"A fresh approach and some creativity could make a huge difference to significant numbers of borrowers."
The mortgage industry has long been recognised for its creative thinking. We are very much a solutions sector; a core part of any intermediary’s job is their ability to problem solve, to find their way around particular sore spots in a case so that the client can still access the funding they need.
However, I strongly believe that the mortgage market is crying out for greater innovation from lenders. A fresh approach and some creativity could make a huge difference to significant numbers of borrowers.
Encouragement for innovation
It’s true that the last year has seen some innovation from mortgage lenders. Skipton for example won a lot of attention - and praise for that matter - with the launch of its 100% mortgage.
It is no secret that saving a sufficient deposit has long been a challenge for aspiring borrowers, and this has only become more difficult off the back of the increase in house prices over the last few years, coupled with higher household outgoings courtesy of record inflation rates.
Opening up the ability to access the housing market to those without a large deposit behind them, or perhaps more accurately without well-off family members able to gift a deposit, can be a powerful step towards boosting home ownership.
The year has also seen positive developments in terms of other products aimed at these sorts of borrowers, but who can turn to family for support. Products like the Barclays Family Springboard have boosted the prospects of plenty of borrowers who need just a little additional support from their family or loved ones in order to get onto the housing ladder.
We need more
However, in truth the mortgage market is ripe for greater innovation from lenders. There are too many underserved mortgage borrowers who could be greatly supported if lenders were able to approach their activity in a more creative way, if they could take a fresh approach.
Take the situation with offset mortgages. If clients have a decent stash of savings in place, then an offset mortgage can be a powerful tool for dealing with the rising interest rates seen over the last year. There is a clear market for them too.
And yet this year has seen the supply of offset mortgages take a hit, with the withdrawal of Scottish Widows from that lending space. There’s no doubt that there is an opportunity for lenders to step into this area, and offer a smarter range of deals that work for those sitting on significant savings pots, but too few lenders seem open to doing so.
This is just one example though; it would be welcome for lenders to be more creative in developing solutions for those with the odd blemish on their credit history or the self-employed, among others.
Recognising what the market needs
In truth, the mortgage market is changing. Where once the bulk of the mortgage market may have fallen within the bounds of what you might term ‘vanilla’, that is no longer the case.
Whether it’s employment status, the credit history, the size of the deposit or simply the property itself, it’s much more common for clients to have some sort of specialised circumstances that need a more understanding approach from lenders.
All too often these clients are not sufficiently well served. The market as a whole would benefit from greater creativity on the part of lenders.
Brokers have a duty
However, it’s equally important to recognise the role that brokers have to play here. It’s crucial that brokers take the time to truly understand the more innovative products when they are launched, so that they are better able to pinpoint the cases where these deals can make a tangible difference.
That educational importance is something we take seriously at Rosemount, which is why we hold workshops for advisers where lenders attend and go through their product ranges. It’s an opportunity to really get into the nitty gritty of what lenders can and cannot do, and the sorts of applicants they can support.
It’s also a good example of the sort of backing provided by a quality network. Ultimately it’s in all of our interests that brokers have the tools at their disposal to best guide the clients that come looking for help.
While that has to start with the product design, it’s equally important for those of us on the distribution side to make sure that those products are properly understood and can be put to use with our clients.
With Consumer Duty such an integral part of everything we now do in this industry, ensuring you have the right network backing has never been so important.
