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Bank of Ireland podcast: Affordability has undergone a ‘huge change’ since the pandemic and lenders have had to ‘get more pragmatic’
Affordability has undergone a “huge change” since the pandemic and lenders have had to become increasingly complex and specialised in how they view it, according to a podcast.
Speaking on the podcast, Louise Weiss, national account manager at Bank of Ireland Intermediaries, said that the mortgage market has changed irrevocably since the pandemic, noting that lenders have had to “adapt” and “get more pragmatic” around affordability, the cost of living and inflation.
“It’s been a huge change, and very difficult for everyone to adapt all at the same time. This industry is all interlinked… but ultimately, we’ve all had to come together, and I think we’ve all done extraordinarily well,” she noted.
Greg Cunnington, head of strategic accounts at Legal and General (L&G), agreed that the mortgage market had changed, explaining that previously as a broker you could be fairly certain “what bucket of client type would go to what lender demographic”, whether that was a high street lender, specialist lender or building society.
However, now high street lenders were becoming increasingly complex, especially around affordability, expanding into areas like large loans and foreign expats.
Cunnington continued that lenders who had built their loan books around certain niches in the market were now “going to have to be more innovative and flexible”.
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He added: “Bank of Ireland’s bespoke proposition, which was market leader on day one, and everybody copied, suddenly you’ve got 10 lenders doing really good jobs. Now, Bank of Ireland had to renew, refresh, and make it better and better, which, if you’re a lender, means it must be really stressful and busy at the moment, and it is the definition of if you’re not running, you’re standing still”.
Lenders embracing affordability complexity has ‘cemented the value of advice’
Cunnington said that increased options and specialisation in the market had “cemented the value of advice” as the mortgage landscape was becoming more nuanced and complex.
He said that when he was a broker, he realised that looking at their client bank who had a 25% deposit, basic salary, no kids and no financial commitments was “zero”.
“Everyone had a car on finance, kids were all at nursery or private school. Everybody had shares income, or they had [a] bonus, joining or signing on bonuses. Obviously, post-pandemic, there have been a lot of people moving jobs, lots of improving jobs and people going self-employed or contracting.
“I think lenders have adapted to that to go, actually, your normal UK mortgage customer is no longer someone where you go three times base salary, you’ve passed your credit score, bam, the market has really evolved and we should be quite proud that lenders have adapted to that,” Cunnington said.
Areas he said that could be improved across the market in terms of lender criteria and affordability was around vested stock income, higher loan-to-income (LTI) multiples and joining bonuses.
Weiss said that “competition is always good and healthy” and it was “fully aware” of what competitors were doing, and it was “great to see the innovation coming through because the market demands it”, but the lender’s aim was to “always stay consistent”.
“Every time I’ve been to brokerages the consistent feedback is, ultimately, you guys do what you always say you’re going [to] do, and that’s why we can rely on you. From a broker’s perspective, all you want is consistency and that comfort,” she said.
This is the first video in a series by Bank of Ireland, supported by Mortgage Solutions. The video features Louise Weiss, national account manager for Bank of Ireland for Intermediaries, and Greg Cunnington, head of strategic accounts at L&G. The host is Anna Sagar, deputy editor of Mortgage Solutions.