Adjust to a new world of buy-to-let, low transactions and equity release
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Lenders must adapt to the UK’s changing housing tenure and broaden their product offering beyond traditional mortgages, according to Yolande Barnes, director at Savills Research.
Speaking at the Council of Mortgage Lenders conference in London last week, Barnes told the audience that the structure of the housing market is changing, with the private rented sector becoming more dominant and the owner-occupier sector less so as a result of problems facing first-time buyers and second steppers.
She told delegates: “The major threats facing lenders are low housing transactions, a decreasing reliance on mortgages and the growing importance of equity.
“To overcome these, lenders need to incorporate new forms of tenure into their offering, such as shared ownership, rather than trying to tweak the traditional mortgage model.”
She adds: “The problems in the housing market go beyond calling for higher LTV lending.”
Barnes adds that lenders need to take advantage of new opportunities, which she believes lie in buy-to-let, co-ownership schemes and equity release.
John Heron, chairman of the Intermediary Mortgage Lenders Association, says he wholeheartedly agrees with Barnes’ views.
He says: “We are in the midst of a radical shift in housing tenure and the mortgage market has to keep pace with these changes. Lenders need to keep working hard to deliver products for those who want to own a home, but these are not the only people we need to create products for.”
Kris Brewster, head of products at Skipton Building Society, adds: “The challenge for lenders now is going to be to build on the opportunity of the growing rental sector while also providing inclusive and innovative solutions for struggling groups such first and next-time buyers.”
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