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01 May 2020

Thoughts on a new normal

By Craig McKinlay
New Business Director of Kensington Mortgages

Craig McKinlay, our New Business Director, gives an update for intermediaries:

As the country went into the COVID-19 lockdown, like most industries, the mortgage sector did not escape unscathed.  The market saw lenders pull their high LTV products and some specialist lenders temporarily stopped lending altogether. Physical valuations were put on hold, although over the last few weeks, we have seen an increase in the launch of alternative valuation solutions. From a consumer perspective, as at 29 April, UK Finance reported that 1.6m of them have taken advantage of a mortgage payment holiday. A glance at the overall mortgage market shows just how much it’s been impacted, with the number of available mortgage products dropping by half in just three weeks, based on analysis by Twenty7tec data.

As the market adapts to change and the ‘new normality’ that will emerge post lockdown, we are starting to see some confidence return. However, no one has a crystal ball, and until we have more facts and figures we can only speculate on what the long-term outcome will be.

From a Kensington perspective, whilst we have pulled some of our product ranges to try and safeguard consumers during this uncertain time, we are in a unique position, as we are largely funded through securitisation which means that we still have the funds available to lend. 

Unsurprisingly, remortgage demand remains high. After all, no one wants to be on a high standard variable rate when there are still plenty of affordable deals available on the market. With demand for cheaper rates still very much there, lenders are ultimately trying their best to help customers remortgage and provide accessible funding options. 

At this point, there is no reason why clients should not carry on with their remortgaging plans as before. And ultimately, financial advisers are more important than ever as a sign of reassurance and to help them through the process to find the best rate for their circumstances during this time. 

The impact on the mortgage industry has not just affected lenders and consumers, it’s been tough for intermediaries too. Where there was initial uncertainty and panic, they are now having to navigate a  new world where cases may fall through, particularly on New Builds or high LTV cases - or where a client’s circumstances have suddenly changed through loss of employment or being furloughed, which has had a knock-on effect on their income.   

For many of us who witnessed the global financial crisis of 2008, whilst the circumstances are different, the initial shock felt familiar. However, there are distinct differences; the last crisis was a financial one caused by credit drying up so there were no funds to lend. The Covid crisis and the subsequent withdrawal of mortgage products is largely as a result of the industry moving to protect consumers.  With a constantly evolving situation which has resulted in furloughs, job losses and businesses – big and small - in danger of not surviving the lockdown, this is about helping to ensure consumers don’t take on debt they may struggle to repay.  

Looking ahead, there will be changes made during the crisis which could go on to become part of the everyday mortgage process, for example an increased use of automated valuations working alongside physical ones. Many of us – including consumers and financial advisers alike – have had to quickly upskill digitally and may continue to work remotely, using digital communications more extensively post Covid as we adapt to a ‘new norm’. There’s no doubt, we are living through worrying and uncertain times - a new experience for all of us and with no pre-prepared guidebook to refer to. However, as things change and lockdown restrictions are eased we expect to see mortgage lenders relaxing their criteria as the country slowly starts to get back on track.  

Craig McKinlay has 25 years of experience working in Commercially focused roles across Financial Services, Telecomms and FMCG in the UK, Europe and Africa. He is New Business Director of Kensington Mortgages, the UK’s leading non-bank specialist mortgage lender.


The opinions expressed in this blog post are those of the author and are addressed to mortgage professionals in the Kensington network. Customers should not interpret any part of this blog post as financial advice. If you require advice on a new or existing mortgage you should contact your mortgage broker.

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