Interview: Monica Bradley, Managing Director of MB Associates, comments on the impact of Covid-19 on the economy
Monica Bradley has over 30 years’ experience in the financial services sector and is the managing director of MB Associates who have provided clients with advice on mortgages and related products for over two decades. This week, she spoke exclusively to The Parliamentary Review about the challenges facing her business and the sector as a whole.
How will changes in the mortgage market impact people purchasing a property?
“New purchase transactions have virtually stopped, with the lockdown preventing potential buyers from being able to view properties, and lenders are unable to get their surveyors to physically inspect them for obvious reasons. Understandably, many potential buyers are also wary of the implications on their personal finances in the short-term so may be inclined to exercise more caution when it comes to making financial decisions.
“The current situation means that innovation has become a necessity, and some Estate Agents are offering video viewings – although this is not widespread, and almost certainly wouldn’t appeal to a great number of potential buyers. We’re also seeing some lenders allowing automated valuations of properties at higher Loan To Values than they would have previously considered.
“Buyers who have progressed past the property valuation stage appear to be well-supported by lenders who, in the main, are allowing extensions of expiry dates on mortgage offers. Purchasers and vendors appear to be getting mixed messages about whether it’s possible, or even right, to complete on transactions. Some transactions are halted, whereas others are proceeding to completion, or have completed.”
How will the changes we have seen in the mortgage market impact people re-mortgaging their property?
“Residential remortgages below 75 per cent Loan To Value seem to be broadly unaffected by Covid-19. For these applications lenders would typically perform automated valuations anyway so, short of some specialist lenders temporarily exiting the market, there doesn’t appear to be much change for most. Those who are looking to remortgage at higher Loan To Values or refinance on a Buy to Let basis are seeing a reduction of suitable products in the market, either through lenders withdrawing products, or requiring a physical inspection of the property.”
How will Covid-19 impact those those currently in the process of purchasing a property?
“A good number of purchase transactions are now on hold, awaiting a physical valuation of the property by the surveyor. However, the lending community must be applauded for its attempts in extending automated, or “desktop”, valuations where they feel there is sufficient data to give an accurate assessment. Purchasers with larger deposits have a greater chance of having their lender perform an automated valuation.”
Do you think banks are likely to make changes to lending criteria?
“It’s too early to comment. Many lenders have taken the decision to withdraw some of their higher Loan To Value products, in order to slow the volume of applications they are receiving while they deal with temporary staffing shortages.”
Do you have a general overview of the current impact on the industry?
“It will be interesting to see how lenders assess applications from customers who have seen their incomes reduce, either through being furloughed by their employers, or by having regular pay items such as overtime, bonuses or commissions reduced temporarily. A few lenders have made the decision to ignore non-guaranteed incomes, but this is certainly not widespread at the time of writing. One would hope that lenders will take a pragmatic approach and assess, where possible, pre-Covid-19 incomes where there is a track record of earnings and where it would be feasible that any previous income will become sustainable again.”