"Whenever we see rate reductions in the market, the reaction is always ‘they really can’t get any lower’, then lo and behold, they do."
FR: As a BDM in the North East, how is the market performing in the area and what are the key issues affecting intermediaries in the current climate?
One of the many reasons I was keen to join Vida Homeloans was because of its foresight to base a BDM in the North East to develop the region. The North East has historically been under serviced by specialist lenders, yet this complex and diverse market lends itself so well to the criteria-led solutions that are available. North East intermediaries are used to having to wear many hats: five miles in one direction you have an average property value of £25,000, yet five miles in the opposite direction you have purchase prices in excess of £1 million. Working in a market with such a varied demographic is very demanding. Without access to regular support and guidance from lenders that are dedicated to the region’s growth, researching the right mortgage for an applicant can be daunting. I believe one of the biggest challenges for brokers is having access to productive and informative face to face meetings with lenders where they can discuss the specialist proposition and offer ongoing support.
FR: Vida has recently launched its lowest ever mortgage rate – do you foresee rates continuing to fall or have they reached record lows?
That’s an interesting question and one that has been debated in the market for the last 18 months. Whenever we see rate reductions in the market, the reaction is always ‘they really can’t get any lower’, then lo and behold, they do. There doesn’t seem to be any more profit margin left in the mainstream mortgage world to reduce rates any further. Having said that, Vida Homeloans is not a rate-driven lender, we are criteria-driven. It’s more about understanding the specific needs of underserved customers and making sure they get the right outcomes.
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?
Maintaining an adequate level of housing supply is an ever-growing challenge. We simply aren’t building enough houses to meet customer demand and we don’t incentivise older borrowers to downsize in order to stimulate the housing chain.
I don’t think mortgages are difficult to place; in fact, if anything, there is more choice than ever before. Regulation has been great for the intermediary market. Whilst there is perceived to be far more paperwork, customers are baffled by choice and really do benefit from professional advice. There is a degree of education that still needs to take place, so that intermediaries and customers alike can see that there are mortgages available for those who may have had previous credit issues, complex incomes, or simply want to borrow into and in retirement.
If you look at this topic in relation to the North East, there are two main issues I see as a priority. Firstly, there are many individuals and families with the ambition of becoming homeowners, yet who are disillusioned, uninformed, and therefore remain in social housing. Awareness needs to grow in order to give these people the knowledge, confidence and the options that will help them realise their dream. We can do this by broadening the reach of specialist lending, and by encouraging lenders to create more roles like mine.
The other issue that needs to be tackled is the lack of cohesion at a regional level, which makes it hard to address any supply side concerns and offer effective solutions. Over the years, I have seen some exciting and innovative regeneration projects in local areas, but when they were released to the open market, it became evident that there were some serious flaws – for example, properties being deemed to be inadequate security for mortgage purposes, not due to build quality, but due to lender policy and guidelines. I would like to see builders and lenders collaborating from the start of potential developments, and also working in unison with local governments to help develop communities and effective solutions.
FR: How will Brexit and a low Base Rate continue to affect financial services in the coming months?
Brexit is still a real unknown for the market. However, it is not unusual to experience a slowdown before an election, and this is similar to what we’re seeing with Brexit. However, the fundamentals of the housing market remain the same: customers still want to own or rent a home. Despite the ongoing Brexit negotiations and the rumours of an interest rate rise, the mortgage market will remain resilient.
FR: If you could see one headline about the mortgage market in 2017, what would it be?
“Stamp duty abolished for the over 55s!” or “Specialist lending leads the way with innovative solutions for potential homeowners”.
