Masthaven pulls products and curbs LTVs
The bank has also restricted its other lending operations due to limitations on physical valuations.
A spokesperson for Masthaven said the product changes would not impact cases in its pipeline.
However, it will be applying its valuation service to pipeline cases which are yet to receive a valuation.
For bridging cases, where a full valuation is not available, Masthaven will consider drive-by valuations supported by an automated valuation model (AVM) at a maximum loan to value (LTV) of 60 per cent.
Where a drive-by valuation is not available, the bank will make use of its AVM Plus service, at a maximum of 50 per cent LTV.
In a communication to brokers, the lender said it will not be accepting any new development or commercial loans until further notice.
“This will enable our team to support existing borrowers with projects already in progress.”
It added that it was removing its larger bridging loans range but the maximum loan size will be increased on its prime and standard range.
These will be limited to 70 per cent LTV for first charge and 60 per cent LTV for second charge.
The minimum term for bridging loans will be 12 months and early repayment is subject to a minimum of one month with interest paid.
Refurbishments will not be available on prime products.
No pipeline impact
A spokesperson for Masthaven confirmed the changes would not impact cases in its pipeline and said it would apply its valuation service to pipeline cases which are yet to receive valuation.
In the message to brokers, the lender said it was making some temporary changes to its product range and criteria as a result of the coronavirus crisis.
“We’re open for lending. We believe that at this time it’s important, as a bank, that we support you and your customers with financing options responsibly structured and underwritten,” it said.
“So while we are making changes we are continuing to offer a lending range.”
It added: “We know that there are lots of changes being made across the market but hope you appreciate that making these changes enable us to continue to support you and your customers during this unprecedented time.”
The product changes will be effective from 6 April.
Top 10 most read mortgage broker stories this week – 03/04/2020
Product changes from the big lenders got the most interest, as Nationwide stopped applications above 75 per cent LTV, with similar moves from NatWest and other lenders.
In positive news, Halifax brought back deals up to 80 per cent LTV and Mortgage Solutions revealed the FCA is preparing a fees support package for smaller firms.
NatWest and Nationwide issue furloughed worker guidelines
Nationwide withdraws mortgages above 75 per cent LTV
Nationwide extends mortgage offer periods and widens digital valuation use
FCA preparing fees support package for smaller firms – exclusive
Halifax Intermediaries relaunches 80 per cent LTV range
‘This crisis should encourage brokers to change how they operate’ – Marketwatch
HSBC maintains 95 per cent LTV mortgages
Nationwide ups product transfer rates
OSB and Precise stop new apps and halt pre-offer cases
NatWest and Metro Bank withdraw high LTV product ranges
Bamford: This is a seismic shift and things may never be the same
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.
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.
Aldermore temporarily reduces LTV offering
The bank will be temporarily reducing its mortgage range open to new customers, including credit-adverse and help to buy products. It is also withdrawing its three-year fixed rate products and term variable options.
All homes in multiple occupancy and multi-unit freehold products up to six bedrooms or units will also be put on hold.
Existing applications where a product has already been reserved will continue to progress.
The bank said this would allow it to focus on supporting its existing customers, during a period of high request volumes.
Aldermore has moved towards remote valuations for owner-occupied properties and buy to let single unit applications due to government restrictions.
Where remote valuations are not possible, cases have been put on hold until new processes are available or physical valuations are allowed again.
The bank also confirmed it is offering payment breaks for existing homeowner and landlord customers impacted by Covid-19 and is providing three-month mortgage offer extensions to customers that have exchanged.
Jon Cooper (pictured), head of mortgage distribution at Aldermore, said: “It has been an extraordinary few weeks for the industry and the country as a whole, and this has led to the necessary decision to temporarily reduce our options for new customers.
“Our aim is to continue to support the market as much as possible while we work hard to maintain the service required to our customers during this worrying time for many.”
Small business loan scheme overhauled with personal guarantees no longer required
Following concerns raised by MPs, banks and small businesses, HM Treasury has overhauled how its Coronavirus Business Interruption Loan Scheme (CBILS) will operate to make it easier to access.
Now all viable small businesses affected by Covid-19, and not just those unable to secure regular commercial financing, will be eligible should they need finance to keep operating during this difficult time.
And according to reports, Treasury has also dropped requirements for lenders to operate the scheme under normal lending protocols, which meant they often asked for security such as a personal guarantee or a charge over a property for smaller loans.
This will continue for loans of more than £250,000 however.
The move came after figures showed just £90m of these loans were approved for less than 1,000 firms in the last week from around 130,000 enquiries, with reports the scheme was too cumbersome and awkward to work with.
Large firm support
A government-backed scheme to provide financing to larger companies, being operated by the Bank of England, has also provided almost £1.9bn of support to firms with a further £1.6bn committed.
And support for large firms has been extended further.
The new Coronavirus Large Business Interruption Loan Scheme (CLBILS) will provide a government guarantee of 80 per cent to enable banks to make loans of up to £25m to firms with an annual turnover of between £45m and £500m.
The Treasury said this will give banks the confidence to lend to more businesses which are impacted by coronavirus but which they would not lend to without CLBILS.
Loans backed by a guarantee under CLBILS will be offered at commercial rates of interest and further details of the scheme will be announced later this month.
Changes a ‘big step forward’
Confederation of British Industry (CBI) director-general Dame Carolyn Fairbairn welcomed the revamp noting that the measures were a “big step forward” on the original scheme.
“They will help deliver cash faster to firms battling for survival in the headwinds of the pandemic,” she said.
“By providing more support for mid-tier companies, they are backing our most significant and iconic regional employers. These firms number in the thousands and make a huge contribution to the economy, so it’s good to see them getting the support they deserve.
“More detail and a clear time frame are still needed, but this plan is hugely welcome.”
She added that banks were working at breakneck speed and it was encouraging to see the government stepping in where urgent help is needed for businesses.
Debt a daunting prospect
Federation of Small Businesses national chairman Mike Cherry echoed the support for the changes.
“Time is of the essence and therefore we welcome government action in ensuring that any viable small business that has been negatively impacted by the Coronavirus can now directly access CBILS rather than first being offered a bank’s own standard commercial lending product,” he said.
“Removing personal guarantees for all commercial loans below £250,000 is also very welcome. Taking on debt at the current time is a daunting prospect for many small businesses and the self-employed.
“We look forward to continuing our constructive engagement with government to ensure that debt can be repaid in an affordable way that allows small businesses to recover from this crisis and to thrive again,” he added.
Chancellor Rishi Sunak (pictured) announced the changes and said he was taking action by extending the loan scheme so more businesses can benefit.
“We have also listened to the concerns of some larger businesses affected by Covid-19 and are announcing new support so they can benefit too,” he said.
“This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible.”
Bluestone Mortgages suspends new applications
This restriction in business comes days after the lender capped lending at 75 per cent loan to value and began declining applications from borrowers working in the leisure, hospitality and retail industries.
The lender said the decision to halt new applications has been made as a result of restrictions that have been put on physical property valuations due to the Covid-19 pandemic.
Bluestone will prioritise existing applications where the valuation has already been completed. All other applications will be processed and underwritten as normal, while they wait for the availability of an acceptable valuation.
All offered mortgage loans will continue to completion as normal.
Bluestone said its existing customers will not be affected by the suspension and the lender’s support services will remain open for these borrowers.
During this time, the lender will reallocate employees to other customer support teams so they can offer more help to existing borrowers.
Steve Seal, managing director at Bluestone Mortgages, said the staff moves were necessary in supporting customers through the crisis and the overall decision to stop accepting applications was not taken lightly.
He added: “Overall, our main priority is supporting brokers in every way we can so that they can continue to deliver strong outcomes for customers and to reassure them they are in safe hands.
“Bluestone will continue to follow the government guidelines and hope to re-open to new business as soon as possible and will update the market on news of this in due course.”
EPC requirements remain for property lettings and sales
In guidance published by the Ministry of Housing, Communities and Local Government (MHCLG) it was made clear that properties put on the market will still be required to obtain an EPC before being sold, let or built.
It added that assessments should only be conducted where the work is essential.
This follows government-issued guidelines last week that urged people to delay or not begin the process of buying or selling a home unless it was absolutely critical.
A valid EPC is legally required when a property is sold, let or constructed and must be completed by an accredited assessor unless an exemption can be applied.
Landlords and sellers have seven days to obtain a valid EPC from the day the property is marketed, with a further 21 days grace period allowed if all reasonable efforts have been made to obtain one, but it has not been possible.
Restriction of movement laws and social distancing practices which have resulted in almost all valuers and surveyors stopping in-person property surveys are likely to have severely hampered EPC assessors as well.
Endeavour to delay transactions
In its guidance today, MHCLG reiterated that unnecessary visitors should not be invited into homes or into those let to tenants.
It said that where a property is occupied, parties must endeavour to agree that the transaction can be delayed, so that an EPC assessment can proceed when stay-at-home measures to fight coronavirus (COVID-19) are no longer in place.
“If moving is unavoidable and the parties are unable to reach an agreement to delay, and a valid EPC is not available from the register, an assessment may need to be conducted,” it continued.
“In these circumstances, government guidelines on staying away from others to minimise the spread of the virus must be followed alongside the guidance for carrying out work in people’s homes.
“EPC assessments can continue in cases where a domestic property is vacant,” it added.
No assessments should take place if any person in the property is showing symptoms, self-isolating or being shielded.
And if securing an EPC is critical the appointment should be rescheduled to when it is safe to do so in accordance with government guidelines on staying away from others.
Only where essential
MHCLG told assessors that EPC assessments can continue, but some buying and selling transactions may be delayed.
“Where transactions continue, they must meet the criteria and assessments should only be conducted where an individual believes the work is essential and meets the criteria for leaving the home, and in accordance with government social distancing guidance,” it said.
“No assessments should take place if any person in the property is showing symptoms, self-isolating or being shielded.
“If you are unable to undertake an assessment for which you have been booked, you should seek to reschedule your appointment when it is safe to do so,” it added.
Aspen Bridging introduces desktop valuations
The company is accepting applications up to £1m net up to 62.5 per cent loan to value for residential and light refurbishment projects.
Flat rates start at 0.89 per cent with terms running from 12 to four months with stepped rates starting at an initial 0.59 per cent up to a maximum of 12 months.
Aspen will continue to supply a fully-costed quote in the first 15 minutes and will progress the case from a submitted decision in principle (DIP) to a post-search DIP in a maximum of three hours.
All meetings that need to be carried out will be done using Facetime.
The lender’s legal partners will operate with full remote capacity and pay-out functions, it added.
Jack Coombs (pictured), director at Aspen Bridging, said: “The measures we have introduced, based around desktop valuations, will ensure that we can continue to lend while the market goes into lockdown.
“We have an extremely strong funding position through our parent company, and this enables us to be more flexible in our offering.
“A level of continuation is crucial for the bridging market, our broker partners and their customers, and we are doing our utmost to deliver certainty in uncertain times.”
Shawbrook limits all LTVs to 75 per cent; adds further assessments
In communication to brokers, the lender also highlighted the importance of ensuring that advice previously given to clients remained valid in the current circumstances.
The changes have come in response to the restrictions in place around the coronavirus crisis and have forced the specialist lending industry to make significant adjustments.
Shawbrook acknowledged the additional assessments would mean applications would take more time and said it has also increased rates and margins on certain products and LTVs.
However, in a communication sent to brokers, the lender added that all full mortgage offers already in place would be honoured, regardless of LTV.
All other pipeline cases will be assessed based on the new 75 per cent LTV maximum and the additional assessment over 65 per cent LTV.
Check bridging advice
In its short-term offering, the lender has withdrawn its heavy refurbishment products noting that: “The pandemic has substantially impacted the construction industry and supply chains. We are unable therefore to consider lending for this purpose until further notice,” it said.
Developer exit applications will be assessed on a case-by-case basis and will assume that the assets will be held for term, rather than sold.
Standard buy-to-let term affordability criteria will apply and market rent will therefore be a key consideration in applications, the lender noted.
And it added that changes to regulated bridging products may impact the initial advice provided. “Please ensure that all new and pipeline cases remain compliant with your advice process and MCOB rules prior to completion,” it added.
For commercial loan borrowers, it has added in a requirement for a minimum personal guarantee of 25 per cent of the loan amount.
Sustainable lending approach
Emma Cox, sales director for property finance at Shawbrook Bank commented: “As we are all fully aware, these are unprecedented times and at Shawbrook, we are constantly reviewing how to best support our brokers and customers.
“We have been following the impact of Covid-19 closely and have been considering Shawbrook’s response very carefully.
“Continuing to support our brokers and customers is one of our main priorities, and these changes to the commercial offering enable us to do just that.
“The product alterations ensure we safeguard the interests of our customers and maintain a sustainable approach to lending in a changing and challenging environment.”
UTB tightens mortgage criteria and offers fee-free bridging extensions
The lender has also outlined fee-free loan extensions for bridging borrowers while adding it is still open to new business on development finance projects.
The changes have come in response to the restrictions in place around the coronavirus crisis and have forced the specialist lending industry to make significant adjustments.
On its mortgage applications, UTB has reduced its maximum loan to value to 75 per cent for employed applicants and 65 per cent for self-employed.
For employed applicants, guaranteed income, such as basic earnings and car allowances, will be accepted as normal and 50 per cent of commission will be accepted, subject to the lender’s standard 18-month history and evidence.
For key workers listed by the government, regular bonus and overtime, including shift allowances, will be considered on an individual case basis, again subject to the standard 18-month history and evidence.
However regular bonus or overtime payments will now not be accepted for most other employees.
It has committed to honouring existing pipeline applications on previous products and criteria, providing the full mortgage application was submitted on or before 1 April, and a mortgage offer is issued by 14 April.
For applications outside of this time-frame, the new criteria will need to apply.
For borrowers with outstanding bridging loans the lender noted that borrowers do not make monthly payments and so would not be eligible for payment holidays.
However, it is willing to offer fee-free extensions for those whose plans for repayment of their bridging loan are affected by the Covid-19 outbreak.
A notice on the lender’s website said: “We can offer assistance to customers who have loans expiring in the next three months, before 1 July 2020, and whose circumstances are affected by the Covid-19 outbreak.
“We are able to extend your loan repayment date by a period of up to three months. In this situation we will not apply any fees, however interest will continue to accrue on your loan as it would with a payment holiday.
“If you have specific conditions due on your loan these can also be extended for up to three months,” it added.
Borrowers will need to apply for the extension and further extensions can be considered but may incur a fee.
On its development finance offering, UTB said it was still lending and that it was “keen to consider” development finance proposals and future projects.
“We continue to support UK house builders and developers.
“So far, our contingency plans are working well. Proposals are being considered and processed, credit decisions are being made and we are making payments when promised,” it added.
UTB said it understood many businesses were facing financial and logistical difficulties at the moment and urged borrowers to get in contact if they were going to be affected.
“We may be able to offer solutions to help you overcome short term financial problems or challenges caused by delays to your project,” it added.
Specialist Lending Solutions has contacted UTB for comment on the moves.