Further Advance borrowing stopped... why?

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I've got builders booked in August to start house extension. I need to borrow a further advance to do this. Affordability not an issue.. went through it all with building society at beginning of the year but decided not to go ahead at that time and do it closer to build time (kicking myself for that now!)
My mortgage provider/building society have stopped doing further advances due to covid. Is this because they have furloughed staff so have no one to process the applications, or because they are struggling financially?

I've asked them, they just tell me nothing and they don't have any idea when they will start lending again.

I don't know whether to cancel my builders as don't want them to miss booking other work if I can't get the money for my build... or do you think once people are back working over the next month they will start lending again?

If I cancel I'll have to wait until summer next year when my mortgage product finishes and move the whole lot. Can't move mortgage before then due to massive release fee.

Everything I guess is unknown at this point. They could have stopped lending temporarily due to unforseen circumstances.

If people aren’t working, the lender doesn’t know if people can make the repayment.

why would you a person borrow more money when you’re unsure if it can be repaid.

Why would you let a person borrow money if you don’t know they can repay it. There are higher chances it won’t be able to repaid due to the pandemic.

Both DH and I are in very secure jobs police and teacher , both been employed full time at same place over 10 years so job security isn't an issue for us. This isn't the reason, they are doing blanket ban , no further borrowing for anyone.

They can’t discrimate and offer money and funds to those that say they’re job is secure. It’s not fair or treating all customers fairly. It’s also not responsible lending.
It’s a business decision. Lenders do not have to explain them.

It's a further advance - they haven't already agreed to advance it and it's up to them whether they do or not.

It might be because of staffing but obviously the economic environment is very different now from how it was before CV. They also don't know what's going to happen with house prices so they will be reluctant to lend when the underlying security could be worth less in the near futures and not meet their lending risk policy criteria.

And there are probably lots of people borrowing money because they're having financial issues or anticipating financial issues, and/or might be worried about losing their jobs so they want to get in there while the statements they're making are still true. Not saying you're doing that, OP, but I'm sure you can see why a lender might be concerned about anyone asking to borrow money atm.

If you have no prospect of paying the builders without this advance and the bank says it won't give it to you, it makes sense to stand the builders down as they likely have families to feed too and will be counting on the payment from the booking.

I don't think you read the op. I was asking if anyone knows the actual reason why they've stopped lending so that I can make a judgment call.

If it's due to;

1. Furloughed staff (so cant process the applications... if this is why then I will hold on as staff are likely to be back working and processing applications again before I have the build scheduled)

Or

2. Wider financial issues re lending anyone money (which obviously aren't going to change quickly and therefore I need to cancel the build).

Your first comments seem to suggest that they won't lend if they don't know that they will get their money back from... I was replying explaining that if they are assessing on people circumstances, I can evidence to them that my circumstances are very secure. But this is not the reason they are not lending. It's a blanket ban.

Can anyone who works in the finance sector offer any advice based on their professional knowledge of what is happening in the industry please?

Seems very unreasonable of them not to explain their position.
I hope you get some sensible answers to try and determine what's happening in the industry.

Financial institutions are dealing with a huge surge in requests for payment holidays on a range of products, applications from a huge number of business, commercial and corporate clients for the variety of government schemes.

Most people don't try to use the bank services at the same time but at the moment all resources are being used to breaking point.

Imagine it like this...... your local branch; every customer that it serves trying to call it on the phone and and queuing up outside to use it. All at 9am on a Monday morning.

It won't be resourced to deal with every customer at once because but has never had to deal with every customer at once.

On a normal day it takes 3,000 calls, lockdown day 25,000 calls.

OP this has happened to a friend of mine. Both secure jobs, low mortgage etc etc. Tried to borrow £10k to finish off their house renovation and told by their bank they wouldn't be able to borrow more due to market uncertainty.

It's a bit of a worry as we were intending to do the same in the summer to get our kitchen extended and we've got an even lower mortgage and far more equity in our house.

They can’t discrimate and offer money and funds to those that say they’re job is secure. It’s not fair or treating all customers fairly. It’s also not responsible lending.

Of course they can. They discriminate all the time, based on what people do, how secure their job is, how much they earn, and other matters. That's how they decide who to lend money to!

It's not as simple as 'is it reason A or reason B', OP. There are many different factors at play and individual lenders will take a position based on their lending portfolio, risk appetite, ongoing financial analysis, policies, shareholders, etc. It's not going to be the same for all of them as each has its own pressures and priorities. The market uncertainly means that there is greater risk that the secured property will drop in price which alters the risk the bank is taking (because there would be less of a buffer between the property value and the loan amount). It's not just about creditworthiness and job security.

I think today's govt dally briefing on house moves and new builds will help to ease things a bit as many people trying to move house have effectively been stuck in a holding pattern, whereas now they've been given the green light to press on. That should gradually ease some of the uncertainty and financial pressure movers have been experiencing (which obviously has an impact on their lenders). It will likely also help with getting physical valuations happening again, which might have been a factor in your bank's decision if they needed to carry one out before advancing further funds. So your bank's position may well alter if you give it a bit of time. Of course, it might not as there is so much uncertainty atm.

Looking at the positives, if you don't get to draw down this further advance now, that might work in your favour next year when you come to remortgage because if there are still fewer banks iending then, mortgage rates will likely go up as a result of less competition in the market. If that happens then needing to borrow a lower amount (or at least having that option if you can postpone your building work longer) might give you more flexibility in terms of choosing a new lender with a half decent rate.

Thank you , these replies are helpful and make things clearer. I think out of fairness to the builder we will tell them what's happened so if they get opportunity of other work they can take it. If we can get the advance this summer and they're still available then great, if they're not, then we'll wait until next year.. it's first world problems and all that (that I might have to wait i mean... not mass financial instability! )

That's sounds sensible. And also, if you do end up getting the loan and your chosen builders are otherwise engaged by then, I'm sure there won't be a shortage of decent builders who are only too happy to take on the work!

You can apply for a 2nd charge mortgage from another lender.

In the absence of surveys, banks are limiting advances to 60% LTV in some cases.
In addition, as PP have mentioned, the applications for payment holidays have been overwhelming.
So priorities have moved from new business to managing risk in the existing portfolio...

We started the process of applying for a Further Advance before lockdown and the application is still continuing on the basis we a lot of equity in our property so the LTV is 22%. I think if it wasn't above 60% the plug would've been pulled on it.

Stage lending is done when the work done has been valued - RICS advised their members to not carry out surveys. Without a survey the bank cannot be given the value and therefore won't know what the risk or LTV is.

So it is neither a lack of staff or financial issues.

Unescorted Our mortgage provider is doing a desktop valuation so it's not a barrier to ours going through, but obviously I don't know about others.

Is your house a self build, a turn key or a resale?

We're with West Brom and they're just not doing any further advances at the minute full stop.

Which is fine but they haven't updated their website to say this so I have to contact them every week to see if there has been a change yet, they always say no change and they don't know when they will start again but it could be any time 🤷🏻‍♀️ but they've been saying that for a month. I just wish they'd update their website.

I've contacted the builder out of fairness. I've told them we still want the build and as soon as the building society start lending again we'll be ready, but I don't know when that will be, so don't turn down work on our account, if we have to wait longer for them to start the build that is fine.