At the Future of Mortgage Servicing conference at the Belfry, hosted by Phoebus Software, Target Group and the Financial Services Forum, representatives from the mortgage sector were asked: “Is affordability set to become a more pressing issue by 2027?”
Of the 100 respondents, 77% said affordability would become a more pressing issue.
Nearly half – 47% – said it would become worse, while 30% said affordability would be significantly worse.
Some 17% said there would be no change in mortgage affordability, and 7% expected it to improve.
Adam Oldfield, CEO of Phoebus Software, said: “Despite a resilient housing market and lower rates than 12 months ago, the tax increases announced in the Budget, along with higher unemployment, could affect mortgage affordability. So, it’s understandable that industry leaders are predicting that it will become a more pressing issue.”
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Oldfield said mortgage lenders were prepared to identify and support borrowers who could fall into financial difficulties.
He added: “Servicing platforms are increasingly integrated with data analytics to anticipate borrower needs and behaviours, and artificial intelligence-powered early warning systems can help to identify at-risk customers. Colleague training is also paramount, to ensure that customers have access to empathetic human support when they need it.”
Pete O’Connor, chief executive of Target Group, said: “The fact that three-quarters of leaders we polled in the mortgage industry expect affordability to worsen highlights the impact of the Chancellor’s use of fiscal drag to raise revenue – bringing 5.2 million people into paying income tax and moving another 4.8 million into the upper rate band, quite aside from the first fuel duty increase in 15 years.
“All this is eroding disposable incomes. Growth expectations have been downgraded for every forthcoming year until the end of the decade and the tax burden is forecast to rise to an all-time high of 38.3% of GDP in 2030.”
O’Connor said lenders were not being unreasonable, adding: “Let’s not forget the rate of UK unemployment rose to 5.1% in the three months to October as unemployment hits a post-pandemic high, showing another sign the jobs market has weakened.
“Having said that, while there are challenges ahead, there are also solutions – and we will help lenders find a positive way forward.”
