How customers needs have evolved and the impact on the mortgage industry

Over the summer we saw transactions around 10% higher than normal, and it is likely that September will record even stronger numbers as buyers rushed to beat the October 1st Stamp Duty Holiday deadline. 

Yet while the Stamp Duty Holiday has undoubtedly encouraged many people to move homes over the past 18 months, there is much more to the current housing market than just this tax incentive. Lots of families have taken the opportunity afforded by lockdown to look for bigger homes away from the cities and in more affordable regions of the country. As a result, transactions and rental rates in the major cities have tumbled over the past 18 months and there has been tremendous growth in areas such as Scotland, the North West and Wales. We expect that prices in the cities will inevitably pick up again as the pandemic eases, entertainment and leisure venues reopen and people once again return to work and their offices.

We’ve also seen a growing split in the market between those buyers who have large deposits saved up and those who don’t. For those with significant equity lenders have been offering record low mortgage rates, while buyers with low deposits have faced significant affordability hurdles.

The panel began by discussing whether green mortgages are having the desired impact on the market.

There is no doubt that more of these products are becoming available, as banks move towards more sustainable lending and buyers prioritise environmentally friendly lifestyles and homes. However, while these green mortgages are sure to become even more mainstream over the coming years, both consumers and brokers need to be better educated about the benefits they offer.

In addition, everyone agreed that lower rates alone are not the answer. While a few hundred pounds off the monthly mortgage cost is of course welcome, it pales into insignificance if thousands must be spent improving the property EPC rating. That’s why Kensington developed the eKo £1,000 Cashback Mortgage to encourage the upgrade of older properties. It gives £1,000 cashback if the homeowner improves the EPC rating by 10 points within 12 months from completion. Other green mortgage products available from Kensington include the New Build eKo Reward mortgage, offering double the cashback of the standard range, on new build properties with an A or B rating.

My takeaway

To my mind, one word connects everything that the panel discussed: opportunity. While Covid has been a tremendous shock to us all, in so many areas of our lives it has also encouraged us to re-evaluate our long-held beliefs and embrace creativity, innovation and modernisation. 

So too in the housing market.

Now is the perfect time for lenders and brokers to think differently about the challenges that lay ahead:

To find new ways to help those who would benefit from a more flexible approach to lending. To ensure that UK homes are fit for the challenges of climate change. And to help create a sustainable, healthy housing market that meets the needs of our changing demographics for many years to come.

Looking to the future

As we look ahead to the remainder of 2021 and beyond, Nicola made a poignant point: we’ve been here before! Post-credit crunch, self-employmen figures shot up as people sought out new ways through which to secure income. We’re anticipating a similar trend post-Covid and the mortgage industry must be ready for the rise of the self-employed.

The changes in the marketplace present great opportunity across the industry and we are looking forward to working with customers and intermediaries  to secure the outcomes that so many self-employed people deserve as we  move forward into a new era of mortgages.