UK banks and real estate companies are in talks with the government over the suspension of the housing market, as the coronavirus pandemic affects their ability to offer new mortgages and valuable properties.
UK Finance, the industry body, has written to lenders asking it to “urgently clarify” the future of the market, which is struggling to operate in extremely difficult conditions.
“UK Finance has asked the government for urgent clarification on whether home purchases should continue at the moment, especially since property appraisals are no longer possible,” he said. declared to lenders.
UK Finance declined to comment.
The note indicates that the government has now indicated that “home buyers and tenants should, as much as possible, delay moving to a new home while emergency measures are in place to control the coronavirus.”
The Ministry of Housing, Communities and Local Government had not responded to a request for comment at the time of publication.
A number of banks and specialist lenders have already withdrawn new mortgages to focus on existing customers and reduce the pressure on understaffed call centers.
Lloyds Banking Group and Barclays, two of the UK’s largest lenders, are temporarily withdrawing from many of their mortgages. Lloyds has stopped offering mortgages or mortgages through brokers, unless the client has a deposit of at least 40% of the value of the property.
Barclays told brokers that it would no longer offer mortgages to clients who had no deposit of at least 40%, but that it would continue to offer remortgaging offers.
David Hollingworth, director of broker L&C Mortgages, said lenders are trying to reduce the flow of new business as they process tens of thousands of mortgage late payment requests.
“The purchasing market will effectively go into cold storage,” he said. “You are simply not able to go out and buy a house even if the seller wanted you to come.”
The industry is also looking to extend the time available to borrowers to complete a transaction after receiving a mortgage offer, in order to prevent transactions already in progress from failing, two people informed of the discussions.
Mortgage offers are generally valid for at least three months, but lenders seek to provide a three-month extension.
A banking executive said lenders wanted flexibility, but warned that “it presents legal challenges – what if a seller changes their mind in the next three months?”