Henry Dannell Mortgage Market Outlook November 2020

We are now deep into the final quarter of what has been the most extraordinary year but the property market has continued to display signs of rude health despite the sceptre of Covid-19 that continues to affect our daily lives. Historically, November has always been a busy month for clients looking to acquire property prior to the natural watershed that the new year inevitably brings and this year has been no different with activity levels at a very positive level.

Lender Update

We have seen some positive moves in the mortgage interest rate market as some lenders have looked to sharpen terms as the year comes to an end. This has seen a number of clients benefit from these improvements as we have been able to review initial terms offered at the commencement of the transaction and move clients to better rates prior to completion. The mortgage rate market is a rare beast that often allows clients a one-way option where they can lock in terms but should they improve in their favour ahead of drawdown, they can opt to switch and achieve an advantage for no extra cost. We looked after a client earlier this year who was buying a house with a delayed completion and we ended the process having the lender provide 5 separate mortgage offers, each improving ever so slightly on its predecessor, as rates ticked down. This was an exceptional case but nonetheless much appreciated by the client and showed our dedication to providing our clients with the best outcome.

We are also beginning to see improved service levels from lenders as they have managed to put systems in place to cope with remote working which must have been a mammoth task. This is certainly not the case across the entire sector but we are able to guide clients to lenders who are performing swiftly whilst making it clear at the outset how long we expect the transaction to take. We are also seeing the lead time on valuation surveys reduce which is positive and shows that the surveyors and lenders are working in unison to adjust their working practices to suit the current climate. We feel that this interaction will bring long term benefits to the industry and eventually see the transaction times reduce due to greater efficiency.

Cladding

In the aftermath of the dreadful Grenfell Tower disaster in 2017 which saw 72 people tragically lose their lives, there has been an understandable review into the construction methods used on blocks of flats up and down the country. The Henry Dannell team are now becoming very well accustomed to a vital document called an EWS1 (External Wall System) which is a report that checks the safety rating of the building and has a profound effect upon whether the property is able to be mortgaged. It seems that some management agencies have been quite slow to react and obtain the necessary ratification. The knock-on effect is felt by both owners and potential buyers when lenders send their valuers in and they come back with the recommendation that the flat does not represent suitable security until the necessary checks have been performed. Our message to our clients that own properties in blocks are to press their managing agents to ensure that the freeholder has done the necessary checks and that the documentation is in place. We would also urge our clients looking to purchase such properties, to check at outset to ensure the documentation is in place and is satisfactory to save time and avoid disappointment. We have seen that far too many buildings have not been checked and this is causing significant disruption and is impacting upon much older blocks as well as those that have been relatively recently constructed. The lenders are taking a very defensive stance in this area and there seems to be ‘zero tolerance’ towards those buildings that have not taken the necessary steps. Our understanding is that the Minister for Housing is looking to streamline requirements and remove the need for such surveys on buildings without cladding but it is unlikely to be an exact science, particularly where buildings have wooden balconies or indeed are deemed to have other safety issues and may still require the external fire safety checks.

As ever, the Henry Dannell team are here to advise and help clients navigate the mortgage market. Should you need our help, please do not hesitate to get in touch.

Please note: a mortgage is secured against your home or property. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.