Do You Think Banks Tightening Mortgage Criteria Is Short Term Until Covid Is Over?

A lot of Mortgages are getting declined and it is normal during this pandemic

Banks when things are tough, will tighten the criteria when house prices are up they relax the criteria. It is natural for the mortgage to tighten now because if COVID and recession.

Do you think banks tightening mortgage criteria short term until Covid is over? I think there's two things banks normally know as a mortgage lender and you know to run a mortgage company back in Australia on the day 20 odd years ago. When things got tough we would tighten our criteria, when things got you know when house prices were going up and our risk was less we'd lose some criteria. So you can say well that's because of Covid yes definitely but I think the other side is we're in a recession so they're naturally going to tighten and they're naturally going to be checking and I think one of the things you check and we've already heard this is that if you're working in hospitality or any of those sort of things which are getting hit directly then you know your job may not be secure and so they're making it harder and harder for you to get a mortgage.

It's about job security, it's about income, it's about you know tenure and all these sort of things you know that I talk about the three Ps the Property, the Person and the Proposition and they're really looking at all three now. What you're actually offering in the mortgage application in minute detail which you know for me I think actually be really nice if they actually open the lending up a bit. Allowing this stuff to happen because that will keep the wheels flowing and stimulate the economy and especially if that was in the new build field you know a big one for new build.

Obviously because that's you know one of my main businesses that's what it does but I love the stimulus effect that it has on the economy. You know if you want to get an economy out of recession you build more properties you know and in this case residential construction you know can lead you out of that because that money gets to the base level. To the plumbers and to the you know the carpenters and all those sort of guys the tile is the you know whatever and then they go and spend it in the community as opposed to putting it in top down and it gets the top and then that pays to buy the shares back and all that sort of crap. Which we saw in the US and it didn't work.

Do i think that they are tightening yeah I think they'll tighten it and I think as things get better they'll loosen it as they establish a criteria. The other thing with I'll say with the mortgage side is this yeah right now they've come through a busy period where they've had so they've come from a slow period and so they might have only had let's say say a company had 20 underwriters all right or 50 underwriters whatever it is okay and they've been doing I don't know two mortgages a day yeah and all of a sudden now they get so that's 100 mortgages a day they can handle that's capacity and all of a sudden they get 500 mortgages a day.

What's going to happen all of a sudden they're going to start going right rather than judging here which is our criteria we're now going to we've only got the funds to give out this many mortgages we've only got the ability to do that many mortgages so the rest of them get rid of them. And I think that's what we're seeing is a lot of the mortgages are getting declined, they're having to jump through more hoops, they're having to do all this sort of stuff and that's natural. I think what will happen is a lot of that lag where people have applied and perhaps jumping through hoops that'll come over and that will probably tide us through the winter months.

We'll see I mean but obviously they're going to have a willing buyer and a willing seller who we're prepared to wait for that long and especially if people are looking to move in. And one of the other complex cities in the whole thing is the government now has put a six months eviction of sorry well they put a six-month eviction ban in but they've also put a six-month notice in for a no-fault thing which means you can't if you want to sell your property you have to give six months notice. So what do you give six months notice and this is the other thing and I should be talking about this in the lettings thing and in fact we'll leave at the lettings I'll explain it because I'm going to go through that.