Inflation, affordability and how it's impacting the mortgage market

Market Update
Alex began the webinar by outlining the volatile economic outlook we are currently facing. The cost of essential items such as energy and food has soared in recent months, sending inflation rocketing towards levels not seen since the late 1980s and putting considerable pressure on the Bank of England to raise interest rates.

Despite this, Alex explained that demand for new mortgages remains high. This is most likely because customers are trying to lock in new rates before the anticipated base rates increase costs further. So his message was clear... If your customers need to get a new loan, the sooner they do so the better.

Alex also outlined what this uncertainty means for Kensington customers. His belief is that, given the affordability assessments customers undergo when taking out a mortgage with us, they enjoy greater borrowing power than is typically seen in the wider market and are very well placed to withstand the impact of this squeeze on incomes.

The challenge for first time buyers
Our panel kicked off by discussing the perfect storm which first time buyers are currently facing: economic uncertainty, rising interest rates, the end of help to buy and very low availability of housing stock. Given that renters are often forced to spend up to half their income on rent, it is increasingly difficult for anyone on an average salary to save for a deposit. For those who cannot rely on the bank of mum and dad, what options are there?

With no easy solutions available, our panel agreed that lenders must be flexible and look beyond the obvious. One such option from Kensington is our Flexi Fixed for Term product, which offers up to 95% LTV. With a range of 11–40 year fixed terms and flexible ERCs, this product has been designed especially to help those people who enjoy peace of mind about their repayments.

Your clients need you more than ever
Craig highlighted, our lives - and finances - have become much more complex in recent years. As a result of Covid the number of self-employed have grown, while millions have relied on furlough payments. Others have taken career breaks or had significant changes in their income and, as a result, some people with otherwise good credit scores have, through no fault of their own, missed mortgage payments and experienced credit blips.

This means that the traditional products offered on the high street or through an aggregator may no longer be suitable for many. Advisors now play a crucial role in helping to cut through the confusion and provide clear, simple, personal advice.

Kensington Business Update
All our panellists underlined the importance of recognising and adapting to this new market reality. This is why it was even more important for us to close the webinar by highlighting the different customers we can offer enhanced affordability for:

• Customers looking for long-term peace of mind, and that security of a regular monthly payment that wont change over the course of their fixed term. Including first time buyers and remortgagers, Our Flexi Fixed for Term mortgage is designed for customers looking for long-term peace of mind, and that security of a regular monthly payment that wont change over the course of their fixed term. Available for first time buyers and remortgagers.
  
  
• Higher earners, applications where the income exceeds £100k can also benefit from up to 6x income, regardless of age or employment type
  
  
• Our Hero mortgage range, designed for specific key worker roles, offers up to 5x income, and
  
  
• Our Professional mortgage range, for certain academic professions, offers up to 6x income.

There are also other ways in which we can help buyers with a smaller deposit, especially as Help to Buy comes to an end. For example, we have partnered with new equity lenders Even and Proportunity to offer bespoke loan products, which we hope will help open the door for a whole new generation of first time buyers.

Thanks to our focus on developing innovative new propositions and partnerships, we have enjoyed record levels of business over the past six months. But we know we can’t stand still. Among the many investments we’re making across every part of the company, we have tripled the size of our underwriting team to ensure we can continue to offer exceptional levels of service. We have also been listening to what you have been asking for, and will very soon be launching a pre-offer live chat function, as well as having recently launched our fully digital product transfer portal.