First-time buyer deposit barriers are just one part of the homeownership problem – Hendry

First-time buyer deposit barriers are just one part of the homeownership problem – Hendry

You often read that general election campaigns are – or at least should be – about policy, and from a housing/mortgage market perspective, we have now seen some of those policies included in the manifestos. 


All parties giving attention to homeownership 

For example, the Labour Party has announced its plans to make the government mortgage guarantee scheme for first-time buyers a permanent fixture of our market.  

As it stands, the current scheme is due to finish at the end of next June, but Labour will now turn this into a ‘Freedom to Buy’ scheme, designed to support 80,000 young people onto the ladder over the next five years.  

This will likely need significant enhancements to meet its goals, given it essentially serves as a government alternative to private mortgage insurance – used by many lenders, particularly building societies – to support high loan to value (LTV) mortgages.  

Critics of the current state version often highlight its cost and lack of flexibility, suggesting it is vastly inferior to private alternatives with many lenders also preferring to manage these loans on their balance sheet without using insurance. 

Similarly, the Conservative Party has announced the ‘First Homes Scheme’, which plans to offer new houses to first-time buyers at a 30% discount from market value. This initiative aims to make homes more affordable, but the buyers will have to resell the homes at the same percentage below market value, ensuring ongoing affordability.  

Additionally, the Conservatives promise to deliver 300,000 homes annually and expand shared ownership options to facilitate access for first-time buyers. 

In Scotland, the Scottish National Party (SNP) is pushing for increased affordable housing and property tax reforms to assist first-time buyers. Its manifesto includes a ‘First-Time Buyer Savings Scheme’ where the government will match contributions up to a certain amount, encouraging young people to save for deposits. The SNP also plans to build at least 25,000 affordable homes each year, specifically earmarking many for first-time buyers, which could be a game changer in addressing housing affordability in Scotland. 

Meanwhile, the Liberal Democrats are advocating for a more innovative approach with a ‘Rent to Own’ scheme. This plan allows tenants to purchase their rented homes gradually, making the leap to homeownership more manageable. Additionally, a ‘Help to Renovate’ scheme could provide financial support for first-time buyers to renovate older properties, improving both home ownership rates and the quality of housing stock. 

Reform UK proposes a reduction in stamp duty for first-time buyers and is seeking to incentivise local councils to approve more residential developments. Its manifesto suggests scrapping stamp duty entirely on homes up to £500,000 for first-time buyers and simplifying planning permissions to boost house building.  

In Wales, Plaid Cymru is championing the ‘Help to Buy Cymru Plus’ scheme, designed to increase support for new-build purchases and fund more affordable homes.  

It is also proposing a land value tax to replace the current council tax system, which they believe will make property ownership more equitable and affordable for new buyers. 


Helping first-time buyers 

As we look at these policies, it’s evident the housing market – particularly for first-time buyers – remains a critical focus for all parties. However, without a concerted and focused housebuilding programme – for both owner-occupation and rental uses – supply is going to continue to lag behind the demand curve.  

The demand we see is simply not going to be met by supply alone. 

One further point to make ties into supporting first-time buyers while recognising that we are a long way from a ‘one size fits all’ need.  

Yes, first-timers require high LTV mortgages, and anything that improves the supply of these is to be welcomed. However, as many have pointed out, they still need to meet affordability criteria even if they have that 5% deposit saved. 

What we also need to focus on is affordability and recognising the different borrower demographics within the group of first-time buyers.  

For example, are they professional borrowers whose income is going to rise significantly in the years ahead, key workers for whom we have different product options, or joint borrower-sole proprietor arrangements with support from parents? 

These more specialist borrower types are increasingly becoming the norm in the first-time buyer space. As a lender, we are certainly committed to finding product ways and solution means by which they can get onto the housing ladder. 

To start, let’s present an optimistic future about what potential first-time buyers can achieve, and let’s hold the new government to account to ensure we have the property supply and product solutions available for all types of would-be purchasers who, for too long, have found the avenue to homeownership too difficult to navigate. 

We want to be known for consistency, affordability and flexibility, says NatWest’s Fordham

We want to be known for consistency, affordability and flexibility, says NatWest’s Fordham

Fordham officially started working for NatWest in February and said in that time, he noticed the lender was renowned for its flexible approach. 

He said NatWest was “less binary” when it came to criteria, lending and some of the circumstances it was willing to consider. 

“That gives brokers that little bit of flexibility when recommending NatWest to their clients”, he added. 

He also said NatWest had consistency in its approach, as it was “always on, from a pricing perspective”. 

Fordham said: “Generally, we’re always priced relatively well and that’s certainly helped the bank grow from where it was a few years ago.” 

Fordham added: “As we stand today, [NatWest] is one of the biggest lenders in the UK. So, it’s a really positive growth story and they’ve been able to do that around some of that flexibility, consistency of pricing, having expanded some of their propositions as well.” 

He said NatWest was one of the “better lenders” when it came to affordability, which had helped grow its market share. 


Easing the process for brokers 

NatWest’s recently launched broker platform had “gone down really well”, Fordham said, and made it simpler for advisers to submit business. 

He said prior to joining the lender, a lot of time was spent collaborating with brokers and developing different iterations of the platform to make sure it “really fulfilled the needs of brokers and what they want when submitting business to lenders”. 

Fordham said he was also impressed by the NatWest team and their “enthusiasm to make it better for brokers” and ultimately their customers. 

“There’s definitely that culture of success, growth and wanting to make it better and there’s lots of things that that you know we are working on to overall improve the proposition for brokers,” he added. 

Fordham said when he joined NatWest, he spent a lot of time talking to the teams across the UK and wanted to work on a number of areas, including the post-submission process. 

“We have the new portal now, which is great, and that’s enabling us from a technology perspective to look at when brokers submit business to us, how we process that business, how it goes through underwriting, how we agree cases all to basically get a decision quicker. Ultimately we’re trying to agree more cases at first touch.” 

He said NatWest was testing certain parts of the process to improve the packaging requirements and the information provided at submission. 

Fordham said this would be part of an education piece, which would make submissions simpler. 

NatWest welcomes feedback on its proposition through regular surveys with brokers. 

“It’s an ongoing journey,” he added. 


Strengthening relationships and offering reliability 

NatWest is considered as “reliable, consistent and flexible” in the minds of brokers, Fordham said, and upholding this reputation is part of what’s driving the lender to improve its broker portal and refreshing its business development management (BDM) team. 

“Brokers want immediacy in my view. If [they] want to understand the point of policy, [they] want to know the answer quickly and [they] want it to be accurate,” he added, “whether that’s with a call or via live chat, [brokers] want to make sure [they] get that information so they can go and advise their client.” 

NatWest is multi-skilling its BDM team to improve that immediacy, Fordham said. 

He said for some brokers, having a BDM was an “emotive subject” and possibly “a status thing”, saying it was sometimes seen as the be all, end all adding that some brokers preferred to have a dedicated BDM. However, NatWest is focusing on how to deliver information in a quick and correct manner regardless of how a broker submits a query. 

“We’re keen for our brokers to be able to use different channels to contact us, but making sure that the experience they get is consistent across all those different channels,” he added. 


Staying responsible 

For the market to return to levels seen previously, Fordham said there needed to be a lower interest rate environment, as this would mean better affordability and more confidence. 

He predicted rates could fall by late summer. 

Fordham said: “That would be very welcome, because I think it would give that boost of confidence boost to the market.” 

If and when this happens, NatWest will continue to lend responsibly and support the market with a limber approach. 

“I think that’s going to continue to be key as the as the year progresses,” he said. 


Brad Fordham, head of mortgage distribution, NatWest Group

Brad has worked in financial services for over 30 years and in mortgages specifically for 15 of those, starting his career at NatWest.

He joined Santander in 1995 and worked in many senior roles across the retail bank before leading Santander for Intermediaries, then assuming responsibility for all distribution channels and subsequently spending time leading the mortgage business in Santander. 

Brad re-joined NatWest in 2024 as head of mortgage distribution.


NatWest has partnered with the British Mortgage Awards this year to celebrate the mortgage sector’s standout and most excellent members. As part of the partnership, Mortgage Solutions will be publishing a series of interviews with NatWest’s mortgage team to discuss best practice and the importance of working together for the good of the sector’s shared customers.

This year’s British Mortgage Awards takes place on 4 July, the shortlist has been announced.

Loughborough BS launches intermediary-focused affordability calculators

Loughborough BS launches intermediary-focused affordability calculators

The mutual worked with local Leicestershire-based tech provider Provident IT to develop web-based tools offering comprehensive affordability calculations across its range of residential and buy-to-let (BTL) mortgages. 

The calculators were developed in collaboration with selected intermediary partners, so it would include broker-friendly features and functions. 

This includes an interface with clear instructions and enhanced accuracy. The tools respond in real time to offer a seamless experience across multiple devices, with instant and accurate affordability assessments.

Loughborough Building Society said this would allow brokers to test scenarios before submitting an application. 

The residential calculator includes specialist lending products such as shared ownership, lending in retirement, high-income multiples and self-build, in addition to the lender’s standard residential offerings. 

The BTL calculator covers let-to-buy, family BTL, holiday BTL, and Loughborough Building Society’s standard BTL product. 

Provident IT is also developing a joint borrower sole proprietor (JBSP) calculator for The Loughborough that is expected to be completed later this year. 


Loughborough BS continuing to evolve its tech 

Ashley Pearson (pictured), head of intermediaries at Loughborough Building Society, said: “As a society, we are continually evolving from a tech perspective and place immense trust in our intermediary and tech partners to ensure we are heading in the right direction.” 

He added: “Following a comprehensive engagement, development and testing process, we are pleased to launch affordability calculators that encompass unique areas of the specialist lending marketplace. These areas have become essential for borrowers and the intermediary community in today’s increasingly complex lending environment.

“Both calculators provide a function that allows for the affordability assessment to be sent directly to the broker in a PDF format. We believe this feature will have a positive impact by ensuring brokers obtain clearer and quicker lending decisions, enabling them to meet a broader range of client needs.”

Harvey Bolton, managing director of Provident IT, added: “We’re delighted to partner with Loughborough Building Society on this innovative project. At Provident IT, we focus on leveraging technology to create practical solutions for our clients – whether that’s through web-based applications or comprehensive IT infrastructure. 

“We look forward to continuing our collaboration with The Loughborough and exploring new ways to push the boundaries of what technology can achieve in the financial services sector.” 

Earlier this year, the mutual updated its self-employed criteria.

Poll: Has the removal of the affordability stress test impacted the mortgage market?

Poll: Has the removal of the affordability stress test impacted the mortgage market?

Higher mortgage rates, along with stress tests and the impact of cost of living, have meant a lot of borrowers’ affordability has become challenging.

In 2022, the Financial Policy Committee (FPC) said that it would withdraw the mortgage affordability stress test, which was introduced in 2014 and requires lenders to assess a borrower’s future ability to repay a mortgage.

This is calculated by seeing whether a borrower could repay a mortgage if the mortgage rate was 3% above a lender’s reversion rate.

The loan-to-income (LTI) limit was also introduced at the same time, but was left in place.

At the time, the FPC said that the “additional insurance provided by the affordability test is small”, adding that a “framework without the FPC’s affordability test recommendation would therefore be simpler and more predictable”.

The mortgage market of 2024 is different to that of 2022, but this month Mortgage Solutions is asking: Has the removal of the affordability stress test impacted the mortgage market?

Has the removal of the affordability stress test had an impact on the mortgage market?

View Results

Has the removal of the affordability stress test had an impact on the mortgage market?

Has the removal of the affordability stress test had an impact on the mortgage market?

Advice specialism important but ‘access to all areas’ critical – Jefferies

Advice specialism important but ‘access to all areas’ critical – Jefferies

“Customers need to be able to access whatever type of broker they want to and access the products that are available on the market across the range. Most of us operate a whole-of-market proposition, and customers should have access to that if they walk into any of the brokers on the high street. So I’m saying there’s a place for both. And it’s important that there is a range,” she added.

In the fourth part [08.38] of a video series, in association with Accord Mortgages, Mortgage Solutions‘ contributing editor and host Victoria Hartley outlined the raft of affordability solutions targeting first-time buyers, from Accord’s £5k deposit mortgage to shared homeownership and the government’s first homes scheme offering homes at a 30-50% discount.

David Hollingworth, associate director at L&C Mortgages, said of the range of product offerings in the first-time buyer market: “I think education is the key here both for brokers and for consumers.

“You’ve given a really good whistlestop tour of all those different schemes, which will pinpoint different areas of the chain from Lifetime ISAs while someone’s trying to save a deposit through to some of the schemes that might help with affordability such as first homes. Brokers are going to have to keep abreast of those, but I think as Vikki says, [you don’t want to get] too specialised for a [single] market, like first-time buyers, which is so vital to the housing market, actually you want brokers to be across all sectors the whole time,” he added.

“Education for them and for consumers [is needed] so that they’re making the most of these schemes.”


Part-own, part-buy appeal

On shared home ownership (SHO), Hartley said half of all government funding currently goes into this form of affordability support and that broker Just Mortgages reported a spike in enquiries of new-build leads of up to 60% at the start of the year.

Jeremy Duncombe, director of mortgage distribution at YBS and managing director at Accord, said whatever the solution, advice is central to unlocking this complex market. Accord isn’t currently lending in SHO, but Duncombe agreed it’s a ‘valuable’ way to solve the affordability conundrum.

He said: “Generally people don’t buy a part of a house unless they have to. They would rather buy the full thing, but affordability is the reason shared ownership is so popular.”

He added that bringing back a form of Help to Buy* or an expansion in SHO will all help borrowers struggling to buy.

“But affordability is the challenge we’re all trying to solve here,” he added.


*This video was recorded before the Conservatives announced the return of a form of Help to Buy in their election manifesto this week.


Watch the three previous videos in the series, in association with Accord here, debating the Accord £5k Deposit Mortgage, the removal of the four-and-a-half times borrower loan-to-income cap and solving the housebuilding conundrum.


This video was produced as sponsored content.


Green shoots in complex lending market – Hall

Green shoots in complex lending market – Hall

As a result, the traditional ‘one-size-fits-all’ approach to mortgage lending is becoming increasingly irrelevant for many borrowers, with complex lending – which grew by 328% between 2009 and 2021 – growing into a much more active part of the market.

As part of the broader shift to more flexible working practices, over 20 million people in the UK – more than a third of the adult population – are now considered multi-income individuals. It’s a group that encompasses a wide range of professionals, including business owners, sophisticated investors, and freelancers.

These more fluid incomes add another level of complexity to product sourcing and affordability testing, and brokers and borrowers are increasingly leaning on adaptable lenders like Saffron who can create bespoke financing solutions.


Self-build an active corner of the market

With housing demand continuing to outstrip supply, we are seeing interest in self-build grow year-on-year. Historically, borrowers have primarily been attracted by the control over design, but new self-builders are realising that these customised properties can also be cheaper and more energy efficient in the long run than buying an existing property. Brokers should be highlighting these benefits to clients and show how – with the right planning and funding – self-build projects can be relatively straightforward and rewarding.


JBSP mortgages offering helping hand to first-time buyer lending

Joint borrower sole proprietor (JBSP) products are also becoming increasingly popular. With parents feeling the pressures of the cost-of-living crisis, these products offer an alternative way for them to help their children achieve homeownership, without gifting or loaning a deposit up-front.

In fact, JBSP mortgages accounted for 5-7% of all first time buyer purchases last year. While a fantastic form of support for those able to access it, it does add another layer of complexity for brokers who are tasked with reviewing and verifying the documentation and source of funds, and assessing the true loan-to-income (LTI) or loan-to-value (LTV) ratio.


Growing market for larger loan lending

Savills estimates that there are over 670,000 homes valued at £1m or above across Great Britain, up 28% on 2019. We are seeing demand for large loans grow as a result.

At Saffron, we’ve listened to broker feedback and evolved our offering by reducing rates and increasing maximum loan sizes to £3m and £5m for our owner-occupied and owner-occupied large loan ranges respectively.

There have always been complex elements in the UK mortgage market, but the volatility over the last few years has certainly driven strong growth in these smaller pockets.

To respond to these changes, lenders and brokers are working together to ensure there is sufficient product availability and flexibility to give borrowers the best chance of finding a solution that works for them.

Gatehouse Bank reintroduces top slicing for UK residents

Gatehouse Bank reintroduces top slicing for UK residents

BTL top slicing, or income top-up, is where a lender can consider an applicant’s earned income in addition to rental income when calculating the maximum mortgage that can be borrowed.

According to Criteria Brain, there are 39 lenders that will consider top slicing for BTL applications. Approximately 42 lenders have said that they will not consider top slicing.

The lender said that it has also streamlined its finance service coverage ratio bandings, so for limited companies and basic-rate taxpayers purchasing individual BTL properties or as part of a portfolio, a 125% rate will apply.

A 145% rate will be implemented for higher- and additional-rate taxpayers purchasing a property individually or as part of a portfolio, and anyone purchasing a house in multiple occupation (HMO) or multi-unit freehold block (MUFB).

To qualify for BTL top slicing, a minimum annual income of £32,000 from at least one UK-based applicant is needed, and the FSCR bandings of 110% for limited companies and 115% for individuals will be applied.

John Mace, senior product manager at Gatehouse Bank, commented: “We continuously review our products and criteria to ensure that we are providing our customers with the most suitable outcomes for their needs. We have reintroduced top slicing to broaden our criteria and subsequently help more buy-to-let customers achieve their financial goals.”

In March, Gatehouse Bank resumed its refinance offering for home purchase plan (HPP) products. The lender will accept refinance applications on all products up to 90% finance to value (FTV) and its green finance deals.

Earlier this year, Gatehouse Bank’s home finance distribution director Roger Evans announced he would retire from the business. He has been with the firm since 2019 and started his career at Natwest in 1979.

Natwest makes BTL tweaks including stress test; Hodge adjusts criteria – round-up

Natwest makes BTL tweaks including stress test; Hodge adjusts criteria – round-up

Natwest said it had brought out a streamlined affordability calculator for buy to let, which contains 11 key questions for most customers.

This means brokers can have a “quick and easy way to calculate landlord’s affordability”.

The lender is also basing portfolio landlord’s assessment on loan to value (LTV) and rental income on the subject property and their portfolio.

It also removing personal income assessment for portfolio landlords, cut packaging requirements for portfolio landlords and underwriters as they do not need to validate personal income or commitments.

Brokers will be responsible for validating customers’ income and keep documentation, which will make the journey simpler.

The firm is also bringing out dynamic product stress rates to its buy-to-let applications so the stress rate and maximum loan amount will be “driven by the product rate chosen and the term of that product, meaning the landlord’s affordability is personalised to them”.

A maximum loan amount or stress rate will not be locked in until an application is submitted and the lower the stress rate the higher the maximum lend will be.

The changes come off the back of a number of buy-to-let rate changes the lender made earlier today.

Brad Fordham, head of mortgage distribution at Natwest, said: “We want brokers to know that the changes we’ve made to our buy-to-let mortgage proposition make us even more reliable, consistent and flexible for their landlord customers. In particular, the changes to our buy-to-let affordability calculator make it quicker and easier than ever for brokers to calculate landlords’ affordability.”


Hodge ups age of first death stress and will accept annexes

Hodge has increased the age of first death stress on its 50+ product and improved criteria for annexes in its wider range.

The stress test ensures the mortgage stays affordable for the surviving customer in the event of the death of their partner.

The age of first death stress will be 87, an increase from 82 previously. This is informed by Office for National Statistics data, which shows an improvement in life expectancy.

Hodge will now lend on properties that have one fully self-contained annexe as long it is a let on a short-term basis for holiday letting or occupied by related parties to the property owner.

The move recognises the growth of annexes due to increased cross generational living and more people working from home.

Jonathan Matthews, head of property risk at Hodge, said: “We continue to see demand for properties with a self-contained annexe as families look to support one another intergenerationally. This change represents further flexibility in our property criteria, removing any ambiguity around annexes for your customers.”

Emma Graham, business development manager at Hodge, added: “This enhancement to the first death stress will enable customers to spread their mortgage across a longer mortgage term, making monthly payments more affordable as they lend up to and into their retirement.

“We continually strive to incorporate and reflect on the feedback we receive from brokers. By implementing these latest changes, we aim to better support customers who need more flexible lending arrangements, especially in the current challenging market conditions.”


LTI cap ‘should be looked at again’ in review, Accord Mortgages’ Duncombe says

LTI cap ‘should be looked at again’ in review, Accord Mortgages’ Duncombe says

Speaking in the second part of a four-part video series, Duncombe said that the LTI cap was “definitely a challenge” as lenders have had a “hard stop” as they cannot lend more than 15% of their book at more than 4.5 times income.

“Lenders play cautiously to make sure they don’t reach that cap because if you do reach it you end up in a position that nobody wants to be in with things like pulling offers. It’s a really strict cap,” he said.

Duncombe added that lenders play below the 15% and are unlikely to exceed 13% of their book on more than 4.5 times income.

He continued that it was the “right question to be asking” in terms of asking for a review of the LTI cap.

“We’ve got to be responsible, we’ve got to be prudent and we don’t want to go back to a period where there are no rules. It has stood us in really good stead, especially in terms of arrears still being low, which is because of the prudent rules that were put in place after the credit crunch,” Duncombe said.

He continued that it was “absolutely critical” that measures were in place but it was time for the income cap to be reviewed as interest rates begin to drop later this year.

“We should be looking again at affordability, things like LTI caps, in the past where rates are likely to go up it’s understandable why those caps and limits are in place but in a market where rates are coming down there have to be some other options, so I agree it should be looked at again.

“Let’s do this prudently and still make sure the market functions effectively but I think there is room to have that debate and I hope they [the regulator] will listen,” Duncombe said.


LTI cap review could be a ‘small nudge’ on affordability

Vikki Jefferies, proposition director at Primis, added that it was interesting to note that lenders were operating below the LTI cap of 15% of lending being more than 4.5 times income, so “a small nudge or a slight review could make quite a big difference”.

“I think we should continue to push for a review, but we’re not looking to go back to any of the old days and some of the practices that we had in the past. It’s just a prudent approach,” she added.

Jefferies continued that the overall impact of a review, as part of a series of “small nudges”, could be “quite significant”.

David Hollingworth, associate director of communications at L&C, reiterated that the mortgage market was “not going to go back to the pre-credit crunch days”.

“I think affordability is a central plank of the problems for first-time buyers at the moment. We’ve talked about deposit but actually affordability is a crucial issue, so giving lenders a bit more flexibility, I think would be really helpful.

“All too often I think the higher income multiples might be directed at those with higher incomes and we’ve got to look at how we might be able to broaden that out for first-time buyers,” he said.

Hollingworth said some lenders had looked at how they can stress more favourably for this cohort to give them a “boost to their borrowing power”.

“If we could get to a point, and I don’t think it’ll happen quickly I’m afraid, because I think the removal of that prescriptive stress requirement will probably mean the LTI will take longer to feed through, but we should keep talking because affordability is such a big deal for first-time buyers in particular,” he concluded.



Watch the 8:18 video, hosted by Victoria Hartley, contributing editor at AE3 Media, with Jeremy Duncombe, director of mortgage distribution at Yorkshire Building Society and managing director at Accord Mortgages, David Hollingworth, associate director of communications at L&C Mortgages, and Vikki Jefferies, proposition director at Primis. This is the second of a four-part video series.

To see the first video please follow this link


This is sponsored content, produced in association with AE3 Media.