Bank of England mortgage approvals (February)

Over the past month or two, lenders have become much more comfortable at higher loan-to-values. Underlining the growing confidence among lenders, this has happened before April when the 95% loan-to-value Government-backed scheme begins. We have seen four lenders return to 95% lending without using the scheme, although none are lending beyond £500,000. More 90% loan-to-value-products have also been introduced by lenders in recent weeks, many with more competitive rates than before. The tougher criteria on many 90% loan-to-value loans, such as a maximum term of 25 years, not lending to self-employed people or on flats and new builds, have also been lifted. Today, there are 90% LTV rates available such as a 2-year fixed rate at 3.05% with a £399 fee. At the start of the latest national lockdown, rates were much higher. At the moment, the self-employed and furloughed applicants are still the hardest hit, with lenders applying the biggest restrictions and scrutiny to them. The majority of lenders will ask any self-employed applicant for their most recent business bank statements to ensure that trading levels are in line and consistent with previous years' tax returns and income. The majority of lenders will not take any applicant's income into account if there is even an element of furloughed income. There are some exceptions, for example if a return to work date and return to full pay have been confirmed by the employer.

There is a lot of confidence in the housing market right now. Due to the extension of the Stamp Duty relief scheme and the success of the vaccination programme, more and more people see now as a great time to move. Crucially, there are more higher loan-to-value products in the market, a sign that lenders are making tentative steps to their pre-Covid offerings. We have seen an influx of clients looking to buy second properties outside London. Most have been looking at areas such as the Cotswolds and New Forest, where they can have a holiday retreat or even their primary residence going forward if they are predominantly working from home. We have even seen some clients looking further abroad, such as the South of France. For wealthy clients, they see a lot of opportunity as the cost of borrowing is extremely low if you have a sizeable deposit.