In the early days, borrowing needs were relatively straightforward with product ranges limited and very much restricted to the high-street to reflect consumer habits.
The emergence of the intermediary market in the 1980’s helped transform a market previously dominated by building societies, as limitations were exposed in their lending quotas. This lending gap, and increased demand, resulted in banks extending their product portfolios.
A move swiftly followed by other providers spotting the available opportunities and entering the mortgage market. Innovation and additional complexity soon followed with the introduction of variable mortgages and a more flexible approach to mortgages and finances in general.
This paved the way for the intermediary community to scale new heights as a new breed of specialist lenders rose to prominence.
From there I’m sure most of us can remember the impact of niche markets such as buy-to-let, non-conforming, secured loans and short-term finance – among others.
Mortgage market adaptions
This isn’t intended to be a history lesson, what I’m trying to outline is how quickly the mortgage market has had to adapt to differing borrowing needs in a relatively short space of time, and that certainly remains the case as another decade of lending comes to a close.
And there are additional considerations to take into account when it comes to the lending tree in the 2020’s.
Research from Barclays Mortgages recently revealed that three in ten homeowners are now living in inter-generational homes, with likely causes being young adults moving back in with their parents and an increasingly ageing population.
On average, 23 per cent of homeowners were suggested to have converted living space into an additional bedroom, with a quarter of respondents making these adaptations within the last two years.
With 2.4 million 20–34-year olds suggested to be living with their parents, an increase of 19 per cent since 1997, it’s no surprise that homeowners are looking to adapt their homes to create more space for their adult children to live with them under the same roof.
Although the number of inter-generational families differs across the country with more people living with adult relatives in cities such as London or Birmingham, with increasing housing costs likely to be a contributing factor.
Millenials valuing financial advice
This shift fits with recent comments made by academic and generations expert Dr Eliza Filby, as reported on the Mortgage Solutions website, when she spoke at the latest Women’s Executive Finance Forum (WEFF) leadership event.
Looking specifically at the issue of young adults, Filby described them as a “financially squeezed generation”, noting that where boomers were encouraged to invest in assets and save in pensions, young people now prioritise short-term experiences.
In other observations from the talk, millennials are suggested to be optimists and Generation Z – those born between the mid-90s and mid 00s – are realists.
It was also noted that millennials are growing up and beginning to value face-to-face experiences, including financial advice. This is a positive sign and one which the intermediary market should be taking note of.
As ever, lenders and intermediaries need to understand current trends and factors which are influencing multi-generational living, inter-generational lending and how families can stay in control of their finances as they plan for a change in their home – whether it’s a big move, a re-mortgage or home improvements.
That way they can try and stay one step ahead in being best positioned to meet their ever-changing borrowing needs.