As lifestyles change, so must mortgages
It is rather interesting to track how the notion of property ownership has changed in the past couple of years, let alone the past couple of decades.
As the FCA’s Jonathan Davidson pointed out at the CML’s conference recently, this changing attitude to homeownership means that the delivery of mortgage finance is also having to develop.
It needs to move from a means to get people into a home and one that will be cleared within a 25-year term to a much more flexible product, which can perhaps help the homeowner deliver a retirement income, a pension, a gift for children and grandchildren to get on the ladder – and much more.
I have been reminded of that song, ‘A house is not a home’, because the fact is that the house is no longer seen as just a home. Some people may bemoan this but it is becoming much more of an asset to be invested into and utilised when (hopefully) it delivers a return.
Therefore, as Davidson also said, when it comes to how property is used for, and into, retirement, there needs to be a movement from all stakeholders, but particularly the regulator itself, on how the aims and ambitions of homeowners can be met. We are moving quickly from a traditional notion of homeownership – buy-to-let has certainly pushed this on apace – and there has to be a recognition that the family home can also help create income and wealth.
The sooner the mortgage industry can work these societal shifts and needs into product ranges – perhaps with the opportunity for specific products to morph into others – and we develop the underwriting, criteria and a new approach to older borrowers, the sooner we will have a market that is fit for purpose.
Richard Adams, Stonebridge Group
Changes to BTL may do our industry a favour
Annie Lennox once sang that behind every great man there had to be a great woman.
The Chancellor’s declaration of war, as Andrew Montlake put it in a recent column, left me thinking that after every great plan there has to be a great workaround.
Ideas are already flowing as to what lenders will do to minimise the impact on what is a very profitable area of lending. Will it be the loosening of SPV criteria? Will it be the removal of maximum ages and we roll out family elders to buy properties? Will the separation rate rise and we see couples using transfer of equity to move from one jointly owned home into two? Will we see 3 per cent cashback on products or a boom in let-to-buy situations?
Whatever ideas the lenders come up with to balance their books, I am sure that buy-to-let is alive and well. I predict we will be very busy for the first four months of 2016 ensuring buy-to-let completions take place before the stamp duty hike. And then we will see some sexy new-build and remortgage rates released to maintain momentum and lender market share.
The Chancellor may just have ensured a very busy year for our industry next year. Merry Christmas, George.
Robert Winfield, Chartwell Funding
If brokers aren’t paid, it is their own fault
Mortgage Strategy recently carried a reader’s letter entitled “Others get paid to work – so why not brokers?” There is only one group of people to blame for brokers not getting paid and that is brokers.
I agree with the letter in that we should get paid for what we do, not just on an outcome. Each client’s needs have differing challenges and time commitments, so fees charged should reflect this.
Equally, once a client has engaged and work has been undertaken, the fee becomes payable if the application does not proceed – unless a mortgage offer is not possible to attain and then that is down to broker knowledge and judgement, so only ourselves to blame, again.
As long as the fee structure is positioned at the outset, I have no problem with most clients paying if they choose not to proceed with the application for any reason. I accept that this will not work for all clients, particularly employed clients, but for the self-employed whose circumstances are rarely standard, they tend to see the value of what we do a lot more.
I also accept that not all clients engage, but by charging a fee you may be less busy but possibly also more profitable.