"We are entering into a time where many mainstream lenders will be looking to tighten their belts. Meaning less risk, tighter criteria and continued restrictions at higher LTV levels."
The increasing of the stamp duty threshold in the Mini-Budget or Summer Statement – whichever you prefer – has been widely tipped to ‘kick-start Britain’s economic recovery’.
Whilst this is a highly constructive move which will benefit a number of buyers and sellers, it remains a short-term solution within a housing market which continues to face its fair share of long-term supply issues, some of which will be further exacerbated by the Covid-19 pandemic.
Now I’m in a good mood, so let’s not focus too much on the negatives. Instead, let’s concentrate on the positives and turn our attention to better understanding how we, as an industry, can utilise any housing market momentum to move forward in a clearer, more constructive and collective manner.
The foundations of any robust housing market will always be built around first-time buyers and even before this stamp duty hike, or even speculation surrounding such a move, it appeared that first-time buyers were already quite bullish about their homeownership prospects.
Research from Legal & General Mortgage Club outlined that 93% of first-time buyers are still considering buying a property in 2020 despite the impact of the pandemic, whilst just over half (51%) said they definitely intend to buy this year. Additionally, it was outlined that around a third (35%) of first-time buyers said that the pandemic has had no impact on their plans to buy. With a reduction in costs on transport and social activities, almost a third (31%) of first-time buyers said they have been able to save more than £100 each week towards a deposit on top of what they were already saving.
It’s interesting to read that lockdown has provided a backdrop for first-time buyers to save, and any visible growth in savings pots could offer a significant lift to all those potential homeowners looking to accumulate a sufficient deposit, even beyond this stamp duty holiday. On the flip side, with high numbers being affected by furlough measures taken by a host of businesses across the UK – and when combined with the uptake of mortgage payment holidays from existing homeowners - then we are entering into a time where many mainstream lenders will be looking to tighten their belts. Meaning less risk, tighter criteria and continued restrictions at higher LTV levels. In times like these, it’s evident that residential cases will have a new level of complexity to them, and that lenders operating within this space need a greater flexibility to deliver a range of solutions. Meaning these solutions are likely to emerge from the specialist lending market.
The art of specialist lending is to understand the market and be able to react accordingly with speed and precision. A vital factor in meeting this challenge is to constantly engage with the intermediary market and actually listen to what it has to say. Relationships between regional account managers and advisers is crucial in ensuring that the right messages are received, and heard, in order for clients to secure the right product solution, first time and every time.
Here at Foundation Home Loans, we’ve been looking closely at our overall residential proposition in an attempt to better service the ever-shifting needs of first-time buyers and homemovers. In order to do this, we’ve been in regular contact with our intermediary partners to build a clearer picture of what they and their clients really need. Recent adviser feedback outlined that the market is currently delivering a far greater number of residential enquiries which do not ‘fit’ within mainstream lending policies or sit just outside their set criteria. And we have acted accordingly.
Intermediaries should not be afraid to let lenders know what their clients want and how their requirements are changing within such a transitional period. And lenders should not be afraid to listen. Specialist lenders are in a strong position to help, especially in terms of those cases which are beyond the ‘ordinary’, and this is a trend which will see undoubtedly see them claim a far larger proportion of the residential lending pie moving forward.