We are living through a health and economic crisis that is unprecedented in modern times – a once in a century event.
Over the past week we have seen the impact of this crisis on the mortgage market too. Echoing the 2008 Global Financial Crisis, lenders have made thousands of criteria changes and in many cases withdrawn products altogether.
But while it is tempting to draw parallels with the Great Recession, this crisis differs fundamentally from 2008.
What the mortgage market faces today is not so much a credit crunch, but an operational crunch, as providers’ ability to lend becomes more challenging.
It is a crunch which has put the spotlight on the need for our industry to digitalise the mortgage journey too.
The clearest example of this operational crunch is the impact of the lockdown and social distancing on lenders’ ability to conduct physical valuations of properties.
The priority is, and rightly should be, the health of those working in the sector and their customers, making it impossible to safely conduct physical valuations.
This is preventing some lenders from accepting applications from borrowers as they are not physically able to view and value the properties they intend to lend on.
Transforming how we do things
In other instances, providers are still able to lend to customers but are having to limit the number of applications each day, in some cases due to events outside the UK.
These are clearly unprecedented times and the impact goes beyond lenders to the wider mortgage and housing markets.
For estate agents, it means no physical house viewings. For advisers, it could be driving a change in how they conduct meetings and get advice to clients.
To resolve these challenges when we are through this, we will need a conscious effort to drive technology through all aspects of the mortgage journey.
We will need to focus on moving from just optimising existing processes, policies and structures to truly transforming the way we do things.
Legal & General Surveying Services is already having in-depth discussions with lenders about rolling out digital valuations to try and solve the challenges some areas of the market are currently facing.
Adapt to new normal
For advisers, we recognise that the immediate challenge is to keep on top of a rapidly changing market.
Advice is more important than ever for clients and advisers need to be in the know about the latest movements, so the club has compiled a summary of lender updates and stances to help our intermediary partners keep up to date in this fast-moving landscape.
We will get through this. The desire to step onto the housing ladder and own a home is a widely shared ambition in this country.
But in this current crisis and to futureproof ourselves, we will all have to adapt to this new normal to keep the mortgage market moving now and in the years ahead.