barclays, two of the UK’s largest lenders, are temporarily withdrawing from many of their mortgages. Lloyds has stopped offering mortgages or mortgages through brokers, unless the client has a deposit of at least 40% of the value of the property.

Barclays told brokers that it would no longer offer mortgages to clients who had no deposit of at least 40%, but that it would continue to offer remortgaging offers.

The bankers wanted to stress that the withdrawal of mortgage products did not mean that they were short of funding, as happened in 2008 when the funding markets froze.

David Hollingworth, director of broker L & C Mortgages, said that lenders were trying to reduce the flow of new business as they processed tens of thousands of mortgage late payment requests.

“The purchasing market will effectively go into cold storage,” he said. “You are simply not able to go out and buy a house even if the seller wanted you to come.”

The industry is also looking to extend the time available to borrowers to complete a transaction after receiving a mortgage offer, in order to prevent transactions already in progress from failing, two people informed of the discussions.

Mortgage offers are generally valid for at least three months, but lenders seek to provide a three-month extension.

A banking executive said lenders wanted to offer flexibility but warned that “it presents legal challenges – what if a seller changes their mind in the next three months?”

Laura Conduit, a real estate lawyer at Farrers, said: “The strict legal position is that if you have traded and have a completion date, you must finish on that date. It will depend on the kindness of the people. “

She said banks should decide whether their credit teams could rely on appraisals using property videos rather than surveyors, adding, “We have no idea what anything is worth. is.”

Leave a Comment