The move from reactive to proactive
Craig Calder is director of mortgages at Barclays
The concept of time hasn’t always been the easiest to comprehend over the past three months or so. In some ways it has flown by, in other ways these three months have seemed like three years.
The speed of change in the mortgage market has been non-stop over this period, although a sense of stability is slowly returning to the lending community.
We are now entering a time when lenders can be a little more proactive from a product perspective, rather than purely reactive as was the case when market, economic and health conditions were shifting on a daily, sometimes hourly, basis.
So, let’s start looking ahead, and nothing screams looking ahead more than a long-term fix. The phrase ‘long-term’ can mean many different things to many different people.
Some may have a one-year plan, some a three-year plan, some a ten-year plan and beyond. Fast forward 10 years from today and it’s difficult to imagine exactly what the mortgage market landscape will look like.
Although if a recent article in WIRED which ‘forecast’ space colonies, a mega-expansion in genome sequencing and tiny nuclear power plants in 2030 is anything to go by then I’d rather not think about it too much.
It also leads to the question – was the mortgage market so different back in 2010?
In terms of volume and product type, the answer is not massively but the past few months have demonstrated just how quickly the world can change, and this has resulted in homeowners and potential homebuyers evaluating their property-related futures.
Post-lockdown, it’s inevitable that habits, outlooks, priorities and material needs will change. The importance attached to a home has been cemented and modifications to the way we work and live means that more people have a firmer idea of what they need from their present and future home. This could involve moving or improving, basically whatever it takes to incorporate that home office or a bar at the end of the garden.
It’s also fair to say that a greater number of people are looking further ahead when it comes to general financial planning as they seek to establish some form of longer-term security over their regular outgoings.
As such, here at Barclays, we are experiencing stronger appetite for longer-term fixed rate deals and have just tweaked our offering accordingly to become the first lender to offer a sub 2% 10-year fix in 2020 after being the first to launch a sub 3% deal in January 2015. Milestones which outline our ongoing commitment to this product type.
Despite the 10-year fix being around the UK mortgage market for quite some time, we understand that this remains something of a niche product. It is not a product type which is appropriate for everyone but it represents an increasing viable option for those where recent events have made them really appreciate their home, the future it offers and who are happy to lock in an extra sense of security when it comes to their mortgage outgoings.
Not to mention that such a deal also works to negate the financial impact of having to remortgage every two to three years and the related costs involved.
It’s also prudent to point out that such a deal can signify the beginning of a number of income generating possibilities for intermediaries, not the end. Especially around ancillary products such as insurance, pensions and investments thanks to the increased security over their mortgage repayments.
Let’s not kid ourselves that two and three-year product terms won’t continue to dominate the mortgage market for years to come.
However, it’s evident in any time of uncertainty that borrowers, and the intermediary market, need additional options and security where possible. And the time could now be right to help the right clients assess a variety of financial commitments through new eyes and lock into their mortgage deal for longer.