"There is a growing need in the mortgage sector to innovate, improve and respond quickly with new solutions as needs continue to evolve. "
FR: Your current job title is head of Halifax Intermediaries – what does your day-to-day role involve and what do you think will be the key issues affecting intermediaries in 2019?
As much of a cliché as it sounds, what I love about my job is that no two days are ever the same.
I head up the Halifax Intermediaries business which is made of business development managers, an extended team of office-based BDMs along with our award-winning Premier team, which provides access to our experts in large loans for applications of £500,000 or more.
What this means, is that on any one day I could be spending time with colleagues based on the road or out meeting brokers, and it really is this variety on which I thrive, and why I have been in this role for 12 years.
In terms of the key issues impacting the intermediary market in 2018 and beyond, it goes without saying that continuing to innovate is key. We’ve seen some major high street retailers experience significant challenges this year, and as one of the biggest mortgage lenders in the UK, we’re no different.
There is a growing need in the mortgage sector to innovate, improve and respond quickly with new solutions as needs continue to evolve. We have offered online product transfers for some time and have several exciting things in the pipeline, enhancing our proposition to make it easier for brokers to do business with us.
Other key issues include creating more opportunities for the product transfer market and increasing the remortgage market. The latest UK Finance figures show remortgage approvals rose by 9% in both number and value terms year-on-year in February 2018.
The fact that we’re an ageing population impacts almost every sector now, and the mortgage industry is no different. The equity release market doubled in the last two years and more homes than ever now are mortgage-free but fewer are trading down. Offering products where loans can be extended into retirement is therefore something that continues to be front of mind.
Helping first-time buyers get onto the market is still important for us, as well as responding to the growing development of fintech companies which can often garner more trust and speed, particularly with the younger market.
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?
Despite the current housing shortages across the UK, there are schemes and initiatives in place to help address the challenge.
Help to Buy is one of the most successful and widely-known schemes that has helped first-time buyers take their first step on to the property ladder.
We’re also starting to see new and modern methods of construction such as modular homes which have long-been popular in Europe start to be introduced in the UK too, making it quicker and easier for homes to be built.
The government announced in the Budget this year that from April 2021 a new Help to Buy Equity Loan scheme will run for two years before closing in March 2023. This means there is still time for first-time buyers to use the scheme to get onto the housing ladder, and hopefully will also encourage lenders to innovate and offer alternative solutions as the scheme comes to an end.
FR: Recent Halifax research found that UK mortgages have reached their most affordable level in a decade – why is this, and is it a trend that’s set to continue?
Our recent ‘buying vs. renting’ research has shown that buying a home is cheaper by £900 a year than renting, with the gap between buying and renting up 44% from £623 last year.
Property owners are spending less than a third (ave. 29%) of their disposable income on mortgage payments. This is the lowest affordability in 10 years since market peak of 48% in 2007.
This trend has been driven mainly by historically low mortgage rates, which have remained relatively stable despite recent base rate rises. There is also a proliferation of mortgage products across the market offering longer borrowing terms, 95% LTV and products with longer fixed rates, providing greater choice and opportunity for new borrowers.
FR: Halifax offer 95% mortgages - do you think the first-time buyer market will continue its recent growth, and what should brokers be aware of when dealing with these clients?
Overall, the first-time buyer market remains buoyant, showing strong demand for people to get onto the housing ladder despite current barriers to buying your own home.
Factors such as low mortgage rates, high levels of employment and government schemes such as Help to Buy have all helped first-time buyers gain a greater segment of the market.
This is supported by figures from the Halifax First Time buyer review (2017/2018) which shows that the number of first-time buyers has increased by 6% in the last 12 months, maintaining an upward trend of six years.
The abolition of Stamp Duty on purchases of up to £300,000 is also likely to be a helpful boost to those wanting to move onto the property ladder, reducing upfront costs.
On the converse side though, the average deposit size has increased by 91% between 2007 and 2017, now standing at £33,339 across the UK and £112,604 in London. The average age of a first-time buyer has also increased, standing at 31 and 33 across the UK and London respectively.
Lastly, there are regional variations to this picture of growth. Unsurprisingly given the cost of houses, the number of first-time buyers has fallen by 26% in last 10 years in London, whereas in Northern Ireland, it has grown by a significant 65%.
FR: If you could see one headline about the mortgage market in 2018, what would it be?
That’s a really difficult question to answer, and I’m sure my answer would change on a day-to-day basis. The headline that I believe would accurately reflect 2018 would be, “Mortgage intermediary market continues to thrive in challenging times.”
This reflects the continued desire from customers to seek advice, and how intermediaries have proven themselves to be flexible in meeting customers’ needs, and in reacting to regulatory requirements.
We are now seeing acceptance that system development will impact on customer behaviour, but also that intermediaries continue to prepare for this.
We’ve also seen interesting developments in the lender space with several lenders stepping up their focus on intermediaries.
I’m sure this will continue to keep everyone on their toes. Our aim is to continue to look at ways to make it easier for brokers to work with us and to provide clear, consistent service in 2019.
