"it’s important for brokers to bear in mind that lenders will approach shared ownership cases in drastically different ways"
In cash terms, that’s an increase of £24,000 to a new record high of £278,000. Given the challenges of the last couple of years - and indeed the testing times ahead - it’s little wonder that purchasing a first home is such a challenge.
Thankfully there are schemes in place designed to give would-be homeowners a helping hand, such as the shared ownership scheme. And the latest data suggests it is set to play a bigger role in the UK housing market.
Delivering more homes
Government figures show that there has been a marked increase in the delivery of shared ownership properties in recent years. Back in 2015/16 a little over 4,000 shared ownership properties were completed, but this jumped to a peak of around 18,220 in 2019/20. While this dropped slightly during the pandemic, the fall was relatively small to 17,100 in 2020/21.
This growth in supply is really positive for the sector, and for the housing market as a whole. The more shared ownership housing we have available, the more options would-be first- and second-time buyers have to choose from.
As we all know, supply of all kinds of property are at record lows currently, with demand continuing to rise from potential buyers across the market. There are no doubt plenty of buyers who would be delighted to purchase on a shared ownership basis; the challenge is making sure there are enough properties to meet that demand.
Providing more mortgage options
It’s not just the number of potential shared ownership homes that has been on the rise. Recent years have also seen a steady improvement in the number of lenders active in this space.
There was a time when shared ownership was almost the sole preserve of building societies, and while mutuals retain a strong presence in the market, it’s also true that other lenders have spotted the demand for these forms of home loan and launched their own deals.
This has been a tremendous development for brokers and their clients. The heightened level of competition has forced lenders to be more considered in their product design, to find ways for their shared ownership products to stand out from the crowd.
Obviously price plays a big part here, but criteria is just as important. The influx of new lenders has pushed all of us to be more innovative in the ways we operate.
Dealing in the details
However, it’s important for brokers to bear in mind that lenders will approach shared ownership cases in drastically different ways.
We know from our conversations with intermediaries in the past that there will be times when lenders adopt a stringent, almost tickbox-like attitude towards shared ownership applicants. In these cases, if there is even the slightest hint of some sort of complexity involved - for example if the borrower is still in the probationary period at work or has an incomplete credit history - that will be enough for them to dismiss the application out of hand.
Our perspective at Mansfield Building Society is rather different. We believe in a more personal approach; each and every case is manually underwritten by our team of experienced and knowledgeable underwriters. It means they are able to get a far more comprehensive understanding of the applicant and the case, getting to grips with the individual circumstances.
After all, brokers know that all cases are different - it’s important for lenders to recognise that in the way they approach applications, rather than making sweeping judgements.
This personal approach means we are in a much better and more informed position from which to make a decision, and therefore to approve those cases that other lenders might shy away from.
This is particularly important when it comes to shared ownership, given the possible challenges and complexities around the sorts of borrowers who tend to turn to this scheme. Working with lenders who deal in the details will help brokers support more clients in getting onto the housing ladder through a shared ownership mortgage.