But they were imposed on banks and building societies with little notice and caused considerable operational strain for lenders as they sought to deal with the enormous volume of requests received.
That meant, at a time when offices were forced to close and businesses moved to remote working – which for the vast majority is still the case today – the resource demands caused by the government interventions meant that something had to give elsewhere.
This is the reason that large numbers of lenders revised criteria and product pricing in order to cope with the mortgage payment holiday issue.
Most lenders generally managed this consistently, dealing with the influx of requests, and since then we’ve seen a slow return of their appetite to lend, including a gradual return to lending above 80 per cent loan to value (LTV).
Extension took additional resources
Four months on and we now have further payment holiday extensions for those who have already taken one and, for those who haven’t, they now have until the end of October to request one.
It’s likely to mean that operational capacity which had been ear-marked for other lending-focused activities has already been redirected back to mortgage payment holiday workloads.
A key question is how this might continue to impact on lenders’ servicing of new business, and what this may mean for brokers and their clients in terms of product choice and access to funds.
You might suggest I’m putting two and two together and getting five here, but in the last few weeks we’ve seen a significant number of lenders pulling back from 90 per cent plus LTV lending.
Now, this might purely be a demand and supply issue – we are nowhere near back to ‘normality’ in terms of the number of lenders active in the higher LTV part of the market.
But several lenders have suggested they made this decision based on servicing issues and wanting to maintain their levels.
Lenders had to pull back
Controlling application volumes, especially when you’ve had to divert resource to unexpected requirements of the market such as mortgage payment holidays, is a natural step for these lenders in these circumstances but will undoubtedly mean less product choice.
And, of course, the knock-on effect is bound to be seen.
We’ve already seen lenders who are still active at 90 per cent plus LTV receiving a huge increase in demand, which again puts pressure on resource and servicing.
This results in ongoing interventions being required, such as lenders trying to quell demand by revising pricing or criteria; it’s a real concern.
While we of course understand the government’s desire to avoid a cliff-edge scenario for borrowers when it comes to payment holidays, there has to a realisation this will have an impact in different areas of the mortgage market.
The point is that lenders can’t do it all.