Speaking at a Lunchtime Learning session with Mortgage Solutions, Jen Lloyd (pictured), head of products and proposition at Skipton Building Society, said that while the mortgage market was “incredibly resilient” and there were “huge levels of demand”, first-time buyers are “facing some of the biggest barriers than ever before when it comes to hurdles they have to overcome”.
She pointed to research done by Skipton Building Society that showed that around nine in 10 would-be buyers can’t afford to buy a property in their local area.
“That feels to me like a big challenge, but we are clearly doing everything that we can to address that challenge when it comes to helping people take those steps onto the property ladder,” Lloyd said.
Lloyd said the upcoming Financial Conduct Authority (FCA) consultation on the mortgage market was very welcome, as some regulation can impede lending to first-time buyers, with a specific example being the loan-to-income (LTI) cap.
“At the moment, all lenders across the industry, regardless of size and markets that they play in, can lend no more than 15% of their lending to people at more than 4.5 times loan to income, and that constrains affordability.
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“What we see is that there are instances, certainly for our own data and talking to peers, that having that cap in place means that borrowers are offered smaller loans than they need where we ordinarily would lend to them.
“It’s not our own affordability that’s saying they can’t afford it, it’s actually this PRA limit is inhibiting lending, so it’s good to see that’s kind of being discussed much more openly now, because it’s long been a challenge,” she added.
Skipton BS aiming to have half of completions go to FTBs
Lloyd stated that it was Skipton Building Society’s aspiration for half of completions to go to first-time buyers, adding that first-time buyers are “what shapes our product development and our policy innovation”.
Its latest financial report shows that it helped around 20,000 first-time buyers out of around 41,658 mortgage customers. This is equal to around 48%.
She said its Track Record mortgage, which she described as its “flagship product”, had “gone down really well with brokers”.
Lloyd said it had been a “good conversation starter” for brokers, even if it didn’t end up being the product customers went with, and said there were thousands of people who now had homes due to the deal.
She also outlined its Delayed Start product, which launched earlier this year and suspends mortgage payments for the first three months to give buyers breathing room.
Lloyd said the mutual was pleased with the reception so far, adding that there had already been “offers out of the day” and it was “making a difference to people already”.
When asked about product innovation, she said she welcomed other lenders coming into the 100% loan-to-value (LTV) space like April Mortgages and Gable Mortgages, as well as innovative first-time buyer offerings like Yorkshire Building Society’s £5k Deposit Mortgage.
“It just shows that it is possible, even within the constraints that we have from a regulatory point of view, it is possible to innovate. I’m excited to see more of that,” she added.
