Halifax withdraws majority of mortgages
Halifax, the UK’s biggest mortgage lender, has withdrawn the majority of the mortgages it sells through brokers, including all first-time buyer loans, citing a lack of “processing resource”.
In a message sent to mortgage brokers this morning, Halifax said it would no longer offer any mortgages with a “loan-to-value” (LTV) of more than 60%. In other words, only buyers able to put down a 40% deposit will qualify for a loan.
It is understood the lender’s mortgage department is currently flooded with requests for mortgage payment holidays, which are being offered as part of the response to the coronavirus crisis, while its valuers are also unable to inspect properties.
In the note to brokers, Halifax said: “Our priority remains the wellbeing of our colleagues and customers and we’re closely monitoring the developing situation and continue to follow official guidelines.
“This has had a direct impact on our available processing resource and we have therefore withdrawn new mortgage and remortgage products across our residential range with a loan-to-value ratio of over 60%.”
Halifax said the mortgage withdrawals apply across its Halifax Intermediaries, Scottish Widows Bank and BM Solutions brands. “Customers can still apply for a mortgage directly online with Halifax and Lloyds Bank,” said a spokesperson.
The lender added that transfers and advances on existing loans will remain unchanged.
Mark Harris, chief executive of the mortgage broker SPF Private Clients, said: “This isn’t a funding crisis – the banks are awash with liquidity.
“There are two main issues. The first is a processing one – they are not all set up for staff to work from home. The big processing centres are closed and they are operating with a skeleton staff.
“There is also the issue with valuations. A lot of the big lenders will accept desktop valuations but only to a certain loan-to-value. As they can’t get a valuer out to inspect the property, it is very difficult to process a mortgage application for a higher LTV.”
Mortgage brokers said Halifax’s decision to halt much of its lending is the most serious since the credit crunch.
Andrew Montlake, managing director of broker Coreco, said: “The Halifax’s decision to stop lending above 60% LTV reflects the wholesale recalibration of risk that is unfolding in the mortgage market.”
Other lenders are likely to follow Halifax. HSBC said: “There are no current plans to change our mortgage lending approach at this stage, though clearly we will have to monitor service levels in these unprecedented times.”
A spokesperson for Nationwide said: “We continue to support the market within the constraints of the current environment. We do not plan to pull our mortgage products at this time, but certain applications may take longer to progress.”
Part of the reason for Halifax’s decision is that its staff are dealing with an unprecedented flood of requests for mortgage holidays.
Harris added: “Lenders are throwing all their resources into dealing with payment holiday requests. In the same way that people are buying food they don’t need, people are asking for payment holidays when they don’t need them. That is blocking the line for those who do.”
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