"The specialist lending market will play a major role in the mortgage landscape over the next 12 months and beyond, so brokers need to prepare for this."
FR: You have been a business development manager at the Loughborough Building Society for over five years now. Tell us a bit about your role and what it involves.
Working for a specialist lender like The Loughborough, one of my main focuses is to educate our panel members about the many solutions we offer, either through face-to-face meetings, online discussions or over the telephone. My remit means I cover the whole of England and Wales, which is a big patch, so one week I may be in Carlisle and the next I may be as far south as Southampton.
Over the past few years, The Loughborough has grown its proposition and I have had to wear many hats. I have been involved in all aspects of the business such as product development, pricing, testing IT systems, and understanding the financial economics of a building society.
Following The Loughborough’s launch into the broker market almost five years ago, a key focus for me has also been the broker journey and growing that part of the business. This has been a great success and what initially started with just myself, has grown into a larger team of two dedicated CeMAP qualified telephone BDMs and a support team of five staff members. The training and development of these team members has also been a significant part of my role.
FR: You’ve recently spoken extensively about the growing popularity of discount mortgages. What do you think is driving this growth?
It’s clear that the premium for fixed rate mortgages has risen as a result of market forces, however, as things start to settle we’re likely to see these drop slightly. Having said that, the brokers I speak to have clients coming off fantastic fixed rate deals at sub 2%, and the thought of paying double each month has seen their attitudes change towards discount mortgages.
There are also a lot of misconceptions around discount mortgages and although a discount can be perceived to be uncertain, it is not directly linked to a lender’s SVR, so it’s down to the lender as to when and if they decide to increase their own SVR. I think more brokers are starting to realise this, which is driving growth in the sector.
I also believe we have been operating in a low interest environment for a very long time, which is why most mortgages have probably been fixed, but now we have seen a shift and naturally this opens up opportunity.
FR: Given the current rising interest rate environment and concerns around affordability facing many mortgage borrowers, what can brokers do to help first-time buyers looking to get a foot on the property ladder?
I think initially it’s about educating first-time buyers with regards to what can affect affordability, such as car loans and credit commitments. We often see first-time buyers with high monthly commitments on car finance for example, and this can significantly reduce their affordability when it comes to securing a mortgage. Having those conversations in the early stages could allow the applicant to make changes that could improve their affordability, which can be further assisted by maintaining a healthy credit file.
I also believe first and foremost that everyone in the industry has a responsibility to have open and honest conversations with clients around budgeting. Although many first-time buyers will be keen to get on with the property purchase, there must be a discussion around the costs associated with running a property and how that may impact the lifestyle they wish to lead. In some cases, it may be that their expectations need to be slightly lowered.
Obviously, once that discussion has been had, it is then about exploring their options and considering all the solutions that the market offers, such as Joint Borrower Sole Proprietor, Shared Ownership, First Homes, and Family Assist mortgages. All these options have been designed to help borrowers get onto the first rung of the ladder.
FR: What are the biggest opportunities facing brokers over the next 12 months?
With every crisis comes opportunity and I believe that later life lending will increase as more parents and grandparents look to help their children and grandchildren get a foot on the property ladder. Applicants will also probably start to look for longer term mortgages to reduce monthly payments.
With this in mind, I think building knowledge around lenders’ criteria for taking a mortgage past the age of 80 would be prudent as would developing a greater understanding of the equity release market either by studying to attain the relevant qualifications or linking with an equity release expert.
It is becoming extremely apparent that the specialist lending market will play a major role in the mortgage landscape over the next 12 months and beyond, so brokers need to prepare for this. I also think we have many borrowers who have interest only mortgages that will be maturing in the next 12 months so finding solutions for those clients will also present opportunities.
FR: What do you consider to be the greatest challenge facing the mortgage market today?
I would say the greatest challenge is managing the expectations of clients that have been so used to paying lower monthly mortgage repayments.
For many, this may require adapting the monthly budget and making lifestyle changes to help balance the books. Brokers are well placed to help borrowers through this, by ensuring they stay up to date with market developments and continue to educate their clients accordingly as well as explore all options when it comes to product offerings.
