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Affordability woes for homebuyers as Covid continues

Broker searches for ‘Covid-19: temporary maximum LTV restrictions’ remain in the top five results for the sixth consecutive month, data from Knowledge Bank has revealed.

The pandemic has become a consistent topic in the housing market, as people prepare to live with Covid-19 long-term.

Brokers kept ‘maximum age at end of term’ in the top spot for the second month in the residential market, which could be indicative of borrowers trying to stretch the term to keep their payments as low as possible in the short-term.

‘Income multiple used for affordability assessment’ and ‘self-employed – 1 years accounts’ also appeared in the top five.

According to Knowledge Bank, people are ‘clearly struggling’ with affordability and, as a result, are reassessing their income as they desperately search for a way to get onto the housing ladder.

This is underpinned by the top spot in the bridging market being ‘maximum LTV’, while ‘maximum LTV/loan to value’ appeared in first place in the second charge market.

The struggle in the residential market is juxtaposed with huge confidence in the buy-to-let market, with ‘first time landlord’ taking the top spot.

As people progressively worry about affordability in the residential market, homebuyers may be exploring alternative options to get a foot on the ladder and, perhaps as a result, there are new landlords coming to the market.

What’s more, searches for ‘property with annex/outbuildings/land/acreage’ took first place in the equity release market – a trend that has undoubtedly been boosted by coronavirus impacting buyer habits.

Matthew Corker, lender relationship manager at Knowledge Bank, comments: “The bottom line here is that people are desperately looking to get onto the property ladder.”

“While there is much news about lenders returning to the market and introducing new products, we are already seeing signs that some products may be pulled in light of the second national lockdown as lender appetite for risk is reduced.”

He concludes: “The unknown impact of a second national lockdown on employment and the wider economy is causing panic in the housing market and this is putting buyers under an increasing amount of stress.”

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