Speaking on the Mortgage Solutions mortgage market review masterclass, Chris Pearson, head of intermediary mortgages HSBC, said that you couldn’t compare the current economic situation to the financial crisis.
“I think we’re almost comparing apples and pears to some degree. Back in 2007, that was more about liquidity and capital constraints for quite a lot of banks. Whereas today, it’s about the increasing rate environment and the pressure on household budgets and affordability,” he noted.
Pearson continued that the “difference” between 2007 and now is that lenders are “out there and very willing and capable of lending” and they were well-capitalised.
“I don’t really want to compare the two. We’re moving from historic [interest rate] lows to into a relatively new normal, but we’re not moving to the historic highs. We’ve seen much higher interest rates than this. What we’re seeing is a jump between historic lows to the environment that we are at the moment, so I think it is difficult to compare the two,” he added.
Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, agreed, adding that “we’re in a completely different place from a banking environment [perspective]”.
She explained: “There was a lot of clean-up of the industry done after the financial crisis that’s put us in a really good place and actually put customers in a really good place as well. So, I know it feels really tough out there, it feels tough for us and brokers and ultimately feels very hard for consumers.
“But we are stressing people’s affordability, and have done for some period of time, at a much higher interest rate than what in reality they have been paying over the last few years.”
Bryden said that what it was finding is that customers are having the “shock of actually no one wanting to pay more than what they have been”.
“We really do want to lend, and I think you can see that across all of the lenders. We certainly came into this year looking at…how can we help borrowers, so [there have been] lots of tweaks to policies, lots of ways of working around affordability and so on,” she noted.
High interest rates ‘not new’
Graham Sellar, head of channel development at Santander, noted that a key difference between now and the financial crisis was that other costs had climbed as well, so the cost of living rather than solely mortgage rates were more expensive.
“Customers are having to pay more of their disposable income on their mortgages and with the cost of living and all the other bits going on at the same time. I think it’s bringing back to me what happened in the past where a large part of your take home salary was needed to pay for your mortgage.
“It is something we’ve probably forgotten about, and it’s coming back again. I think it’s interesting in terms of how it [interest rates] has moved so quickly. It’s not new, but it is new to a lot of people,” he noted.
Kevin Roberts, managing director of mortgage services at Legal and General, said that the interest rate environment we are in now is “normal”.
He continued: “I think what has been abnormal is the very low interest rate period we’ve had for several years. We’re back to normal and this is what we’ve got to deal with now for the foreseeable future.”
‘There’s a lot of education that we want to do’
Bryden, along with other lenders on the masterclass, said they were engaging with brokers to talk about the economy, fraud and technology, and there was key collaboration between the Association of Mortgage Intermediaries and Intermediary Mortgage Lenders Association.
“There’s a lot of education that we want to do and all of us have on this call here have really robust business development management teams that want to engage,” she added.
However, she said that lenders had to “acknowledge” that the “frenetic” period that we are currently in was stressful for brokers.
“Brokers have actually said I’ve not got a lot of time in the day to do the actual day job, so how do we engage with those brokers and educate them whilst they’re really busy? I think it’s really important that we go out ask brokers what they want from us and what they need,” she added.
Bryden pointed to lender resources and UK Finance as areas with a “wealth of information”.
To watch the video click below. The video features Amanda Bryden, head of Halifax Intermediaries and Scottish Widows, Chris Pearson, head of intermediary mortgages at HSBC, Kevin Roberts, managing director of mortgage services at Legal and General and Graham Sellar, head of business development – mortgages, Santander UK.
