We need to start focusing on what really makes a difference to people, focusing on a frictionless journey to homeownership.
Kevin Roberts is director of Legal & General Mortgage Club
Our annual Mortgage Club Conference, provided over 200 advisers the opportunity to discuss a number of topical issues in the mortgage market and hear the views and predictions of some of the industry’s leading figures including Jackie Bennett, director of mortgages, UK Finance and Mike Jones, managing director, intermediaries & specialist brand, Lloyds Banking Group.
The sessions covered topics ranging from increasing property transactions, lending through the generations to working as industry to help deliver the frictionless mortgage journey.
So, what were the key takeaways for advisers?
Increasing housing transactions
There simply aren’t enough decent affordable homes available to buy on the housing market. Potential movers are waiting to put their homes on the market which is resulting in the stagnation we are seeing. As a consequence, many homeowners are opting to ‘improve, not move’.
Not only do we need more of the right kind of housing built in the appropriate areas, but we also need to see greater incentives to encourage people to move.
We need to create a system where homeowners looking to move up the ladder have somewhere to move to, freeing up properties for first-time buyers, typically looking for smaller properties.
The Budget was a step in the right direction as the government clearly recognises some of these challenges, with an extension of the Help to Buy scheme confirmed for first-time buyers until 2023 and stamp duty exemption to shared ownership properties of up to £500,000.
However, what about the country’s last-time buyers, looking to downsize to better suited properties? If we are to stimulate the market for good, we need to look at incentives that will make a difference to all types of potential buyers.
Lending through the generations
Over the last few years, we’ve seen a significant rise in the average age of first-time buyers due to the amount of time and money required to save for a deposit, especially in London and the South East.
In response to this we’ve seen increased innovation and flexibility from lenders, with more 95% LTVs back in the market. Whilst we can also expect to see more intergenerational lending with the Bank of Mum and Dad and perhaps even equity release playing a part, saving for a deposit is still the greatest barrier to homeownership.
Help to Buy and Shared Ownership have helped to plug this issue, and going forward will continue to play a role, however it will be interesting to see if Generation Rent will choose to stay Gen Rent instead of buying.
Specialist lending
With more customers struggling to meet the lending criteria of the traditional high street banks, specialist lending has become one of the fastest growing sectors in the mortgage industry.
Some advisers, however, have remained cautious of specialist lending, not wanting to deal with complex customers, believing the case will take longer, or for fear of having to transact with unfamiliar lenders.
Specialist lending though, presents a fantastic opportunity for advisers to engage with a growing pool of customers with unique needs and circumstances which the high street can’t always find a solution for.
Delivering the frictionless mortgage
The mortgage journey has traditionally been a long and tedious process for many borrowers and at Legal & General Mortgage Club we envisage a future where the intermediated mortgage process moves from days and weeks, to just hours.
As an industry we have a duty to overhaul the current outdated process and work together to make the frictionless mortgage journey a reality for customers, as well as helping advisers realise the important role fintech can play in futureproofing their businesses.
If we don’t act together as an industry to improve efficiency and customer experience, outside disruptors might move in and do it for us. To create a more efficient home-buying process, we need to start focusing on what really makes a difference to people, focusing on a frictionless journey to homeownership.
Education, education, education
In such a fast-moving environment, education is key, and we’re currently working on our 2019 program which aims to be bigger and better than ever. It’s vital that advisers take the time to keep up to speed with market changes and increase their knowledge of different areas of the mortgage market.
In doing so, advisers will be able to share their knowledge with their clients and deliver the best possible outcomes for their circumstances.
