First-time buyers Review

Embracing the people-first approach

Anita Arch

head of mortgage sales, Saffron Building Society

With two-thirds of private renters struggling to save enough money for a deposit, there are question marks over whether the mortgage industry is doing enough to support potential property buyers.

Ongoing uncertainties surrounding the COVID-19 pandemic’s long-term impact on people’s health and finances, as well as on business, are combining to make the current climate particularly daunting, with many plans to purchase property currently in limbo.

However, it’s important to remember that this situation won’t last forever, difficult though it may be to envisage at this point.

When things begin to get back to ‘business as usual’, it is vital that our industry is ready to step in and support as many people as possible to pick up their property purchasing plans. on an individual, case-by-case basis, which gives us more flexibility to serve those people who might not get a mortgage elsewhere.

We also accept gifted deposits on all of our mortgage products, where applicants’ loved ones can assist them by giving them some or all of the money they need.

Aspiring homeowners now need to raise an average of £32,000 for their deposits, which is an impossible amount for many.

Gifted deposits are particularly helpful for those who are perfectly able to afford the monthly repayments, which may in fact constitute a saving on what they are paying in private rent, but simply cannot save enough for the initial deposit.

We have always believed in treating our customers as individuals – not simply numbers – and have worked hard over the past 12 months to introduce support for areas of vulnerability, improve accessibility and

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enhance the level of service we offer our customers.

For example, all of our staff have been given mental health wellbeing training, allowing them to identify vulnerable customers. Many have also been trained as dementia friends, able to support customers, and their families, affected by dementia.

We also use a range of third-party deals as a means of strengthening and retaining lasting relationships with our members, something that is especially crucial in these uncertain times. These include support with estate planning, bereavement, retirement, and annual events that give members the opportunity to meet and get to know their Saffron team.

Working continuously to improve customer experience allows us to ensure we put our people first, which has always been one of Saffron Building Society’s fundamental values. Crucially, this people-centric approach in turn helps us to support the intermediaries we work with.

If we’re serious about keeping our industry healthy and robust during these uncertain times – and beyond – then inclusivity and support should not just be buzzwords.

Instead, they should be principles that we hold at our very core.

NEW BUSINESS

So, what can the industry do to attract a heathy amount of new business, once the current situation levels out? At Saffron Building Society, we believe that opening up the property market to more potential first-time buyers is key, both for lenders and for the intermediaries who work with them.

One of the ways we are working to do this at Saffron is by making our products accessible for as many people as possible, especially those who may not otherwise meet mortgage affordability criteria.

Our underwriting process helps here. Because it is manual, rather than automated, it allows us to make decisions on mortgage applications

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At our best when we work together

Stuart Miller

customer director, Newcastle Building Society

Times are undoubtedly tough at the moment in so many ways. The current crisis has created new uncertainties about the health of our loved ones, the health of the economy and the health of our businesses.

In that context, how lenders and intermediaries work together in the coming months will be important for everyone’s future.

Meanwhile, the government has stepped up to provide for huge swathes of individuals and businesses across the UK at this time of need.

We are definitely all in this together.

CUSHIONING THE BLOW

In the UK, we are in the fortunate position of having our own central bank and a Treasury which is unfettered in its ability to do what is necessary to cushion the blow already weighing on our economy due to COVID-19.

How others, particularly in the private sector, continiue to react to the current crisis will be important.

Collaboration, consideration and patience will be something we all need as we adjust to new ways of working and delivering the lending that people will so dearly need.

In our own market, there has been an inevitable period of turbulence and adjustment, yet thankfully at the time of writing, there appear to be some early green shoots emerging.

Everyone needs time to understand the implications of lockdown, and brokers particularly understand this; a housing market which is unable to deploy valuers to properties cannot work optimally.

The availability of wholesale funding lines for some was inevitably shaken, but I sense they have settled.

All lenders are busy stepping up to the plate and offering mortgage payment holidays where needed, but measures such as these present many challenges operationally, now and for the future.

Everyone will be working hard to understand how we might underwrite and fund applications containing them in the future.

HIGHER LTVS

I write this in the first few days of May, and already lenders are tentatively reintroducing higher loan-to-value ratios (LTVs).

This is partly the result of detailed and sensitive conversations between distributors and providers to find a way through the changes the outbreak has caused across the mortgage sector.

There are far fewer options available today to borrowers, who were already underserved at the start of the year, even when we were all hailing the Boris bounce in the housing market.

Lenders and distributors will have to work hard together to fix this.

We should remind ourselves that this state of affairs is not permanent, but that it may change the way we live and work totally and irretrievably, and influence who we are and what we value for generations.

Nevertheless, it will not change the fundamental fact that people will want to own their own home; as an industry, we must do all we can to try and make this possible.

CHALLENGING TIMES

The mortgage market is unbelievably good at handling disaster and adapting to new ways of being.

It has in recent history taken on countless regulatory changes and navigated incredibly challenging times.

We have a precedent for managing crisis. In 2007, the global financial crash took the floor out of our market, but this time feels very different for many reasons. Then, for example, funding was unobtainable, but that is just not the case today.

UNDERCAPITALISATION

During the financial crisis, there was a fundamental and structural undercapitalisation in the sector. The opposite is true today.

What is challenging us all now is the unknown – when will lockdown start to be relaxed? When will valuers be allowed back into homes? Will people be prepared to move home when we’re all allowed to go where we like when we feel like it?

Like you, I could only hazard a guess at the answers to these questions.

In the coming weeks we will glean a greater sense of certainty about how our new arrangements in the workplace might look.

What I do know is that our customers, the people who take mortgages with us and who save with us, are hardworking people, often with children and elderly parents.

They’re young couples who have saved hard with a huge determination to buy their first home.

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They’re also people who have saved and borrowed with us for decades, saved with us as children, bought their first home with us and now need leeway on repayments because their income has fallen through no fault of their own.

They’re local businesses forced to shut, but nevertheless completely committed to their communities.

We all need to keep these people and businesses in mind, and work hard to find ways to continue delivering our fundamental purpose.

It’s easy for me to say that our members matter, but they do. Now more than ever.

Brokers matter to us too – you’re our lifeblood when it comes to helping the customers who become our members.

Working together has never been more important.

A day on our ‘virtual’ intermediaries’ desk

Peter Izard

business development manager, Investec Private Bank

Our day begins at 8am, after most of the team have started their morning with exercise and a hearty breakfast to get them in the right frame of mind for the day ahead.

Although we’re working from home, we have an important role to play in providing lending options for current and prospective clients at this challenging time. Fortunately, we were already well-equipped with digital tools for flexible working, and

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the team is able to work efficiently and communicate with brokers and clients via video conference calls.

The current market is volatile, so we monitor government updates and discuss changes which may impact our clients, colleagues or the broker community, on a daily basis. We’re also taking the time to join webinars about the economy, housing market and wider outlook to make sure we’re as informed as possible and can share our knowledge. We stay in touch with our Investec colleagues on Microsoft Teams, and the friendly banter keeps morale high. We’re trying to stay positive and look ahead so we’ll be prepared in the months to come.

Until then, business continues during these extraordinary times.

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