Looking ahead to the mortgage industry in 2020

Miles Robinson

January 21, 2020

Miles Robinson is head of mortgages at Trussle

There’s been a lot of political and economic uncertainty in the UK in the past few years, with 40% of 18-39-year-olds saying that their property decisions have been affected by Brexit.

But, following the recent winter General Election, we’ve seen signs of stability within the housing market.

House price growth in December was the biggest in 2019.

The current conditions amid low interest rates, competitive mortgage deals, and increasing demand from would-be buyers suggest there’s potential for the housing market to prosper.

We also expect progress in the mortgage market to automate more of the mortgage process, making it quicker and more accessible for mortgage applicants.

Open Banking

This time last year, the mortgage industry was braced for Open Banking and how it would impact the speed of the mortgage process.

Although there were some movements in 2019, the integration with Open Banking has developed a lot more slowly than the industry initially anticipated.

Customer use of Open Banking in the UK has surpassed the one million customer mark for the first time, doubling in the past six months.

We expect to see further adoption across the industry this year.

Open Banking doesn’t only have the potential to make the application faster, but also support affordability assessments.

This could give applicants greater confidence that they’ll be accepted for a mortgage product and should improve the time spent processing the mortgage.

APIs

Open banking leverages APIs to help users make use of banking services through multiple online platforms.

Increasing the use of APIs amongst brokers and lenders will allow for more automation, reducing the time spent on administrative tasks throughout the mortgage process, and allow for more time to be spent delivering fast and accurate advice to customers.

Nationwide has begun piloting API technology with the aim of cutting time spent by brokers on sourcing products and submitting applications.

The APIs will mean a reduction in the amount of data that brokers are required to input.

As a result, we expect quicker decisions in principles, improving certainty for customers and reducing the chance of making mistakes in an application.

Accessibility

With house prices rising nearly seven times faster than people’s income, today, just one in four young adults will own a home, compared to two in three people 20 years ago.

However, with 35,010 new first-time buyer mortgages completed in the summer of 2019, we’re hopeful that the number of first-time buyers entering the market will continue to grow.

Boris Johnson plans to introduce a new mortgage with long-term fixed rates, requiring only a 5% deposit, to help renters buy their first homes.

The Help-to-Buy Equity scheme is also available to first-time buyers until 2023.

We hope that this will go some way to combat the withdrawal of Help to Buy ISA in November 2019.

But more needs to be done to make homeownership accessible for the younger generation.

Our research shows that 64% of 18-34 year-olds believe that homeownership schemes are too complicated to understand.

To help with this, we’ve developed a tool to help people find out which homeownership scheme they’re eligible for.

With better education around these schemes, prospective buyers will be well-equipped to understand the options available to them.

Affordability still remains an issue and with a new government in place, housing must be a priority this year.


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