The government’s consideration of cross-generation mortgages is not addressing the core issues around the UK’s housing market, according to industry professionals.
The new plans, which come to light earlier this month, would see homeowners take out 50-year mortgage terms to be passed on to their children when they die.
While this style of mortgage has been introduced in other cultures, there are a lot of questions to be asked on how it would work in the UK.
Speaking on a ‘Lenders Live’ panel hosted by Knowledge Bank, the Association of Mortgage Intermediaries (Ami) chief executive Robert Sinclair says: “Our discussions with Treasury and with the Levelling Up Committee are around the fact that we have to get back to targets, which have been lost again.”
“Targets include the construction of new properties that match what the demand will be going forwards as opposed to what we have seen being built, fueled by Help to Buy processes.”
He explains that this is the “wrong answer” to a problem that is “fundamental”.
Also speaking on this, The Mortgage Mum founder and managing director Sarah Tucker says coming out with plans such as the 50-year mortgage term is “distracting people that aren’t necessarily educated in what’s actually happening in the housing market”.
Tucker notes that the real issue is to do with supply. “We all need to be really vocal in our own businesses and lenders about what is actually happening so that people can have some other trusted voices actually know what’s going on,” she adds.
Last week it was revealed that housebuilding was the weakest-performing area of construction activity for the fourth month running in June, registering the first overall downturn in residential work in almost two years.
The housing sector posted a reading of 49.3 last month, below the 50.0 no-change mark, signalling the first fall in residential work since May 2020.
Speaking on what the new housing minister can do to tackle this issue, Sinclair says: “Until we actually have a housing minister who’s prepared to draft the nettle and see things that are politically unacceptable to the main people who elected them, I think we’re going to be left in this mess for a very long time.”
While there have been many commitments made by governments over the years, Sinclair says “they never come to fruition”.
“If they’re going to allow for people to buy, it shouldn’t be I want them to build another one, it should be buy one and build two. This would begin to solve the problem if we see more social housing developed by the right targets and the right funding coming from government support housing associations, rather than seeing it as a simple political prop, which is a great headline.”
“There is still this horrible lack of a national plan and local authorities allowed to do their own thing and still nimbyism that prevents proper developments going on,” he adds.
Broker burnout
Over the last few years, there has been a build up where the industry has seen unprecedented business volumes but Vibe Specialist Finance managing director Kim McGinley says “trying to manage that was almost quite easy compared to where we’re sitting now”.
McGinley explains: “We don’t want [broker burnout] to become an industry norm and we can’t quite see where the end is going to be with this either. I think that’s the really difficult thing. I think that managing a team at the minute is incredibly high pressure.”
“There is late night working, but there’s an element that you just have to be flexible with people. There’s a lot of give and take in our business.”
She says that it comes down to “one key thing and it’s communication”.
“It’d be nice to see some lenders being a bit empathetic towards brokers at the minute because you do see a lack of that. Everyone is complaining about how busy they are but I’ve never known a time like this, such as these quick changes.”
“For good brokers, there’s only so much you can do but at the same time, we want to secure these rates for the clients who will see these jumps in rates because they’re quite significant and we will do everything we can to get it done but with that comes absolute extra pressure.
“It just goes back to flexibility and communicating all the time with the team to see who’s doing what,” she adds.
Also commenting on this, OSB Group group lending engagement director Roger Morris says: “Lending engagement is purely about understanding the broker journey.”
“There’s never enough education to understand the skill, the dedication and the hard work that goes into arranging a mortgage application and the late nights, the weekend and the sacrifice that brokers do in is not forgotten within our group,” he adds.
Meanwhile, Pepper Money sales director Paul Adams says the empathy from lenders needs to be followed up through actions.
Adams says: “It’s what position you put in the broker in so you know, withdrawing products and then apply in a high price for a pre offer pipeline, for example, that must be a nightmare for for a broker to have to explain to a customer and then put themselves into position whether they’re deciding whether they still want to proceed or not given the high prices.”
However, there are other factors that play a part in a broker’s role. Adams says from a broker’s perspective, the adoption of technology is slightly slower than he would like it to be.
“I know that must be difficult because it’s about changing habits, behaviours and the way you work, at a time where you’re absolutely flat out and that’s potentially not the best time to make those changes. But I think going forward, it’s thinking, how can I adopt the technology that’s coming about because it’s going to speed the whole process up.”
Adams also points out that not every broker has an administrator, a position which he describes as “fundamentally essential to keep the industry going in a way we will write £300bn gross lending in a year”.
“But not every broker has an administrator so it’s thinking about, what you get them doing, because that can really help keep the wheels moving,” he adds.
