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A bleak outlook for first-time buyers: Can technology help? – Pender

by: Katie Pender, managing director of Target
  • 22/05/2024
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A bleak outlook for first-time buyers: Can technology help? – Pender
A report published recently by the Building Societies Association (BSA) on first-time buyers was a stark wake-up call for the housing industry and the government.

First-time buyers are facing the toughest conditions seen in 70 years. Those without family help, people on single or on lower incomes, are being excluded from homeownership.   

The findings of the report, Age old problems, modern solutions: a roadmap for change, make for a shocking read. In March this year, 32% of people said that they wanted to buy their own home but thought they wouldn’t be able to. The report says that, unless first-time buyers have help from their parents, or two incomes that are higher than the average, it is more and more difficult to buy your own home.  

It comes as no surprise that the biggest challenge facing first-time buyers is affordability. The BSA Property Tracker Report shows that the recent interest rate rises have led to affordability of mortgage repayments being cited as the biggest challenge for would-be first-time buyers.

The BSA is calling on the government to conduct an independent review to set out a long-term strategy that will increase the number of first-time buyers with a commitment that the findings will be published and implemented within 12 months.  

It is also calling for regulatory changes, including increasing the availability of 95% loan to value (LTV) mortgages, and more flexibility on the cap on high loan to income (LTI) lending.  


Doing more to assist first-time buyers 

For those with lower incomes, less wealth and from groups with lower rates of homeownership, the BSA has recommended that lenders should be allowed to offer more diverse products to increase the diversity of people becoming first-time buyers.  

The BSA is right when it says that building societies are limited by current regulations in how much they can lend to first-time buyers.   

We very much endorse the BSA’s recommendations, some of which, in essence, demand greater flexibility.  

Currently, the sluggishness of the homebuying process adds to the woes of the would-be first-time buyer. Clearly, new technology, and its adoption by lenders, can’t fix the housing crisis on its own. But it can make lending more flexible by speeding up processes.  

This includes the integration of artificial intelligence (AI) in mortgage processes which enables quicker and more informed decision-making. Machine learning algorithms analyse vast amounts of data to assess creditworthiness, identify risks, and determine optimal loan terms.  

This results in faster approvals, reducing the time borrowers must wait for their mortgage applications to be processed. 


The advantages of technology in the mortgage space 

Robotics play a pivotal role in enhancing customer interactions through chatbots, virtual assistants, and automated communication systems. Borrowers can receive real-time updates on their applications, access personalised information, and receive prompt responses to queries. This results in less friction.  

First-time buyers are often looking for similar user experiences to those they access in the retail sector. They want speed and convenience, multiple channels, and products, suited to their needs and desires, available 24/7/365. Mortgage tech needs to be as easy to use as an iPhone, TikTok or Instagram.

It must place the user at the heart of the experience, with technology designed around them. 

Modern mortgage tech offers a better user experience if it is modular and integrated. Individual parts of a system can stand alone and be developed as required. Integration with other systems such as panel managers and CRM systems, product and criteria sourcing systems, and platforms, removes repetition, increases accuracy and saves time.

The BSA report makes clear that reform of regulation and the housing market cannot come quickly enough for first-time buyers.  

Unless there is significant change, the outlook for this group will be very bleak indeed. No one can put down roots and plan for a future and a family without a secure roof over their heads.   

Societal wellbeing depends on everyone having a home. Cutting-edge technology can help by driving flexibility and make the homebuying process easier for all.  

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