Speaking on a Lunchtime Learnings session earlier this week, Jennifer Lloyd (pictured), head of mortgage products at Skipton Building Society, that she hoped that other lenders “follow in our footsteps sooner rather than later” into the 100 per cent loan to value (LTV) space as it was “punching above our weight in terms of market share this year”.
“We’re happy to lead the way but it would be really great if people could follow and not just with 100 per cent LTV lending. It’s continuing to innovate and think a bit differently about what can we offer as lenders in terms of products but also propositionally or with criteria.
“What can we do that acknowledges and recognises that buying a house today is very different to buying a house was even 10 to 15 years ago.”
John Scrivens, new build and first-time buyer lead at Skipton Building Society, said that research done by the mutual showed that around a third of first-time buyers received a gift from the Bank of Family.
“That’s not fair, not everybody has that that ability. I absolutely hope that others will get involved [in the 100 per cent LTV space] and if not come up…with something that will address that issue,” he added.
Figures from Skipton Building Society show that financial support for first-time buyers is increasingly coming from family members, not solely parents.
The proportion of siblings contributing towards deposits has nearly doubled since 2017 to around 11 per cent, while parents has fallen from 80 per cent to just over 70 per cent in the same time period.
Track record mortgage helped 500 people onto property ladder
Lloyd said that since the innovative track record mortgage launched in March it had helped over 150 first-time buyers and 500 people in total get a foot on the property ladder.
This is the equivalent to around 91 completions through the product, she noted.
She also confirmed that the recent changes in criteria could lead to a doubling of applications through the track record mortgage product.
The criteria changes were introduced earlier this month and allow tenants who haven’t previously been homeowners in the last three years to apply as long as they can demonstrate affordability and a strong track record of rental payments.
Lloyd continued that Skipton had also seen a “good geographical spread of applications, completions right up and down the UK and a real good spread of income and case size”.
She noted that there had been a maximum case of over £600,000, as well as more affordable houses bought using the product.
Lloyd said that the average case size at the moment was around £160,000.
She said: “We do acknowledge that the product works best where house prices are more in-line with rent, that’s a fact of how it is.
“I do hope though, however, that we are starting to see mortgage rates come down and rents are going up. So, I hope that in time, we’re here to stay with this product, and so hopefully we’ll start to see that improvement in terms of rent to mortgage payment which will open the door for more first-time buyers.”
Lenders should take a more ‘tailored approach’ to affordability
Lloyd said that she was not aware of other lenders using rental history in a product like the track record mortgage, adding that there had been “long-held confusion” from first-time buyers about why this has not been included as obliquely in the mortgage process.
She noted that there was “development” in the industry in terms of thinking about assessing affordability, pointing to Open Finance and Experian Boost as examples.
“There is definitely innovation going on to make sure that we are looking at first-time buyers holistically and not in the old-fashioned way that we once did,” Lloyd added.
Scrivens noted that there was also innovation such as joint borrower sole proprietor, and he “applauded the intermediary market for creativity”.
He explained that when it launched its JBSP proposition it was mainly aimed at first-time buyers wanting to get assistance from family members but it had seen a lot of older customers coming to the end of an interest-only mortgage and getting younger family members to support that mortgage application from an “affordability perspective”.
Lloyd said that as an industry there tends to be a “one size fits all approach” to affordability assessments and the way lenders look at criteria.
“I’d certainly be interested to explore kind of a more tailored approach because what works in Skipton is not going to work in London. It isn’t the same, so there should be potentially a little bit more nuance in terms of what lenders are expecting, asking for and taking into account when they are assessing affordability.
“I look forward to seeing that continue to innovate as we go through the next year and beyond,” she said.
Watch the full video below, hosted by Anna Sagar, reporter at Mortgage Solutions, Jennifer Lloyd, head of mortgage products at Skipton and John Scrivens, new build and first-time buyer lead at Skipton.
