Mortgage applications remained high during February with the number of ‘hard’ searches by lenders a similar level to Autumn last year and 12 per cent above the same time in 2020.
Anyone who has purchased a property knows there are still hurdles to negotiate even after you have been accepted for a mortgage, so these buyers will be pleased that they are not faced with a rapidly approaching cliff edge on March 31.
Lenders themselves have been hampered by needing to ask more employees to work from home, people who may have childcare or other family commitments to manage.
But the increased demand in the property market, stimulated by raising the stamp duty threshold, has meant they needed to find a way to keep making high-quality decisions.
All the while, the pandemic has changed the way they can interact with the public. Face-to-face meetings between lenders or brokers with prospective applicants to guide them through the process are not an option. Paperwork is not easy to share.
Understanding affordability
One of the many consequences of the pandemic is that it has accelerated the mortgage application journey’s digitalisation.
Open Banking is key, providing lenders with trusted bank account transaction data to quickly categorise people’s income and expenditure, so they can judge which mortgages will be affordable for them.
Technology such as Open Banking has also helped them pick through the financial changes of Covid-19, which in many cases are temporary.
For example, someone’s income may be temporarily reduced while on furlough, so a lender needs to understand what their salary is in normal times.
On the other hand, for many prospective homebuyers, expenditure is unusually low because opportunities to spend on food, drink and holidays are – sadly – all too infrequent.
Lenders must ensure a loan is affordable for the product’s lifetime, not just while we’re following government guidelines to stay at home.
Borrowers comfortable online
Digitalisation has undoubtedly brought lenders efficiencies, while customers who would perhaps consider themselves to be ‘digital second’ are now well practised and comfortable in online environments.
The advance of technology combined with the acceleration of confidence in using online services to navigate big moments have provided a couple of positive moments in a challenging year for us all.
As we all hope for a return to normal life in the coming months, the mortgage industry can look back with pride at the progress made to service increased demand when conditions are most challenging.
This work will allow hundreds of thousands of people to celebrate their freedom from lockdown in their new homes.
