A Transition out of Lockdown: A (condensed) update from MFS

The 4th of July will mark the start of the second phasing of lockdown of the 2020 pandemic, meaning that we – the public – will need to change our social habits once again.

With each stage promising to return more of the ‘old ways’, the uncertainty of a second wave is at the front of many peoples mind and industry leaders speculate what this would mean for the British economy. Despite the hesitancy, there have been gains in the financial market on The Financial Time Stock Exchange (FTSE 100) and Dow Jones.

On the last day of June, PM Boris Johnson released his ambitious plan to revive the economy by promising £5billion to build homes and infrastructure to help protect the economy, supply jobs and encourage spending.

It seems that the UK will be building itself out of the pandemic.


The state of the property market

Bricks and mortar have remained a key interest and is still very much in demand with many transactions taking place over recent months. The latest figures from HMRC show that there has been a 16% increase on the April figures, with 48,450 properties being sold in May.

Whilst there has been the expected decline in the house price growth, it has been far from the expected damage that was initially feared at the start of lockdown. Halifax’s House Price Index for May brought to light a monthly drop of 0.2%, which under normal circumstances would spread concern, but after all we have endured, it does cast a positive light on the upcoming quarter.

Activity via online portals have become a popular source for potential buyers, whether it be via estate agent or online auctions.

Where does this leave us?

Future forecasts are looking progressively positive. Zoopla, for one, is anticipating a rise of 2% to 3% increase in house prices over the next quarter alone, and with many potential buyers longing to continue with their property plans, it shows that there is spark of hope ready to ignite the property market once again.

The state of the lending market

Clients depend on their lenders and it’s been a scary time for those looking for lending products.

The ever-tightening criteria and the disappearance of mortgage products has left customers feeling locked out in the cold with a snowstorm due to hit at any second. Buyers have had to prepare for the possibility of a mortgage approved in principle being taken back or face delays in the mortgage’s deployment.

Covid-19 was an event no one was prepared for and it has forced lenders to look at their lending process, to reimagine and improve, to ensure they can always be there for their clients.

Many lenders were forced to close or suspend taking on new clients, those who have remained open – like ourselves – have been focusing not only on the current but following weekly data and pulling our expertise to prepare for whatever potential changes the future may hold.

More lenders are returning to the industry but with limited stock, withdrawing 95% and 90% LTV mortgages and increased deposits requirements of up to 10%. But even by opening their doors they are restoring faith in the current climate.

Our in-house funds and bespoke bridging loans gave us a great advantage in the fight to keep the industry moving and allowed us to react quickly with little disturbance; as they’re designed to be fast and flexible. As a result, we have arranged over £30 million worth of loans since the introduction of lockdown measures.


The New Normal – What to expect

As non-essential businesses set to reopen and many employees return to the workplace, the invisible threat of a second wave feels as if it is hovering just overhead. Yet despite concerns, the government is optimistic the number of cases will remain low and allow society to reboot, with a slight upgrade as we start to take in the ‘new normal’ aspects of society.

But what will this look like? Changes in customer and societal behaviour has already altered, and there are many ways in which this can affect our industry, You can find out more here.

This second wave worry is an understandable threat. But businesses have evolved and are now prepared primed and ready.

If a rise in cases does peak, companies are equipped with experience and equipment. As a nation, we are prepared to react quickly and in abidance with lockdown rules should we need to.

To keep our clients, broker and prospective buyers in the loop, our underwriting team have drawn from their experiences to provide an update on the real estate and lending markets. The full report will provide you with a more in-depth view on the property market’s current state and the avenue of finance available during the transition out of lockdown. You can download it here.

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Speak to us on the phone, via chat or email about your case, however complex it might be. We have a friendly, dediciated team and one of our underwriters will be happy to help you with your query. We will try our best to say yes to you, instead of finding a reason to say no.

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