As we’ve written in several articles the property market has been feeling the brunt of the Coronavirus & subsequent lockdown. There was a period where the market ground almost to a complete holt, at least the traditional open market anyways, but we’re over that and since have reported a spike in interest with Rightmove quite recently reporting some of their busiest days.
There’s an issue however, most buyers need a mortgage in order to purchase properties, which presents a little bit of a problem.
Mortgage companies for a while froze new mortgage applications, with the uncertainty on how the virus may have affected people’s ability to pay & having to grant mortgage holidays to those who where struggling to keep up with payments.
Despite positive news with a massive spike in traffic and viewings for the property industry, the sale are still going to be a struggle as the figures show that the mortgage approvals have completely tumbled in recent months. Back in February 2020, which feels like a long time ago, before all this started, mortgage approvals sat at around 73.67k in that month. Queue Coronavirus and the slow down began to become evident, in March figures of 56.13k where posted, followed by 15.85k in April.
Recently the figures for May got published, and it’s a bit of a concerning read, with mortgage approvals dropping as low as 9.3K, but what does this mean? Well, there’s not quite been the surge in mortgage approvals to match the ambition of house buyers, as lenders have little appetite to let funds go.
Although buyers seem motivated with viewing properties, it likely means that they aren’t easily going to be in a position to bid on them. Mortgage companies have firmed up who they are granting mortgage too, and there rejecting a lot of people they previously wouldn’t have. This could mean it’s harder to sell your property.
Perhaps the more concerning thing is a lot of mortgage providers are still offering agreement in principles, meaning people are still bidding on properties only to find out later down the line that they can’t get a mortgage. This will mean that there is a large increase in chain breaks, and that buyers potentially spend money on solicitors only to be let down at the final hurdle. In fact, according to an article in the FT Advisor, half of buyers are denied a mortgage despite having an agreement in principle.
This challenging time presents issues for both buyers and sellers, nobody wants a property chain to fall through, it’s frustrating, time consuming and costly. It might be time to look for alternatives to the open market & secure that cash buyer!