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Bamford: This is a seismic shift and things may never be the same

by: Patrick Bamford, business development director at AmTrust Mortgage & Credit
  • 03/04/2020
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Bamford: This is a seismic shift and things may never be the same
It’s not surprising to see many lenders cutting their maximum loan to values (LTVs) as they seek to maintain a market presence while at the same time re-assessing their risk in a much-changed environment.


Some lenders continue to buck this trend however; HSBC recently reaffirmed its commitment to offering high-LTV mortgages, while a large number of building societies are also adopting a ‘business as usual’ approach – or at least one that attempts to mirror this as closely as possible.

However, for every lender able to continue in this vein, we have those which have had to change their approach in a radical way.

Many have stopped new business while they work through the payment holiday requests of their existing borrowers, while others are in a state of stasis, given the nature of the capital markets and the ‘wait and see’ attitude that most funders have adopted.

Having said that, there will no doubt be opportunities to be grasped at some point; one suspects, for example, in the high LTV space that while some of the biggest lenders retrench to lower LTVs, the building societies, challengers and smaller banks might be able to continue to support this demographic.

Traditionally the preserve of the first-time buyer, there may also be a growing number of existing homeowners who need higher LTV products.

Those lenders who are able to keep lending, servicing and processing business throughout this period are likely to find a reserve of customers to dip into who are taking the chance to review their finances.

With the support of advisers of course.


No return to normal

What the future might bring beyond this period however is still uncertain but there seems little doubt that many lenders will not be able to offer a pre-coronavirus (PC) proposition.

There continues to be a lot of talk about ‘returning to normality’ – whether that’s the ability to reduce the lockdown measures or in a business sense.

However, we are facing a ‘new normal’, not the environment immediately prior to this; for many people and businesses, things will never be the same again.

I suspect for many lenders too, there may have to be a fundamental shift in the way they conduct business, and many will certainly have to revisit their appetite for risk, especially what that means for high LTV activity.


Seismic shift

Over time we may see a gradual return to a PC mortgage market but this is going to take time, and will need a softly-softly approach, with a large degree of hand-holding and patience with lenders as they work back towards this.

This is a seismic shift for all of us, and we could see a very different situation when this period is over.

Those who once appeared to lead the way, may be overtaken by others who are able to react, and get up to speed, more quickly.

It might not seem like this at present, but this will present opportunities for certain lenders. Whether they are able to take them is however another thing entirely.



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