A year focused on making things simpler for consumers and advisers – Lakey

A year focused on making things simpler for consumers and advisers – Lakey

 

We’ve seen the consolidation of various conditions under umbrella headings and the removal of ineffective conditions – a real attempt to streamline these often-confusing plans and make them more consumer and adviser friendly.

It also highlighted the futility of counting condition numbers in the mistaken belief that it proves superiority.

 

Spring growth

LV= chose January to make it’s first real changes since 2013. This involved adding or improving numerous conditions as well as uplifted payments for certain conditions diagnosed before age 55.

These welcome improvements brought this back into the ranks of the quality plans.

Mere days later Scottish Widows merged conditions under wide-ranging headings in its Protect plan. The changes implied that only 39 conditions were included whereas they actually covered 59 plus five child-specific conditions. Additionally, booster payments were introduced for certain conditions diagnosed prior to age 45.

March found Royal London focusing on its adult cover, having previously made substantial improvements to its children’s cover.

Conditions were added and improvements made to existing ones as well as joining those insurers that have removed HIV from their plans. Child cover was also extended to the 23rd birthday.

Aegon took its turn in April and unleashed a smorgasbord of changes including improved claims wordings for cancer, deafness and cardiomyopathy.

It also removed conditions it considered to be of little worth such as critical fracture cover, donor cover and rheumatoid arthritis.

 

Summer upgrades

In July LV= introduced its second upgrade of the year.

This one focused on children’s cover which increased payments to the lower of £35,000 or 50 per cent of the parent’s cover.

LV= also introduced ten child-specific conditions as well as a fixed £5,000 payment for six named pregnancy complications, while the £5,000 child death benefit was extended to include stillbirth.

Aviva embarked on a simplification exercise where conditions with an identical claim trigger were combined. The number of named less-advanced cancers was reduced from 16 to two using umbrella headings.

And for ease of understanding Aviva organised all conditions into seven groupings such as brain and nervous system, and heart and circulatory system.

Vitality also engaged in simplifying its plans during September. This involved consolidating the three plan versions into a single personal protection plan and making child cover optional.

 

Autumn overhauls

The final changes occurred in October when AIG and HSBC undertook extensive reviews.

AIG’s modifications introduced the greatest simplification thus far while correspondingly extending the scope of coverage.

This was achieved by the introduction of umbrella headings bringing together numerous conditions with linked claim triggers. The most obvious example being Degenerative Neurological Disorders which included existing named neurological conditions but also extended to encompass rare and previously excluded disorders such as various ataxia’s, Rett syndrome and Alpers’s disease.

Children’s cover was made optional and reconfigured with fixed payments of £25,000 or £50,000 and a new condition of Birth Defect Cover was added.

HSBC excelled with the introduction of a range of new conditions and by significantly revamping its quality version named Critical Illness Plus.

Child CI payments were increased to the lower of £50,000 or 50 per cent of the parents cover or, for additional payment conditions, lower of £30,000 or 50 per cent.

Also, cover was extended to the 23rd birthday regardless of whether children are in full-time education.

‘Don’t bury your heads’ FCA equity release concerns are not just about ‘dabblers’ – Sinclair

‘Don’t bury your heads’ FCA equity release concerns are not just about ‘dabblers’ – Sinclair

 

In what has been a muddled year, where mentally it feels like it should be March yet we are nearing Christmas, it’s important that the significance of this regulatory review does not get lost as 2020 draws to an end.

This is particularly the case as the FCA has set out in its recent Dear CEO letter to mortgage intermediary firms that it intends to do further work on lifetime mortgages during 2021.

To refresh, the FCA’s main concerns centre around the equity release sales and advice process, in particular the insufficient personalisation of advice, insufficient challenging of customer assumptions and lack of evidence to support the suitability of advice.

 

FCA looked at most active firms

These communications combined form a clear message that firms need to take action; they cannot be complacent and think the issues raised do not concern them.

As an industry we should not make assumptions that the FCA review and recent Dear CEO letter only relate to firms dipping their toe into the later life market intermittently – to make that assumption puts us in a dangerous place.

Indeed the 2020 supervisory work was on the dozen most active firms in this market.

It is very unusual for the FCA to publish its findings from exploratory work meaning that its concerns are widespread and not just limited to firms that carry out a few equity release cases each year.

The FCA has also been explicit in that all firms should ensure that their advice processes, including how they record the suitability of advice, are sufficient.

If we believe that this only relates to dabblers in the market, then we are in denial.

 

Industry bodies have gone quiet

It will take a concerted effort from all that represent the equity release market to ensure there is change and to convey the message on the reality of the situation.

However, there has been a distinct lack of communication from some industry bodies on the actions required and updates on any progress.

Back in June some were vocal in the mortgage trade press about what actions they had planned but have since remained quiet.

There must be more open and transparent dialogue to re-ignite the discussion and ensure the correct level of focus.

The mortgage advice industry will be measured by the way it reacts and moves forward.

Comments made in the FCA review and recent Dear CEO letter should not be viewed as criticisms but rather an opportunity.

An opportunity to ensure regulated advisers take responsibility, not delegate to solicitor checks, and really mean it when we say we put consumers at the heart of everything we do.

We cannot ignore the fact there will be increased regulatory scrutiny over the next 12 months and the industry needs to avoid a situation where the FCA feels intervention and action is necessary.

Now is our chance to improve the perception of this market. With a collective approach this is possible – just as long as we don’t bury our heads in the sand.

 

 

Lenders have lit touch paper of BTL market – Ying Tan

Lenders have lit touch paper of BTL market – Ying Tan

 

Thankfully, I wasn’t too far from the mark as intermediaries across the country saw a number of lenders light a fire under the buy-to-let (BTL) market with product numbers rocketing and some sparkling deals on offer.

Let’s start with some bangers from the more mainstream lenders.

 

NatWest and Barclays

NatWest has reduced selected buy-to-let products by up to 84bps.

In addition, the lender has reintroduced free valuations for intermediary purchase products, reduced its interest coverage ratio (ICR) and increased the maximum age at the end of term for buy-to-let applications.

Barclays has also made cuts on 14 BTL products by up to 35 basis points on purchase and remortgage deals.

The largest cut is on its five-year fix for large loans between £1m and £2m in value at up to 60 per cent loan to value (LTV) with a £2,495 fee, which is being reduced to 2.1 per cent.

Meanwhile, for standard loans between £35,000 and £1m, the two-year fix at up to 60 per cent LTV with no fee has fallen from 2.39 per cent to 2.15 per cent.

Interestingly, customers who have a residential mortgage with Barclays will now be allowed to let their property on a short-term basis after the bank made changes to its mortgage policy.

Borrowers can list a room, or their whole property, on online platforms to be let out for a maximum of 90 days a year but for no longer than 30 days to the same person.

 

Bluestone and Kent Reliance

Moving on to specialist lenders, positive news has emerged from Bluestone Mortgages as it has just announced the resumption of 85 per cent LTV lending on residential and buy-to-let products.

Kent Reliance for Intermediaries has extended its offering within its houses in multiple occupation (HMO) and multi-unit freehold blocks (MUFB) range to include 10 bedrooms or units.

The decision stems from wanting to create greater choice for its intermediary partners who are seeking solutions for larger HMO and MUFB cases.

Products within its HMO and MUFB range, starting from 3.79 per cent, are available up to 75 per cent LTV to £3m on one to six bedrooms or units, and up to 70 per cent LTV to £1.5m on seven to 10 bedrooms or units.

In addition, the lender is accepting limited company structures and those with less than perfect credit profiles.

 

TML and HTB

The Mortgage Lender (TML) has released a special edition £30m five-year fixed rate buy-to-let tranche with rates starting at 3.49 per cent for a mortgage at 70 per cent LTV.

It has also launched a Mini MUB product for blocks of two units with a minimum loan of £150,000 and a five-year initial fixed rate of 3.74 per cent at 75 per cent LTV.

The special edition and Mini MUB products are whole of market for purchase or remortgage and available to individuals and limited company applicants with a 1.5 per cent completion fee and a £150 application fee.

Hampshire Trust Bank (HTB) has launched a large loan buy-to-let offering.

The product is a 60 per cent LTV five-year fix at 3.25 per cent. It is only available for buy-to-let purposes and the minimum loan amount is £1m, with the maximum being set at £15m.

 

Competitive Christmas rates

Finally, The Mortgage Works (TMW) has also reduced rates on its limited company 75 per cent LTV range by up to 0.25 per cent.

The two-year fixed has been reduced from 3.39 per cent to 3.19 per cent with a £1,995 fee, while the £995 fee alternative has seen a reduction of 25 basis points to 3.34 per cent.

Across its five-year fixes, the product with a £1,995 fee is now 3.64 per cent, down by 0.25 per cent while the deal with a £995 fee has been reduced by the same amount to 3.74 per cent.

All the products also have free valuations.

There are some highly competitive rates on show here, and it will be interesting to see what kind of opportunities are being presented in the weeks leading up to Christmas.

 

 

 

‘People are not shoe-horned into inappropriate products’ – Hale

‘People are not shoe-horned into inappropriate products’ – Hale

 

In June, the FCA published a report into equity release sales and advice processes which found that “where customers were suitably advised, we have seen some good outcomes where consumers ended up with an equity release product that met their long-term needs”.

However, concerns were raised around personalisation of advice, insufficient challenging of customer assumptions and lack of evidence regarding the suitability of advice.

These points were also reinforced in a Dear CEO letter in November.

As the CEO of the UK’s largest equity release advice firm, I think this is good news for the industry and we need to properly engage with the observations from the regulator.

For too long, people have taken pot-shots at the sector based on myths and misconceptions or an outdated understanding of product rates and terms.

However, it’s time for the equity release industry to present lifetime mortgages for what they truly are: a modern, flexible mortgage product, with low rates, penalty free payment options and a multitude of customer protections, in many cases making them superior to alternatives.

 

Look at the evidence

Interest rates are not high – in Q3 2020 the average was 3.05 per cent fixed for life, which for a product which could run 20+ years represents phenomenal value.

Products are not inflexible – 43 per cent allow interest repayments and 59 per cent allow penalty free capital repayments.

The industry needs to get better at promoting these flexible features and advise customers on payment options – mitigating the impact of roll-up interest, particularly for younger customers.

Many products offer inheritance and downsizing protection as well as wider safeguards – a no negative equity guarantee and guarantee of tenure.

Properly advised, modern lifetime mortgage products are not a last resort, but part of the mainstream mortgage market, playing a vital role helping customers navigate later life.

Societal and individual benefits need to be better recognised and the sector should be a celebrated part of the UK financial services industry.

 

Fees must not be excessive

We must continue to challenge ourselves on fees, ensuring they are not excessive nor act as a barrier to customers accessing specialist advice.

Adviser remuneration reflects these are lifetime products and the hours of expert support customers receive.

People are not shoe-horned into inappropriate products – less than 15 per cent of people who approach us take out equity release.

Are there exceptions to the rule? Absolutely, we’re concerned about those who don’t transact enough business to know the intricacies of a complex market that includes c.400 lifetime mortgage products.

 

Personalised advice

Advice needs to be personalised and customers challenged on preconceived assumptions. Customers need access to advice that allows them to understand all their options and delivers consistently good outcomes.

As an industry we need to break the silos that exist across the later life market: equity release, retirement interest-only, specialist later-life mortgages or downsizing should all be considered when making recommendations.

Education and information for customers around their options and how to access specialist advice has to increase.

Industry investment in this area should be encouraged and applauded as long as marketing activity is responsible and not driving customers into product silos.

Work is required to better define the later life lending sector and how product types fit within advice models.

However, on the back of a helpful nudge from the regulator, I hope that 2020 will be seen as a defining moment towards the market achieving its full potential and stepping-up to meet vital customer and societal needs.

 

 

Regulator and industry must stop bad apple advisers reappearing – Clifford

Regulator and industry must stop bad apple advisers reappearing – Clifford

 

I suspect a large majority of firms are already carrying out much or all of what the regulator requires and is focusing on.

However, such missives can obviously be useful in terms of knowing where the line of sight is for the regulator and in providing certain market participants with a shove in the right direction.

The three key areas of potential harm outlined by the FCA – consumers purchasing an unsuitable product, paying excessive fees and charges, and the risk of fraud to all stakeholders – should be widely understood and, certainly for advisers, on their radar as standard practise.

For those businesses like ourselves who are responsible for large numbers of broker firms, we stay very close to and focused on the regulatory requirements and this is a constant review process.

But it’s still worthwhile for the regulator to address the sector, outlining its own priorities and reminding market participants of their responsibilities.

 

Action is vital

What is perhaps even more vital here is the action that regulated businesses take when they come across bad practice within broker firms.

Quite frankly, it is fine having systems and processes in place, but clear and decisive action must follow when poor work is discovered, whether it be deliberate or otherwise.

Networks routinely suspend advisers when it has been found they do not comply with the firm’s practices or meet the required standards, and we make no bones about terminating the contracts with firms and de-authorising if breaches have been serious enough to justify this action.

It’s perhaps what happens after this that will go a long way to improving standards across the industry.

 

Stop bad apples reappearing

Those serious infractions which have resulted in consumer or firm harm must be widely understood and known such that firms have access to that information in order to make decisions about who they are authorising.

Sometimes it feels like it is too easy for poor advisers to resurface elsewhere and to continue running the risk of consumer detriment, when they have been censured for poor conduct by other organisations.

There will always be bad apples in any industry, but when those individuals are found and dealt with, industry participants need to take clear disciplinary action and prevent advisers from popping up elsewhere with the risk that they would continue to deliver poor advice.

We are committed to ensuring all our advisers and firms work to the highest standards, which doesn’t always make us popular.

In fact, in the trade press recently, I have seen us referred to by advisers as ‘harsh’ in compliance terms.

Given the need to improve industry standards and consumer protection, I’ll take that as a compliment.

 

 

 

Dear regulator: ‘replying to emails would be greatly appreciated’ – JLM Mortgages

Dear regulator: ‘replying to emails would be greatly appreciated’ – JLM Mortgages

 

In our line of work, there are easy targets – and then there is the Financial Conduct Authority (FCA).

Perhaps the easiest of all targets and we have some sympathy for those who work for this organisation especially given the large amount of – often unjustified – opprobrium that is thrown at it.

That said – and you might have sensed where this is going – sometimes criticism is justified, especially when you can see a perverse logic, or an inverted priority list.

Now, let’s caveat that again because we all understand this is a pandemic we are living through and, we might argue, that the normal rules do not apply. However, there is also a strong argument to suggest our regulator should be doing more than most to create a greater level of ‘normality’.

We all have staff working away from the office, we have all had to ensure our systems and processes can function in that environment, we have all had to keep providing the service we are paid for, we have all needed to find ways to maintain our focus and deliver our ‘end product’.

The FCA should not be immune from those responsibilities, in fact you might think it is more important for them to function ‘normally’ than most. Particularly given the ever-increasing cost of being regulated.

 

Six months to process AR firms

So why, for example, are we waiting an age for them to process and register our new AR firms? Why has it taken over six months and, despite constant calls, emails and meetings, this still hasn’t been done?

Why are they effectively stopping these firms and advisers from trading while we wait for them to be processed? Why have they taken people off the register for no reason, then when questioned, reinstated them with no apology?

And then there is the issue of what should be the regulator’s major priorities at this moment. Big picture strategising is one thing – we’ve seen enough of that in the mortgage market with its ongoing fixation on price but, at the same time as it is ignoring emails and calls, it is ramping up the workload of the firms it regulates.

Hence, while we have been waiting since November 2019 for the regulator to provide the guidance we asked for on business structures, it is now asking us to fill out a second Covid-19 impact study. To say this is not necessary at the moment is an understatement, especially when these requests seem designed to stop advisory firms/network principals and the like from actually getting on with our work.

How come this data is deemed so supremely important when we simply want a reply to an email?

 

High standards for all

So, while we understand that this might be perceived as another case of bashing the regulator, there is a lot more substance to our concerns, mostly because when the highest standards are expected of our business, why shouldn’t we expect the same from the FCA?

Given the circumstances, and given the FCA itself said it would – during this period – only be focusing on key areas, why doesn’t it now begin to deliver on what is really required for the firms it regulates? We await a response – and if they could also reply to our emails, that would be greatly appreciated.

We are keeping up our side of the bargain, so it would be good if the regulator could try and support us more.

 

Mortgage Solutions has contacted the FCA about the issues raised in this article.

 

Landlords need to be prepared for every possibility with CGT changes – Young

Landlords need to be prepared for every possibility with CGT changes – Young

 

For most, the answer is staring them in the face, and that is continue to hold the property for the long-term.  

We’re all acutely aware that investing in a property has to be done over a 10, 15 or 20 year timeline and not the short-term. Regardless of what outward pressures are placed upon landlords, that still holds true. 

So, when I see speculation around the potential reform of capital gains tax (CGT) – specifically whether it will be charged on additional properties and what this might mean for landlords  I am quite comfortable in saying that, for the vast majority, the decision right now will be to pursue the status quo. 

This, by the way, is not a new taxation suggestion and – given the current circumstances with the need to grow tax revenues – I am not surprised to see it mooted again.  

Whether it gets to the statute book however remains another thing entirely. In terms of impact this is clearly not up there with the potential for CGT to be charged on the sale of owner-occupier properties. 

Another suggested tax ‘refinement’ that has again been suggested over the past decade or so. 

So, we are not in new territory in terms of its potential, but we may be closer to it becoming law than at any time before. 

 

Impact on landlords 

What could it mean? Well, as mentioned, it’s likely to mean that fewer landlords will be inclined to sell their properties if CGT is charged, and it may well mean that older landlords in particular have to think a little bit more carefully around what their exit strategy might be. 

For the most part, landlords invest in the private rental sector (PRS) as part of their ongoing pension plan. The closer you get to retirement, the greater the consideration of how to realise the asset. 

What we may see, if CGT is charged, is a more structured response to selling those assets – perhaps waiting until their tax affairs change 

Or we may find that owners continue as is, taking the rental income through retirement with the view to passing on those properties as part of any inheritance. 

There has been some speculation that the introduction of CGT might hasten the move from owning buy-to-let properties as an individual, into limited companies, in order to avoid the charge. 

Certainly, over the past five or six years, a far greater number of purchases have been within limited company structures, but we’ve tended not to see the ‘transfer’ of properties already owned, because of course they are treated as a sale and come with a stamp duty charge and other costs. 

 

Added costs 

Now, however, landlords may have to reconsider whether continuing to hold a property in an individual name is the best option for them.  

At the moment, they might feel they can swallow a stamp duty cost in order to do this, but whether they could if CGT was added in, is another thing entirely.  

No doubt some advisers may be receiving contact from landlord clients if the move towards a CGT charge on buy-to-let moves ever closer. 

However, at present, we cannot say with any certainty just what might be brought forward.  

Certainly, give the vast majority of the UK public will never pay CGT, charging it on those deemed to be ‘richer with assets’ is unlikely to be a vote loser. 

That said, there is always a vociferous debate – particularly within the Conservative Party – about taxation, its levels and who may or may not be appropriate to pay it.  

I suspect this tension will be at play again should this potential measure move more firmly into the spotlight. 

However, regardless of what might happen, landlords should always be considering what they do next, particularly if this CGT charge turns out to be the next intervention.  

Landlords must meet retirees’ needs as older renters rise – Rowntree

Landlords must meet retirees’ needs as older renters rise – Rowntree

 

Today, 20 million people are over the age of 55; by 2043, that number will grow to 26 million. Over-55s are turning to the private rented sector in increasing numbers.

While the numbers are still relatively low in the context of the whole market, 16.3 per cent of private renters are over 55, the forecasted growth of the over-65 age demographic across the UK will result in increasing numbers of people relying on private rental homes in later life.

The care home sector is failing to keep pace with demand for new beds and social and demographic changes are creating increasing numbers of single person households, the majority of whom are in the over 55 category, and home ownership is often out of their reach.

Other factors include divorce, which is rising in the over 65 age group but falling in others, men living longer and stagnating retirement incomes.

The average income of all pensioners in 2018/19 was £320 per week, compared to £314 in 2009/10. However, inflation averaged 3.1 per cent per year over the same period, meaning something costing £100 in 2009, would cost £135.15 in 2019, putting strain on retirement incomes.

The low interest rate environment of the past decade has also limited income from savings, while the proportion of pensioners receiving an income from investments has declined consistently since the mid-1990s.

An option for asset rich, cash poor homeowners could be to sell and either downsize or rent.

For many, the private rental sector will be the solution and landlords are already reacting to this trend.

 

Meeting the needs

Paragon’s research shows that a fifth of landlords expect growth in the market for retired renters over the next year and the good news is that this age demographic like the benefits it offers.

Two thirds of over 55s said renting suited their needs or they enjoyed renting, compared with 49 per cent in the under 55 group,

An overwhelming majority (63 per cent) said they were pleased they do not have to worry about repairs.

When asked about the reasons for renting, 39 per cent said they didn’t have a mortgage deposit, while 22 per cent said they didn’t want the responsibility of owning a home – compared to 9 per cent of under 55s.

Additionally, 16 per cent said it enabled them to live in an area they could not afford to buy in and 15 per cent because it gave them the flexibility to move easily.

Tenants aged over 55 are also much less likely to want to own their home – 45 per cent compared to 81 per cent of under 55s.

Catering for later life renters presents opportunities and challenges for landlords.

This cohort of tenants typically stay in a property for longer, maintain the home well and benefit from stable income, usually in the form of a pension.

However, homes need to cater for the physical restrictions some of these tenants may face. This tenant group has a greater propensity to have a disability or long-term illness.

The private rental sector has proven capability to adapt to meet the needs of a broad range of tenant groups, from those leaving home for the first time, to young couples, families and, increasingly, those looking for a home for their later years.

FCA equity release concerns focusing on dabblers – Wilson

FCA equity release concerns focusing on dabblers – Wilson

 

Its specific references to lifetime mortgages as one of two key areas for its supervision work, along with second charge mortgages will be significant interest to those in the equity release sector.

The Financial Conduct Authority (FCA) used this Dear CEO letter to reiterate the findings of its equity release review, published earlier in the year.

It emphasised the three key areas of concern – personalisation of advice, insufficient challenging of customer assumptions, and lack of evidence to support the suitability of advice.

And it stressed that firms need to review what they currently have in place and whether it is robust enough to meet these concerns.

 

Are equity release practitioners being put on alert?

Perhaps, but the letter also stressed that firms are being given ‘time to assess what they need to do, and to introduce and embed any changes required’.

What was also interesting within this focus on lifetime mortgages, was the regulator making the connection between the sector and a Covid-19 world.

This was particularly in terms of how advisory firms might address any income shortfalls that have developed during 2020, and whether this may see them drawn to areas of the market ‘where they may not have the relevant experience’.

 

Dabblers the focus

As has already been pointed out this sounds to me like a refocus on so-called dabblers.

Historically the regulator has been concerned with advisers who only carry out a very small number of equity release cases every year, and this appears to be a warning to those who may have the permissions and authorisations to provide this advice but who are not necessarily specialists in the sector.

In other words, of course you may be able to work in this space, but are you necessarily best positioned to be doing so?

I suspect the regulator is potentially concerned advisers might be lured into a sector which they perceive as more lucrative, only to give advice which is not appropriate because they may not understand it fully.

There is also a point to be made about whether the current regulatory set-up makes the likelihood of that outcome even greater.

For instance, when mainstream mortgage advisers can already actively advise on retirement interest-only (RIO) mortgages without necessarily having any wider later life lending experience, then there might also be a danger that firms, who have the permissions, might allow their individual advisers to stray further into lifetime mortgages.

Or indeed, it might simply be a warning to advisers and firms to think very carefully about providing equity release advice, if it’s something they would never touch in a normal environment?

 

Potential for poor outcomes

Given the levels of business that most mainstream mortgage advice firms are currently seeing, this is perhaps an unfounded concern.

However, with a much greater need for later life lending advice, and a regulatory system that does allow mainstream intermediaries to advise on a specific later life mortgage product, there is an obvious potential for customers to get poor outcomes, especially if only one part of the product solution puzzle is being covered.

Regulatory scrutiny has always been a significant part of the equity release market, and that will not change.

Firms clearly need to think carefully about their current processes and systems, and their current activity levels, especially if equity release only tends to be a fleeting part of their overall offering.

If they are going to provide advice then they need to seek out the additional training and support available and use a sourcing system that provides up-to-date product information and criteria in its entirety.

And if they can’t, or are not willing to do that, it may be far better to have an introducer arrangement with a specialist, than take a risk with their livelihood.

 

New blood needed or high LTV lending might dry up – Bamford

New blood needed or high LTV lending might dry up – Bamford

 

It’s not to say there aren’t high LTV loans available, but they are certainly not in abundance.

Just crunching some product numbers based on the Halifax House Price Index and its average UK house price of £250,457 in October will show you what I mean.

For all products across all terms, first-timers seeking a 95 per cent loan based on that average would have their ‘pick’ of just 15 products, according to Money Saving Expert.

At 90 per cent it rises to 41, and at 85 per cent it more than triples to 158.

You can therefore understand why the current focus is on 85 per cent LTV and why potential clients are being asked to see if they can boost their deposit levels in order to get to this.

 

What would that entail?

Well a five per cent deposit at that Halifax average house price would be just over £12,500, 10 per cent would be just over £25,000, and 15 per cent would be just over £37,500.

If you’re at the 95 per cent deposit level, how do you pull together £25,000 at short notice?

It’s no wonder families are being called upon more and more.

By the way, in just one year, those deposit levels required have gone up by over £800 for five per cent deposits, over £1,750 for 10 per cent, and over £2,600 for 15 per cent.

Again, you can see why there tends to be urgency to make property dreams happen, and that’s without even talking about the current stamp duty saving available.

 

New blood needed

So, while it’s understandable that – with large amounts of business anyway – the market is focusing on the here and now, we need to look forward and address the ongoing high LTV product shortage.

Without new blood coming into this market we are likely to see a big drop-off in activity.

As an optimist, I sincerely hope lenders will reset themselves in January and will hopefully see the requirement to be active in the higher LTV space, the benefits it brings, and the necessity for our marketplace.

However, we might not be able to rely on the market healing itself, and the need for government intervention may well get bigger and bigger.

Can families keep coming to the rescue? Probably not.

And this will be brought into sharp context when – in all likelihood – we have a whole swathe of people who couldn’t get onto the housing ladder, even when there was a stamp duty holiday in place designed to help them do just that.

 

Johnson muddying water

The government, or rather prime minister Boris Johnson himself, has dipped his toe into the water but I sense he is muddying it slightly, by conflating high LTV with long-term fixed rates.

These are separate issues and probably need to be treated as such.

Which means high LTV lending has to be encouraged in the future, and then some.

Whatever is decided, action will be required quickly.

Otherwise the future will become the present very quickly and the transactions normally fuelled by good high LTV availability will inevitably dry up.