"The mortgage market has never before experienced the level of business disruption that has been caused by Covid-19."
FR: What does your role at IMLA entail and how have you found the position since starting it?
My role is to co-ordinate IMLA’s activities and provide a focus for its lobbying and representational work. I have monthly meetings with our management committee and our 43 full members meet several times during the year. This regular contact with members informs how I represent their views, whether in direct meetings with the regulator, government departments and others, or via comments prepared for the trade and national media. IMLA works closely with key market stakeholders, offering advice and lenders’ perspectives on changes to housing and lending policy which could benefit the market and UK homebuyers. We also have 11 associate members and run a programme of regular informal meetings with small groups of full and associate members, to discuss current developments and subjects which members wish to raise.
Another key part of my role includes collaborating with the authors of IMLA research reports and market analysis, as we work to keep members and the wider market informed on key issues and developments in the sector.
The mortgage market has faced many challenges since I first joined it, including Brexit and the Covid-19 pandemic more recently. I certainly couldn’t have foreseen either when I first joined the industry, but it has responded with its characteristic flexibility and energy. I am keen to ensure IMLA continues to play its part.
FR: How successful do you think the mortgage market has been in adapting to the pandemic?
I think lenders have done a great job: the mortgage market has never before experienced the level of business disruption that has been caused by Covid-19. The response from lenders and intermediaries has been both swift and positive given the circumstances. Businesses have rapidly adapted to remote working and lenders have done an admirable job responding to thousands of queries from concerned customers, including those who have opted for payment deferrals.
Intermediaries have fully embraced video call technology for all communications, supporting customers and pursuing new business opportunities. Lenders have increased their use of automated valuation models and digital valuations where physical valuations have not been possible, with many improving their websites and digital customer service platforms to meet increased demand.
FR: What impact is Covid-19 continuing to have on lenders as the housing market reopens?
Managing the situation around mortgage payment deferrals (the term ‘holiday’ should be avoided, as it suggests a break from payments with no long-term impact) will continue to be a challenge for lenders. At one point it was suggested that around 61,000 deferrals were being granted by lenders every day. This will likely slow as lockdown continues to ease, but lenders will need to shift their focus to helping customers work out how they plan to restart monthly repayments.
In the early stages of lockdown, we saw a number of lenders temporarily pull high loan-to-value products from the market. This was largely a practical measure – lenders needed to work out how they could continue to provide good service to existing customers whilst simultaneously preparing staff for remote working. Some will have had staff who had to self-isolate for periods and others may have been ill with the virus themselves or looking after family members who had contracted it. It therefore made sense to rationalise the products and services on offer for a while. As things ease, lenders will be eager to reintroduce products and services - including the higher loan-to-value products which are particularly important for first-time buyers - as soon as they can. The pent-up demand from buyers we are seeing is certainly a positive sign.
FR: Beyond Covid-19, what other emerging themes could we see in the mortgage market this year?
We still have some way to go before we can start accurately predicting what life in the mortgage market might look like post-crisis.
However, early signs have suggested that 2020 really could be the year we see technological innovation truly take hold, particularly in the form of digital advice (chatbots supporting brokers, mortgage advice provided over video calls, virtual ID&V and so on). Businesses have effectively been forced to fast-track their adoption of technology for their survival. Consumers have similarly needed to become more familiar with using digital channels in everyday life. As we move beyond the crisis, it’s likely consumers will be more confident in using digital tools as part of the mortgage process.
FR: If you could see one headline about the mortgage sector in 2020, what would it be?
The economy is going to need to grow fast if Britain is going to recover as quickly as possible. A fully functioning housing market that serves a broad variety of the population could play a key role in this.
IMLA welcomed the government’s recent announcement on proposed changes to the planning system, which could go some way to meeting the housing shortfall. On a similar note, the recent announcement of a stamp duty ‘holiday’ on the first £500,000 of property purchase values will be welcomed by homebuyers, particularly those who have been looking to downsize but have been deterred by the costs. Stamp duty has long acted as a barrier to moving for individuals reaching or in retirement who want to move into a smaller home and free up equity.
We were also pleased to see the government’s new focus on environmentally friendly homes. The Green Homes Grant is a first step and will see resources directed towards making properties more energy-efficient. However, there should be a system of accreditation put in place to reassure consumers that they are hiring properly qualified and reputable contractors, rather than paving the way for cowboys.
And there are other areas we’d like to see the government consider if we’re really going to get the market moving again post crisis. An extension to the current phase of Help-to-Buy would have a big impact for prospective first-time buyers, for example, and allow developers to get back on track with housebuilding.
As for a headline, I would welcome something like: “Government, lenders and intermediaries collaborate on new long-term strategy for housing market”.
