"An uptick in enquiries from applicants asking about the maximum age at end of term has also been seen"
The affordability challenges facing first-time buyers and other aspiring home purchasers have been extremely well documented over the years.
Runaway house prices, difficulties raising a deposit and issues around supply and demand have all been cited as barriers to purchase for many of those trying to get a foot on the property ladder.
More recently, this has been further exacerbated by the cost-of-living crisis and squeeze on income felt by all UK borrowers, many of whom have had to find ways to adapt as they try to navigate the ever-changing mortgage market.
While the growth in house prices over the years has proven beneficial for a large proportion of the country’s homeowners, it has become a huge obstacle for those trying to get that all important foot on the property ladder.
According to figures from ONS, the average UK house price increased almost 67% over the last 10 years, with the average house price rising from £172,655 in June 2013 to £287,546 in June 2023.
This, coupled with other factors such as the global pandemic and the cost-of-living crisis has placed a significant squeeze on household incomes. However, as we head towards the end of a somewhat turbulent year, there are signs that the market is beginning to stabilise.
Inflation fell sharply to 4.6% in October, its lowest level for almost two years and the Bank of England base rate hasn’t moved from 5.25% since the August meeting. On the back of this, the cost of borrowing has also started to fall, and confidence is slowly starting to return to the market.
Although interest rates are unlikely to return to the historically low levels seen before the pandemic, this downward trend is a welcome sign as we head into the new year.
It is against this backdrop that Dudley Building Society has seen a significant spike in enquiries in recent months for innovative and flexible mortgage products such as our Joint Borrower Sole Proprietor (JBSP) product.
An uptick in enquiries from applicants asking about the maximum age at end of term has also been seen - a trend supported by recent findings from sourcing system Knowledge Bank showing JBSP and maximum age at end of term to be the two of the most searched terms among brokers in recent months. This suggests that brokers are increasingly exploring new strategies to find affordable and viable solutions that meet the needs of their clients.
In an environment where the Bank of Mum and Dad has become an established way for parents to help their children get on the property ladder, a JBSP product provides an ideal solution for those with the financial ability to help boost their children’s purchasing power.
One of the many benefits of a JBSP mortgage is that the borrowing capacity of the applicant can be increased by allowing up to four borrowers to be included on the application form.
An example of this can be seen in a recent case handled by Dudley Building Society in which we helped a broker whose client wanted to purchase a residential property near the university where they were studying to become a doctor.
The applicant had no personal income and required their parents to be included on the mortgage as JBSP. The oldest parent was 52 and employed in a non-manual role as an office manager and planned to work until they retired at 75.
Following the necessary checks, and because Dudley offers consideration of income for those up to 75, the applicant was able to secure a 23-year term mortgage based on their employment income facilitating the full LTV of 90%.
The flexibility of the product and underwriting criteria meant the borrower was able to get a foot on the property ladder using the income of a parent, which significantly eased the burden of raising a substantial deposit. It also enabled the main borrower to secure a property despite the fact that they had no individual income, setting them up for the future.
Recognising and accommodating financial situations where the primary borrower has no individual income by using products such as JBSP demonstrates the growing flexibility of mortgage lenders as they look to meet the needs of borrowers in an ever-changing economic climate.
Tapping into the potential offered by specialist lending products such as JBSP can enable brokers to find suitable solutions for those clients facing affordability challenges, by drawing on the borrowing power of family members to help them achieve their property goals.
