Speaking on the Diversity and Inclusivity Finance Forum (DIFF) podcast for May, Mobeen Akram, national new homes director at Mortgage Advice Bureau, was asked about the lack of Pakistani Muslim women holding leadership roles in the UK, particularly in certain industries.
Akram said it was likely due to different communities seeing some jobs as more attainable and aspirational than others.
Akram spoke of her niece, who she encouraged to get into mortgage advising during the pandemic after she struggled to find a job after completing her psychology degree. She said her niece’s personality was a good fit for the job because she had the right skill set, and this highlighted the industry’s need to widen its talent pool.
She added: “We need to do more in the industry to attract people from different backgrounds. If we do that, it’s great not only for our community locally, but also for our business overall, because we’re attracting different customers, which is more profitable for us.
“But we need to invest internally first to attract the right talent.”
Ian Andrew, managing director, intermediary sales at Nationwide, said role models were also effective.
He said: “We’re starting to see some tremendous female role models coming through the industry. Some of our biggest distributors now have female leadership. Nationwide just appointed Debbie Crosbie as its new chief executive. She starts later this quarter.
“So we’re starting to see some real role models coming through in terms of females. And we could probably do with a little bit more of that in the ethnicity side as well.”
Akram agreed, mentioning Esther Dijkstra at Lloyds Banking Group as an example.
“That’s such a great inspiration to all of us as women as you see more females in the industry at senior levels. Even small time me, had to be a role model for my niece to say ‘actually, you can make it in this industry… if you work hard, you’re devoted, you can get somewhere’.
“That actually has a huge impact, more than we think it does, because it’s inspirational and it motivates us to be the best of who we are and to bring our true self to our workplace,” she added.
Andrew said he believed in hiring the best person for a job, but sometimes the lack of diversity was obvious.
Making an effort
Andrew said Nationwide was “early to the party” when it came to diversity and inclusion. He had his first session on unconscious bias six years ago, which in “the mortgage industry terms was probably relatively early.”
The mutual also has community champions to improve diversity and inclusion.
Andrew said part of learning about representation was “holding a mirror up”
“I thought a great example of that was the report produced by the Association for Mortgage Intermediaries (AMI) last year, which was really interesting, if uncomfortable reading.
“Hopefully, that did force people to have a look in the mirror and think ‘are me or my staff behaving in that way?’ because it was a real challenge reading through some of that report,” he said.
Nationwide also asked for permission to use the report within its business to identify behaviours and challenges in the market.
Andrew said initiatives like the AMI report and DIFF were examples of progress being made in the sector.
He added: “I think there’s a momentum building up. That won’t stop. Everybody understands the importance of it. And I think that’s starting to happen across the industry as well.”
Listen to the podcast [24:30] featuring Mobeen Akram, national new homes account director at Mortgage Advice Bureau and Ian Andrew, managing director, intermediary sales at Nationwide.
A survey from Nationwide consisting of over 2,000 respondents suggests 19 per cent of respondents will put off buying a home for at least three years because of increasing costs.
Some 88 per cent are worried that costs will impact their ability to raise a deposit with disparities between regions. In Scotland, 93 per cent of respondents say they are worried about the effect this will have on saving towards a deposit, while 98 per cent of people in Northern Ireland said the same. In Greater London, where respondents showed the least concern, this still accounted for 82 per cent of respondents.
Raising a deposit is the greatest concern for future homeowners, with 28 per cent saying this was their biggest hurdle. Around 14 per cent said the ability to borrow enough money was a barrier while 12 per cent said keeping up with mortgage payments was the main challenge.
When asked if 2022 was a good time to buy their first home, 51 per cent of respondents said no and the remainder said yes.
Financial considerations
Approximately 48 per cent of respondents said they have had to reduce the amount they save while nearly two-fifths have had to reallocate money which was originally intended for a deposit.
For those considering which costs to cut or how to raise additional cash, 43 per cent have committed to reducing how much they socialise, 36 per cent will sell items and 12 per cent will cancel family plans.
Additionally, 69 per cent of respondents are now looking to relocate to another part of the UK to get more for their money while nearly two-thirds will have to buy with someone else.
High property prices were cited as the main issue for 57 per cent of those planning to buy a home in their local area. A further 43 per cent said rents were too high to be able to save up. Nearly a quarter said their local housing market was too competitive, while the same proportion said there were not enough available homes.
Deposit raising
The average amount saved by prospective first-time buyers towards their home is £14,700 over the typical length of time of three and a half years.
Some 86 per cent of respondents said they had been saving for more than three years and 14 per cent saved for at least six years.
Three-quarters saved their deposit on their own while a quarter relied on their partner. Some 23 per cent received money from either a parent or grandparent, while 13 per cent gained their money as inheritance.
The research comes as the mutual announced the launch of an informational hub for first-time buyers. It also offers £500 cashback for first-time buyers who complete a mortgage with them.
Paul Archer, senior mortgage manager at Nationwide Building Society, said: “Building a deposit remains the single biggest barrier to homeownership today, with many people starting out facing a long uphill battle to save. The rising cost of living has made this even harder.
“With high house prices and the rising cost of living, we need to tackle the first-time buyer challenge on multiple fronts.”
According to Nationwide’s monthly house price index, this is the 11th time in 12 months that the annual growth rate has been in double digits.
House prices are up 0.3 per cent month-on-month, taking into account seasonal effects, making it the ninth consecutive month of increases.
However, it said that this was the smallest month-on-month change since September last year.
The report said that the average house prices was £267,620 in April, up £2,308 in the space of a month.
Robert Gardner, Nationwide’s chief economist, said that the current market buoyancy is “surprising” given the mounting pressure on household budgets, comparing consumer personal finance budgeting estimates to “the depths of the global financial crisis” in 2008.
He added: “Affordability has deteriorated because house price growth has been outstripping income growth by a wide margin over the past two years, while more recently borrowing costs have increased, though they remain low by historic standards.”
Emma Cox, managing director of real estate at Shawbrook, said: “The acid test for the market will be the run up to summer. Traditionally a hive of activity, sellers will be hoping for current transaction levels and price growth to prevail. Expectations are that house prices will be shielded from current pressures for the remainder of 2022, with reality perhaps starting to bite in 2023 if current market conditions persist.”
Rising interest rates
Gardner expects the housing market to continue to slow as the cost of living crisis and economic uncertainty squeezes household budgets.
He added that inflation is expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high and the Bank of England (BoE) raises base rates again.
This was backed by revised estimates in the latest Capital Economics (CE) review, that predicts a five per cent decline in house prices between 2022 and 2025.
The consultancy also warned that the Monetary Policy Committee (MPC) will raise the base rate from 0.75 per cent to one per cent on 5 May, with a hike to three per cent expected in 2023, though other economists put the 2023 figure at two per cent.
However, given the low interest rates at present, some believe that lenders will be able to pick up the slack to remain competitive.
Mark Harris, chief executive of SPF Private Clients, said: “Even though rates are edging upwards, and may again at the next MPC meeting, they are coming off an extremely low base.
“Lenders have plenty of cash to lend and are keen to lend to the right borrowers, although the more house price growth outstrips incomes the tougher it will be on the affordability side to get the numbers to add up.”
Gardner continuted: “Housing market activity has remained solid with mortgage approvals continuing to run above pre-Covid levels.
“Demand is being supported by robust labour market conditions, where employment growth has remained strong and the unemployment rate has fallen back to pre-pandemic lows. With the stock of homes on the market still low, this has translated into continued upward pressure on house prices.”
‘The race for space’ is fuelling market buoyancy
A survey conducted by the lender of 3,000 customers found that over a third, 38 per cent, were in the process of, or seriously considering moving.
Nationwide said that this was “very high” considering that housing stock turnover was typically five per cent.
It added that was higher than the figures for April 2021, which was at the height of the pandemic and when stamp duty incentives were brought in.
The mutual found that nearly half of Londoners wanted to leave the city. The lowest percentage of potential movers was in Wales, but the survey still found that 25 per cent of Welsh respondents wanted to up sticks.
Gardner said the proportion was highest amongst private renters at 45 per cent, but was also heightened for those with a family at 44 per cent and outright homeowners at 30 per cent.
Around 42 per cent of those owning with a mortgage also wanted to move.
It added that 17 per cent of those moving or considering a move said they were downsizing or moving to reduce household spending.
Cox debates this, arguing that poor supply levels will continue to insulate sellers, especially in traditional hotspots.
She said: “The return to city centres after a two-year hiatus and the demand for more face to-face interactions again could reignite the UK’s love affair with cities. The staycation and second home boom in seaside towns also remains steadfast, making quaint British towns a top priority for buyers too.”
This includes two and three-year fixed rates which have gone by up to 0.10 per cent up to 95 per cent LTV, and 90 per cent for remortgages.
Examples include the two-year fixed homemover mortgage at 60 per cent LTV, with a £999 fee, which now has a rate of 2.34 per cent, while the fee-free option has a rate of 2.64 per cent. The three-year fixed equivalents have the same rates.
Rate changes have also been made at 90 per cent LTV, with a two or three-year fixed mortgage and £999 fee now priced at 2.44 per cent, and the fee-free alternatives priced at 2.74 per cent.
For first-time buyers, rates begin at 2.39 per cent for a two or three-year fixed mortgage with a £999 fee, up to 2.89 per cent for a 95 per cent LTV fixed for two or three years with no fee.
For existing customers who are switching rates; two, three, five and 10-year fixes will see increases of up to 0.20 per cent up to 90 per cent LTV.
Applications for existing products must be reserved by 5pm today and changes will come into effect on Thursday, 21 April.
Lenders and housing associations speaking on panel sessions at Just Mortgages’ inaugural new build and affordable housing event said brokers should prepare for an increase in shared ownership enquiries, especially as Help to Buy is due to end next year.
Furthermore, they said housing associations are expected to build more shared ownership houses and increasing numbers of lenders are predicted to enter the space.
However, panellists said there needed to be more consumer awareness and understanding of shared ownership, so brokers had a key role to play in educating borrowers.
Panellists also noted that there were multiple affordable housing options which borrowers should consider, including Deposit Unlock, private equity loan schemes, the mortgage guarantee scheme and First Homes scheme.
Lenders speaking on the three panel sessions during the day included Barclays, Halifax, Nationwide, Santander, Leeds Building Society, Skipton Building Society, Kent Reliance and Kensington Mortgages.
Housing associations and property providers on the panels included Sage Housing, SO Resi Partnerships, NU Living and Swan Housing.
John Doughty, financial services director at Just Mortgages New Build Division, said: “Lenders and brokers are getting less Help to Buy enquiries from customers as restrictions were introduced a year ago and the scheme nears the end of its shelf life. Instead, we are talking to more people wanting to know if they are eligible for shared ownership.
“I would like to take this opportunity to thank all the lenders, housing associations, property providers and developers for their participation in our event during what was a thought-provoking and successful day.”
Shared ownership currently accounts for two per cent of housing stock and the government has pledge funding for up to 90,000 new shared ownership properties over the next five years.
Virgin Money said that all exclusive rates will be withdrawn, barring its residential 80 per cent loan to value (LTV) fixed rates, which will be increased by up to 0.4 per cent.
All the lender’s core fixed rate offerings between 65 and 85 per cent LTV will go up by between 0.15 and 0.35 per cent.
Selected 90 per cent LTV fixed rates will be increased by up to 0.2 per cent, and all BTL fixed rates will rise by between 0.1 and 0.3 per cent.
The changes to some of Virgin Money’s residential BTL mortgages take effect from Thursday 31 March at 8pm.
Nationwide makes changes to new business and switcher ranges
Nationwide is making changes across its fixed term new business and switcher ranges, as well as adding to a range of early repayment charges (ERC) on fixed rate products. These changes will come into effect from Friday 1 April.
The mutual has told customers that they need to submit a decision in principle (DIP) by 5pm today to reserve existing products.
New business rates for two and three-year fixed rates with no fee at 95 per cent LTV in its member moving range are going down to 2.79 per cent. Its £999-fee version has fallen to 2.69 per cent.
First-time buyer products are seeing a similar drop at the 95 per cent LTV tier, with prices for two and three-year fixed rates with a £999 fee coming to 2.64 per cent, and 2.79 per cent with no fee.
The lender has reduced existing business rates at 95 per cent LTV for both two and three-year fixed rate terms to 2.64 and 2.79 per cent respectively. It has also cut prices for its switcher products at the same LTV.
However, rates have been increased for select switcher products between 60 and 85 per cent LTV, with fee-paying rates starting from 2.14 per cent and no-fee rates starting from 2.34 per cent . Select switcher rates will rise, including its no-fee five-year fixed rates between 60 and 85 per cent LTV which will start from 2.49 per cent.
Additional borrowing rates are also increasing with two and three-year fixed rates between 60 and 85 per cent LTV starting from 2.34 per cent, and five-year fixed rates at the same LTVs will start from 2.49 per cent.
Nationwide also updated its ERC structure, which now increases the threshold for repayments by between 0.25 per cent and 1.25 per cent payable per year, including a six per cent payable ERC for the first five years of a 10-year fixed rate mortgage.
A Nationwide spokesperson said: “We regularly review our Early Repayment Charges on both our residential and buy-to-let mortgages and have made a small increase to the ERCs on a number of fixed term products from 1 April. Even with these changes, the Society’s and TMW’s ERCs remain amongst the lowest in the market.”
According to Nationwide’s monthly house price index, the average house price now stands at £265,312, which is an increase of around £33,000 over the past year.
It is also the first time this year that annual house price growth has gone above 14 per cent and the fifth month in a row of double digit year-on-year house price growth. In February, annual house price growth came to 12.6 per cent.
House prices increased 1.1 per cent month-on-month, and was the eighth consecutive monthly increase.
The report added that house prices were 21 per cent higher than pre-pandemic levels.
House price growth was strongest in Wales and at 15.3 per cent, which is in-line with the 15.8 per cent in the same period last year.
This was followed by Scotland with 12 per cent growth and England which reported 11.6 per cent growth.
Within England, Yorkshire and Humberside prices were up 13.5 per cent, which is the strongest rate of growth since 2005. London was the weakest, at 7.4 per cent growth.
Detached property prices have gone up by 22.6 per cent, around £68,000 – and flats rose by 14.1 per cent, equivalent to £24,000. The report said this reflected changing housing preferences due to the pandemic.
Robert Gardner, Nationwide’s chief economist, said that the housing market had “retained a surprising amount of momentum” despite increased pressure on household budgets and a steady rise in borrowing costs.
He added that the number of mortgages approved for house purchase in February came to 71,000, which was 10 per cent above pre-pandemic levels. He attributed this to robust demand and limited housing stock.
Gardner continued that the buoyant housing market could be explained by the strong labour market conditions, pointing to the low unemployment rate and wage growth.
He continued that significant savings during lockdown could have helped accrue a deposit. He estimated that households had saved an extra £190bn in deposits over and above pre-pandemic trends, equivalent to around £6,500 per house.
Gardner said: “Nevertheless, we still think that the housing market is likely to slow in the quarters ahead. The squeeze on household incomes is set to intensify, with inflation expected to rise further, perhaps reaching double digits in the quarters ahead if global energy prices remain high.
“Moreover, assuming that labour market conditions remain strong, the Bank of England is likely to raise interest rates further, which will also exert a drag on the market if this feeds through to mortgage rates.”
Supply and demand dynamics
Mark Harris, chief executive of mortgage broker SPF Private Clients, said that the figures show that property prices are still rising but “supply is still not enough to meet demand”.
He added: “Buyers’ purchasing power is strong as they take advantage of low mortgage rates to afford their next home. Brokers are being kept busy as borrowers increasingly worry about rising mortgage rates and are keen to lock into a fixed rate before they become more expensive.”
Harris added that recent research from the Bank of England showed that a broker could lower average mortgage interest costs by 21 per cent, therefore “sensible borrowers” were taking advice to ensure they were paying the right amount for their mortgage as cost of living and interest rates rise.
Alex Lyle, director of Richmond estate agency Antony Roberts, added that the year-to-date market had been “stubbornly short on supply” but more stock was becoming available, especially in terms of “mid to upper-family house market”.
He added: “The time of year plays its part in that, as well as some sellers bringing forward their plans in the hope of benefiting from what we could look back on as a real window of opportunity.”
Lyle noted that a large volume of viewings, multiple offers, and sealed bids are increasingly common, and prices are rising for both houses and flats.
He said: “This level of demand is likely to remain over coming months, but more stock is required across all price ranges for that demand to remain committed. The rising cost of living, increases in interest rates and conflict abroad may in time dent confidence and impact on sales volume.”
Jeremy Leaf, north London estate agent and a former RICS residential chairman, said that he felt the sector was entering more of a “normal market phase” similar to pre-Covid times with “supply and demand increasingly in balance”.
However, he warned that the figures were still showing prices rising based on mortgages granted for sales several months ago so may not reflect what has been happening now.
He explained: “Rising interest rates, inflation and wider concerns about the impact of the terrible events in Ukraine in particular have put a dampener on transactions and prices which continue to be sustained by stock shortages.”
Space is ‘real driver’ of housing market
Tomer Aboody, director of property lender MT Finance, said that space has been the “real driver of demand in the housing market” over the past 12 to 18 months.
He explained: “Buyers have been adapting to the trend of working from home at least some of the time and need designated space to do so.
“With the lack of supply of good-sized homes, prices have surged. There are many more buyers than properties for sale, and those buyers are armed with savings due to the lack of spending during the pandemic. On top of this, lower interest rates mean they can afford bigger mortgages.”
He added that regional trends showed that demand for space was strong, with countryside and coastal regions reporting the strongest growth in demand and prices.
