Danny Belton: Housing associations could replace the Help to Buy scheme
Help to Buy could be replaced with institutions or housing associations launching similar schemes, Danny Belton, head of lender relationships at Legal and General Mortgage Club, has suggested.
Help to Buy is currently set to end in 2020 and the government has yet to announce an extension.
Belton said: “Help to Buy has been tremendously well received. It’s added value but it’s difficult to say whether it should it should stay.
“Anything could happen. If the government stops it, we may see other institutions, or people wanting to invest in the financial market, try and put something in that space.
“And Help to Buy is different in England, Wales and Scotland so maybe housing associations could do something different for their regions. I assume the Government are weighing it up and making a decision. We’ve got a bit of time.
“The bigger issue is helping those customers remortgage from Help to Buy.
“The problem is we’re now five years down the track from when customers first took Help to Buy so now they will have to start paying interest to the government on the part they own.
“There’s limited options available to those customers and we need more. We need more lender support and education for the brokers so they can help.”
Belton suggested one solution could be new build and stressed how important it is for Legal and General.
He said: “We’ve actually enabled more lenders to come to the market with strong propositions that have the right offer time and take into account builder incentives and offer right LTVs on both houses and flats.
“We as a country are in need of more houses. The volume of properties owned outright is now greater than the number of properties with mortgages on them. The only way to change it is to build more houses.
“The government has set their own targets for new build. We won 100% of Cala Homes and we have our own factory in Sheffield for modular housing.
“It’s an important topic for us and the country. It’s all very well building all these houses but you need the lending for them too.”
He argued the two areas seeing the most growth are later life lending and specialist lending, including second charge.
Later life involves equity release and helping older borrowers that still fit the traditional mortgage continue with their interest-only type deals. And by specialist sector, he meant second charge deals and consumers with complex incomes.
He said: “Later life is a growing market, partly because of products improving, the older generation being fitter and stronger and having a desire to keep working and people realising you can use equity release for many different reasons such as home improvements.”
Belton thought second charge deals can be great for customers and brokers are just becoming more aware of them.
He said: “Second charge deals offer really good solutions for a number of customers. I see that market growing a bit but I see specialist lending in general growing.
“A lot of it is awareness and they’ve catered for this complex income environment as well as those with credit issues in the past.
“Ultimately there are certain customers such as serial debt consolidators that actually shouldn’t but there are a lot of people that just had other circumstances.
“These lenders have recognised that opportunity and awareness and have a good criteria, service and competitive rates, pretty close to high street rates.”
“In today’s market with a flat transaction levels, the view is we need to be more holistic advice and we place those deals with the right lenders. It’s a change in mindset more than anything else.”
Belton predicted Legal and General growing its volumes and adding more lenders to its panel.
Belton said: “We’re seeing the product transfer growing as well. In 2017, there was £25bn worth of product transfers being written by intermediaries and this year that could double to £50bn. A lot is down to how brokers use that market.”