My friend emailed last night asking advice about a property she really wants to buy. She can’t see inside (due to social distancing rules/ lockdown), but she has seen a virtual tour.
She asked me what I’d do.
I said, I’d wait.
And then I wondered if I was being a fearful-fretster who’d never amount to the towering heights of the riches property investors are promised and worried some more.
Didn’t Warren Buffet say you have to be greedy when others are fearful?
So I emailed her again and said maybe I was just being too risk-averse, but obviously it was only my opinion.
She thanked me for my email and said: I need a mortgage; do you think I’d be able to get one now if the surveyor’s aren’t able to value?
I replied she should check in with the estate agents about that and how it works. And then for good measure I started to google it.
And that’s when I learned while everybody’s focus is on Covid-19, the banks are pulling their products leaving huge numbers of consumers unable to get onto a better deal.
It’s not something that’s been widely reported. I mean, who really cares that Halifax has stopped all lending above 60%, that Barclays has pulled many products and stopped buy-to-let lending, and that since 19 March 2020 three lenders have pulled their entire mortgage ranges on 80% LTV or above. It got a bit more airtime yesterday when Nationwide withdrew all its mortgages over 75% LTV. And I’m sure there’ll be more to come in the next few days and weeks.
But, still, I don’t think people really get how stuck they’re going to be when the banks have decided not to lend, unless you’ve got a chunky stash of equity. And I get it that banks are reassessing their risks and working out what to do.
But what about consumers who are trying to re-assess and re-mortgage?
What about people who are now going to be trapped into more expensive deals because the banks have suddenly decided to re-evaluate?
What about consumers who are trying to re-evaluate their lives with dropped income, lost jobs and God knows what else to come?
The Bank of England base rate was cut – in an emergency measure – to 0.1%. The lowest in its 325-year history for a reason. It was meant to help the economy, and in theory, the little people. Because – despite all the fame and glory of big businesses – it’s the little people that make up the big economy.
It’s pitiful that banks, yet again, get to change the rules overnight and consumers, yet again, get to suck it all up.