"With robust regulation and sensible safeguards, I think we will see more products and solutions which reflect the reality of today’s housing market. "
FR: Please tell us a little bit about your background and what Tembo does.
I set up Tembo during covid (Tembo means elephant in Swahili, because the elephant is the most family minded animal on the planet) with the aim of trying to find alternative ways for families to help their loved ones to buy their first home. Prior to that I had worked as CFO at Founders Factory, a venture investment company backed by Aviva. I started off my career working in corporate finance at EY in London and Melbourne.
Tembo is a specialist digital mortgage and savings business that helps our customers - primarily first-time buyers - to buy their home sooner. We distribute both direct to consumers and also via a number of partners, including Saga Mortgages.
FR: What made Tembo focus on first-time buyers and home buyers facing affordability issues?
We wanted to increase access to home ownership and felt that too few people knew about their options when it came to buying their first home. Getting a foot on the property ladder has never been harder, but there has been a much-needed influx of innovation in the market in recent years. We wanted to encourage the uptake of new products to market that can make all the difference for first-time buyers and people facing affordability issues.
Tembo initially focused on alternatives to equity release as a way to manage intergenerational wealth transfer. The retirement interest-only mortgage had recently been authorised and looked, on the face of it, like a great product, particularly for more affluent customers who wanted to release some equity without getting tied into a lifetime mortgage.
Eddie Ross — our chief product officer who joined from Mojo Mortgages — and I shaped the initial proposition, but quickly realised from listening to our earliest customers that they needed much more choice than this.
Within a few months we had expanded into a broader range of family mortgages and alternative buying schemes, including the joint-borrower/sole-proprietor product that was largely unloved at that stage.
We’ve continued to grow Tembo by continually enhancing our platform with the best, most innovative solutions to make the dream of home ownership a reality. For example, since February 2024 we have offered a lifetime ISA to help our customers navigate the challenging property market more effectively.
FR: What role do you think fintechs like Tembo have to play in the property market?
For me, startups are primarily about swiftly and efficiently filling gaps in the market.
Property and financial services companies struggle with innovation, digitalisation and implementing technology. They are often restricted by legacy systems and manual processes. Proptech and fintech startups can help cut through this. We’re more agile by design so we can move quickly.
On the other hand, established real estate firms have capital, in-depth property industry knowledge and existing customer relationships - things that startups generally need. There is a huge opportunity to improve efficiency and customer experience by partnering closely together. It’s a win-win for everyone.
FR: What do you think the future holds for first-time buyers in the UK?
First time buyers still face the very real challenges they did when Tembo first started but the market is improving, and I believe will continue to do so. With robust regulation and sensible safeguards, I think we will see more products and solutions which reflect the reality of today’s housing market.
While there are no magic bullets, the market is continuing to innovate and adapt to the needs of would-be first-time buyers - the lifeblood of the housing market as a whole. For example, maximum loan to income ratios (LTIs) have crept higher because full-time employees can now expect to spend 8.3 times their earnings on purchasing a home in their local area. These mortgages will not be for everyone, but for some it will be the only way they’ll get on the ladder - and home ownership is still important.
We have known for some time that renting is far costlier in the long term than home ownership. In addition to the extra monthly costs associated with renting, those that are able to get on the property ladder earlier will accumulate significantly more wealth in the long-term. Our research shows that over 20 years, those that own the same property versus renting it would be £200,000 wealthier.
With more innovation and, hopefully, stability in the economy, we’ll see more people able to buy their first home in the future.
