Lenders overhaul product offerings amid mortgage market upheaval

Banks are making sweeping changes to their product offerings as they grapple with restrictions on movement and unprecedented call volumes.

The spread of Covid-19 means many valuers can not visit properties in person, leaving banks either largely reliant on desktop valuations or unwilling to take on new purchase business.

Meanwhile lenders continue to face unprecedented call volumes in the wake of two bank of England emergency rate cuts, the introduction of three month mortgage holidays and the lockdown of many international based processing centres.

As a result of the upheaval, banks are making daily changes to their product offerings, often introducing caps on loan-to-value ratios or loan sizes. In fact, a study by lending technology company Mortgage Brain found that last week, banks made 43% more product changes when compared to the week before.

While the situation is fluid, borrowers can’t expect lenders to behave in the way they may have a month ago, according to Hina Bhudia, partner at Knight Frank Finance.

“With so many product tweaks, it’s important to keep track of offers from moment to moment, whether that’s for home purchase, buy-to-let or refinance,” Bhudia says. “We’re finding lenders may pull back one day, reigning in their maximum loan size, only to revert again later, so it’s worth checking in to see what’s possible.”

The outbreak of Covid-19 has also led to a spike in demand for personal insurance products as volatility in financial markets tests the balance sheets of the world’s biggest insurers.

The pandemic has prompted as much as a 30% increase in customers seeking protection, estimates James Jones, Head of Insurance at Knight Frank Finance. Insurers are now questioning applicants as to whether they have travelled to high risk locations, whether they’ve had symptoms, or whether they’ve been tested.

“People have become more motivated to have protection in place amid the outbreak, however getting cover has become trickier given the changes insurers are making to their underwriting procedure” says Jones. “Many of our clients are wanting to be covered against loss of income in the event of catching the illness, but without guidance it’s very difficult to be sure which policies will cover against Covid-19 and which policies will remain available, as insurers reduce their underwriting capability with so many staff unable to work from home.”

Across the insurance industry, insurers are slowly increasing premiums due to the health risks posed by the virus but also in an attempt to offset volatility in financial markets.

For information on how insurers are operating amid the pandemic, Protection Guru is a useful resource, though aimed at insurance professionals. You can also speak to our insurance experts at Knight Frank Finance. Just call us or email us.