COVID-19 – How it’s affecting mortgages in the UK

By Jack Adams, CEO of We Are Mortgages

18th March 2020

 

The good news is, there have been some recent communications that have been very positive for our industry to help our customers who might end up struggling financially due to the recent COVID-19 outbreak.

But first, let’s look at this pragmatically. COVID-19 is a virus that is likely to have a big impact on our economy. It’s spreads easily and can be serious for the elderly and those with pre-existing medical conditions so we must do whatever we can to help protect those who’re most at risk.

This means businesses (potentially) closing and the country (potentially) going into lockdown. At the moment, this isn’t the case but of course it’s an ever-evolving situation that we’re watching closely and clearly, if this happens, it will negatively impact the economy.

However, there are some positives that we can take from recent communications which will help us deal such a situation!

 

Mortgage Payment Holidays

This is one of the most encouraging bits of news that came out of yesterday’s announcement by Rishi Sunak, the current Chancellor of the exchequer. Lenders have agreed a 3-month payment holiday for those that are suffering financially as a result of contracting COVID-19.

What a great step forward from lenders! They’re clearly taking the situation seriously and offering short term help for those that need it most. I can be critical of lenders at times, however this is a great offering to help.

There are many industries that will be affected by the spread of COVID-19, unfortunately it now seems inevitable, so this will really help those self employed with little or no savings, or those who’re employed on a zero-hour contracts.

You will need to check with your lender if you qualify and pre-agree the payment holiday. Please do not just cancel your direct debit. You will need to note, this is not the lender paying your mortgage for you, it’s a payment holiday and will usually be extended onto your mortgage. Make sure you find out the exact way it will work with your individual lender before you go ahead as you would want to make sure it does not affect your credit file.

 

Base Rate Reduction from 0.75% to 0.25%

This couldn’t have come at a better time! The rates have now reduced to 0.25%. This means borrowing is going to be cheap for the foreseeable future!

Prior to COVID-19 hitting the UK properly, 6 of the 8 advisers for the Monetary Policy Committee recommended to reduce the interest rates so we were already heading that way but COVID-19 helped to speed this up.

The reason behind the reduction in base rate is to make borrowing cheaper to encourage spending, which in turn keeps the economy going.

So good news for borrowers! Money is cheap!

 

Virtual Mortgage Appointments

We Are Mortgages have been offering Free Virtual Mortgage Appointments for some time now to help our customers arrange a mortgage from the comfort of their own home, whilst offering the benefit of looking at product tables, lenders calculators and cost of moving spreadsheets.

It’s one of the reasons our customers love us! It’s something unique and different and helps people who don’t want the hassle of going into an office but want to still see everything that’s going on.

It’s never seemed like a better time to speak to people about this service and offer it to anyone who would like it. If you’re interested in finding out more about this service, please get in touch for more answers.

 

Summary

So, in summary, COVID-19 isn’t going away fast but we’re dealing with it in a practical way. The government is coming up with new innovative ways to help people and so are businesses.

We will certainly do all we can to help our customers understand things better and reassure people that the mortgage industry is continuing to operate as normal.

We all need to be mindful and to help anyone who needs it, especially those who are elderly or have suffered from pre-existing medical conditions.