Online mortgage broker Trussle has revealed that mortgage enquiries fell by 37% from March to April, just as the UK’s lockdown measures came into full effect.
In contrast, Trussle has seen a 110% year-on-year increase of remortgage applications.
The coronavirus pandemic also seems to be disproportionately affecting first time buyers, with mortgage applications down by 35% year-on-year during April and a 53% decrease in submissions between March and April 2020.
Since the coronavirus lockdown came into effect, some 7.5 million workers have been furloughed. Trussle has seen applications by furloughed workers being handled by lenders on a case by case basis.
The furlough scheme is also impacting mortgage applicants across the wealth spectrum. High earning furloughed workers are experiencing their own difficulties when trying to secure a mortgage. For this bracket of home buyers, the scheme’s cap of £2,500 per month has meant some of their salary is instantly discounted by lenders, meaning more expensive homes might be off limits until they are able to return to work.
Miles Robinson, head of mortgages at Trussle, said: “As the coronavirus crisis continues to impact people’s livelihoods, those who have been furloughed are naturally likely to be concerned about their mortgage applications.
During these difficult times, many lenders will only consider 80% of a furloughed customer’s income in affordability calculations, provided that the applicant has confirmation that they’ll be going back to work. As there’s a monthly cap of 80% of salary paid up to £2,500 for furloughed workers, people earning more than this will be impacted more significantly. Many lenders are also hesitant to consider overtime and bonuses at this point in time as it is certainly not guaranteed income”
While other lenders won’t accept furloughed customers at all, we’ve seen flexibility from those who are accepting customers on furlough and we’ve helped a number of customers in this position to secure mortgages. The criteria has been changing frequently during these times, so anyone who has been furloughed should seek professional mortgage advice.”
