According to industry professionals, the government’s review of intergenerational mortgages does not solve the fundamental problems of the UK housing market.
new projects, which were revealed earlier this month, would see homeowners take out 50-year mortgages to pass on to their children upon their death.
Although this style of mortgage has been introduced in other cultures, there are many questions to be asked about how it would work in the UK.
Speaking at a ‘Lenders Live’ panel hosted by Knowledge BankAssociation of Mortgage Intermediaries (Ami) chief executive Robert Sinclair said: “Our discussions with the Treasury and with the leveling committee are that we need to get back to the targets, which again have been lost. “
“Goals include building new properties that match future demand as opposed to what we’ve seen being built, fueled by help-to-buy processes.”
He explains that this is the “wrong answer” to a “fundamental” problem.
Also speaking on the subject, The Mortgage Mum founder and chief executive, Sarah Tucker, said offering plans such as the 50-year mortgage term “distracts people who aren’t necessarily educated on what’s really going on in the housing market.”
Tucker notes that the real problem is with supply. “We all need to be heard in our own businesses and lenders about what’s really going on so people can have other trusted voices who actually know what’s going on,” she adds.
Last week it was revealed that homebuilding was the worst-performing area of construction activity for the fourth consecutive month in June, recording the first overall slowdown in residential work in nearly two years.
The housing sector posted a reading of 49.3 last month, below the 50.0 mark unchanged, signaling the first drop in residential work since May 2020.
Speaking on what the new housing minister can do to address this issue, Sinclair said: ‘Until we actually have a housing minister who is willing to squirm and see politically unacceptable things for the main people who elected them, I think we’re going to be in this mess for a very long time.
Although there have been many commitments made by governments over the years, Sinclair says “they have never materialized.”
“If they allow people to buy, I shouldn’t want them to build another, but rather buy one and build two. It would start to solve the problem if we see more social housing being developed by the right targets and the right funding from government housing support associations, rather than seeing it as just a 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 a nimbyism that prevents proper developments from proceeding,” he adds.
Over the past few years there has been a build-up where the industry has seen unprecedented volumes of business, but Vibe Specialist Finance managing director Kim McGinley said “trying to manage that was almost pretty easy by compared to the current situation.
McGinley explains, “We don’t want [broker burnout] to become an industry standard and we can’t see where the end is going to be with that either. I think that’s the really hard thing. I think managing a team by the minute is incredibly high pressure.
“There is work late at night, but there is an element that you just have to be flexible with people. There are a lot of give-and-takes in our business.
She says it comes down to “one key thing and that’s communication.”
“It would be nice to see some lenders being a little bit empathetic to brokers at the minute, because you see a lack of that. Everyone complains about being busy, but I’ve never experienced a time like this, like these rapid changes.
“For good brokers there is not much you can do but at the same time we want to secure these rates for clients who will see these rate jumps as they are quite significant and we will do everything we can to get that done. but with that comes absolute added pressure.
“It just comes down to flexibility and constant communication with the team to see who’s doing what,” she adds.
Also commenting on this, OSB Group Lending Engagement Director Roger Morris said: ‘Lending engagement is all about understanding the broker’s journey.’
“There is never enough education to understand the skill, dedication and hard work required to organize a mortgage application and the late nights, weekends and sacrifice brokers make are not forgotten. within our group,” he adds.
Meanwhile, Pepper Money sales manager Paul Adams says empathy from lenders must be followed by action.
Adams says, “That’s the position you put in the broker, so you know, take out products and then apply a high price for a pre-offer pipeline, for example, it must be a nightmare for a broker to have to explain to a customer and then put themselves in a position to decide whether or not they want to continue given the high prices. »
However, there are other factors that play into a broker’s role. Adams says that from a broker’s perspective, technology adoption is slightly slower than he would like.
“I know it must be difficult because it’s about changing habits, behaviors and the way you work, at a time when you’re absolutely flat and it’s potentially not the best time to make those changes. But I think going forward, it’s thinking, how can I embrace the technology that’s coming, because it’s going to speed up the whole process.
Adams also points out that not all brokers have a director, a role he describes as “fundamentally essential to keeping the industry going so that we write £300bn of gross loans in a year”. .
“But not all brokers have admins, so you have to think about what you’re having them do, because that can really help get things done,” he adds.