Why are some lenders requiring a higher deposit
So you've all probably seen the news in relation to lenders requiring higher deposits during the pandemic. I will try my best to answer why here ...
Why are lenders asking for a higher deposit?
Ok so I've seen a couple of articles online stating that banks are requiring much higher deposits in order to lend.
I've had a chat with Lee from JLM Financial Services in Gorseinon to find out the reasons why this has happened and to find out if it should be something to worry about.
He explained that the lenders haven't stoped lending but they have had to offer restricted lending. This is not because of uncertainty in the housing market, but to do with the current government guidelines that have been put in place, which state that valuers are unable to carry out valuations or surveys in peoples homes during the stay at home period.
From the lenders point of view there is too much risk involved to offer a mortgage at a 95% - 90% loan to value without a valuer going to the property. They are however able to carry out a desktop valuation where the borrower has enough equity or deposit to enable them to take that risk.
The lenders are also very busy dealing with their current customers who maybe experiencing financial difficulty due to the coronavirus outbreak. So have less staff available to deal with new applications.
From a buyers point of view, applications which have already had their valuation and gone to offer will be upheld. For new applications for the time being at least a greater deposit may very well be needed. With the exception of one or two lenders.
Now I know this sounds a bit worrying but the way I see it, clients are unable to visit properties to view at the moment anyway, so the amount of buyers affected will be lower. I am sure that once the stay at home guidelines are lifted and valuers are able to attend these properties to carry out valuations, normal deposit amounts will be required and things will go back to normal.
So please do not panic, not much is going to happen between then and now anyway in the way of new buyers and offers. Personally I don't think this will cause any major issues in the long run. Let's all stay positive and stay safe at home
If you have any further questions or would like to speak with Lee regarding a new mortgage application or one you are currently progressing with then please don't hesitate to get in touch and we will do our very best to help.
Keep safe xx