From working habits, to time spent with family, people have realigned their priorities. The same could be said for mortgages and the way they serve borrowers.
So this week, Mortgage Solutions is asking: Have recent months highlighted a need for product innovation that was not available prior to the pandemic? Where do you think the most change is needed?
There’s a fine line between product innovation and lender criteria so it is difficult for the mortgage broker and lender to sing from the same hymn sheet.
Brokers are busy trying to service the needs of their clients but we appreciate that for lenders, it can take time to bring product innovations to market.
They have to pass regulation and also, lenders are profit-making companies. If it’s too niche perhaps they won’t make money from their innovation.
It’s not a simple question and there isn’t a simple solution.
A big one for me is the change following Brexit. A lot of products are no longer available to those with pre-settlement status but no indefinite leave to remain in the UK.
I’d love to know what the rationale behind that is because those with pre-settlement status will go on to be eligible for indefinite leave.
I was talking to an expat in Portugal who wants to buy investment properties in the UK. The lenders I usually use would not lend to him because he lives in a European Union state, but they would lend if he lived anywhere else in the world.
But I appreciate they have government legislation and regulation to adhere to, as well as their own target market they want to tend to.
There is also room for innovation with first-time buyers, the self-employed and rewarding existing customers with favourable rates when switching or remortgaging.
The required innovation which stands out for many enquiries we receive is the change in the judgement of risk regarding zero hour contract workers.
If a borrower is a standard PAYE employee, the issue of income and affordability assessment is straightforward, and the case usually sails through.
But the notion of a standard employment structure has changed over the last year. Those workers who are on zero hour contracts are the borrowers who need some extra support and more of a sympathetic consideration by the lenders.
Whether zero hour contract workers are looking to remortgage or purchase, we have seen that in the main the lenders still expect at least a year’s worth of experience in the same role, and then an explanation of how long the job might last, too.
This is the double-edged sword, and although the workers are more than willing and able to secure their job and grow a career, the zero hour contract status means that every day is an uncertainty which hangs over them.
This is where a sympathetic innovative lender could win a huge amount of quality business from the pool of qualified, professional and career-oriented workers.
Those who earn bonus income and commission have been significantly impacted by Covid so that could do with loosening up going forward.
Criteria for the self-employed as well as people who earn bonuses and commission is important because that makes up a large pool of the workforce nowadays. They should not be discarded all of a sudden.
Everyone else has been relatively well served. When it comes to low deposit borrowers, we will have to see how the 95 per cent loan to value mortgage scheme shapes up down the line.
First-time buyers are where all the focus goes, so I would also like to see mortgage providers do more in the shared ownership space and with new-build properties.
First-time buyers are more likely to buy new-build homes but often, the criteria is very hard to meet for them.
If property prices keep going up the way they are now, that could continue to be an issue.
Also, stress testing on a mortgage needs to be loosened. Interest rates are staying low, and everyone says they will continue to stay low; but that’s not reflected in the stress testing.
So borrowers should be tested on a lower rate.