"Self-employed borrowers are still not getting enough support from the financial services sector. However, I don’t know if I blame the industry or the regulator for this."
We spoke to John Phillips, group operations director at Just Mortgages and Spicerhaart, about self-employed borrowers and talk of more lenders coming to the market in the next 12 to 18 months.
FR: It’s been 18 months since we last spoke to you for a Spotlight interview – what do you think have been the biggest changes in the market since then, and what’s new for Just Mortgages?
Due to increasing competition between lenders, the number of mortgage products available to homebuyers soared to an eight-year high in January, and the low interest rate environment is giving customers even more choice.
In terms of Just Mortgages, overall business and profits were both up 14% in 2016. In addition, in its first year, our client servicing division produced just under £400,000 of income and the whole business has become a lot more holistic, as we continue to focus on turning customers into clients. Due to increased brand awareness we have a steady flow of quality people that want to join us. In fact, in February alone, we received over 1,100 CVs which shows how far we have come since we last spoke in 2015.
FR: Last year Just Mortgages launched its self-employed division – do you think self-employed borrowers are getting more support from the financial services industry, and what more should be done to help them gain access to finance?
It is clear that self-employed borrowers are still not getting enough support from the financial services sector. However, I don’t know if I blame the industry or the regulator for this because the FCA makes it very difficult for lenders to do anything particularly innovative or new for the self-employed. In reality, I don’t see anything on the horizon that is going to make any difference to that.
FR: Do you foresee the supply and demand issue getting worse? What more can be done to ensure that people continue to have access to the mortgage market?
Although mortgage approvals dipped during February, there has been talk of more lenders coming to the market in the next 12 to 18 months, and let’s not forget that existing lenders have money to lend. This is good news for Joe Public.
However, it is evident that more needs to be done to ensure people continue to have access to the mortgage market, including the self-employed, older borrowers and those on zero-hours contracts. Self-employed people are essential for job growth and productivity and, as the level of self-employment in the UK continues to rise, lenders need the regulator to allow them to be more flexible when catering for these people.
FR: What positives and what shortfalls have you seen in the Government’s recent Housing White Paper?
Reading the headlines and soundbites that emerged after the white paper was published highlighted how nothing particularly positive came out of it. It of course stated that there just isn’t enough homes in the UK and we are miles behind the government’s housebuilding target. So until the government comes up with a strategic and realistic plan to deal with the volume of homes being built, nothing will change.
FR: What are the biggest issues facing the mortgage market in the current economic environment, and what should advisers be aware of when dealing with both lenders and clients?
One the biggest issues facing the mortgage market is the confidence of the purchaser, with a quarter of UK youngsters thinking they will never own a home. The market itself is clearly fragile but there is still interest there and the economy has weathered the storm of Brexit uncertainty better than first expected, with GDP growing at 2% last year. However, despite this resilience, if the economy were to take a turn for the worse it could result in a domino effect, with some buyers pulling out of deals at the last minute.
FR: If you could see one headline about the housing market in 2017, what would it be?
The government has announced a strategy that explains exactly how we are going to solve the housing crisis by building enough homes in the UK to deal with the low housing supply and increasing demand.