Will it be tougher to get a mortgage?

The Bank of England has been informed by mortgage providers that the chances of getting a new home will drop significantly in the upcoming months. The news comes from fewer mortgage products being offered meaning only a select few individuals would fulfil the criteria if they were to pursue the endeavour.

Due to the financial strain that the coronavirus pandemic has had on the economy, lenders are more cautious offering their products to Britons. With the government income support slowing down as well, there is a growing concern over a rising unemployment rate which would affect mortgage payments.

From all of these circumstances lenders are hesitant to dish out deals to the public as they can’t afford people defaulting on their payments. Additionally there are signs that the property market in the UK is falling despite all of the schemes in place to counteract it.

With less mortgage products available for the public, the ones that are being offered are offering a smaller deposit. Sources indicate that there is only one deal that offers a two year fixed rate with a 5 percent deposit. Before the crisis there were 137 products offering a similar deal. While there are still many products offering higher deposit deals, there is a long way to go before the mortgage market returns to normal.

Mortgages aren’t the only things being affected during the pandemic. Loan providers are also telling banks that they are less likely to hand out approvals despite the high demand.

While the beginning of the lockdown created a lot of hesitancy on the market, many providers were optimistic that it would recover quickly. However due to the trends we are seeing from numerous providers and the banks, it is unlikely for the lending industry to return to normal any time soon.