FIVE MORTGAGE INDUSTRY TRENDS FOR Q4 2020
At Consegna Recruitment, one of the sectors that we specialise in is financial services. Our teams work extremely hard to find our clients the best talent in the mortgage and financial planning industries across the UK.
Of course, the COVID-19 pandemic has had significant implications for the property and financial sectors, and we are currently working in unchartered territory and supporting our clients in every way we can.
When lockdown was announced in March, the purchasing plans of many prospective buyers were unceremoniously put on hold. The housing market was effectively suspended and, according to the Bank of England, mortgage approvals fell to a record low in May.
However, let’s not focus on the doom and gloom of the past, but rather the opportunities of the present and the future.
Rightmove have reported high demand for new homes when the property market started opening back up, and mortgage approvals increased in July to their highest levels since February.
So, what are the five Mortgage Industry Trends to look out for during Q4 of 2020 and where are some of the potential opportunities for our clients within the financial services industry?
1. Extra support for buyers
As the UK looks to find a new normal, an important step is for the government to restimulate the property market. Temporarily cutting Stamp Duty has been successful and it looks like more measures are set to be introduced in order to support new buyers.
Whilst schemes like ‘Help to Buy’ and ‘Shared Ownership’ have been around for a few years, they are only going to become more prevalent, and effectively essential for many potential buyers. Consequently, financial services support and mortgage brokers need to be clued-up in terms of what deals are out there and how best to take advantage of them.
There may also be many opportunities for financial services companies amongst local housing developers who need support in selling their homes and in helping to match buyers with mortgages that suit their circumstances.
2. Interest-only deals
Interest-only mortgage options look like they are on the rise and are here to stay. Research from MoneyFacts shows that approximately 61% of mortgages currently on the market offer an interest-only option.
Families who have suffered financially as a result of COVID-19 could well be considering these types of interest-only deals at the moment. This means that there is a big opportunity for financial and mortgage advisers to help these buyers navigate these deals and get a plan in place to repay the capital.
The broker Legal & General says enquiries for interest-only deals have risen significantly in recent months so it does look like this trend is set to continue throughout Q4 of 2020.
3. Discounts for energy efficiency
The government is currently pushing a range of energy efficiency policies and they may have some interesting implications for the mortgage sector.
‘Green’ mortgages are ones specifically targeted at so-called green buildings. In order to attract potential buyers into buying these buildings or renovating existing ones to make them greener, banks can offer mortgages with either a lower interest rate or an increased loan amount.
These deals have been circulating in the market for many years and are still seen as a niche product. However, as buyers look for any deals they can in current circumstances and with people becoming increasingly concerned over environmental issues, green mortgages are set to be more popular over the next few months and years.
The opportunity here for financial services and mortgage companies is to become experts in this field so that buyers actively seek out their advice and skills as this type of mortgage becomes more sought-after.
4. Help for the self-employed
One of the consequences of COVID-19 has been the rise of the freelancer. In light of this, lenders appear to be increasingly open to helping this group of people.
As an example, Beverley Building Society has announced its ‘bounce back’ initiative which allows self-employed borrowers to be considered for a 75% mortgage with just one year of accounts. There’s also an option for eligible borrowers to take the first year of their mortgage on an interest-only deal.
Financial services companies that can reach out to new self-employed markets will stand themselves in good stead for finding new customers.
5. Escaping to the country
The post-COVID market is also seeing a rise in buyers looking to completely change their lifestyle.
Several months of lockdown have caused people to reflect on what they want, and the desirability of outdoor space, rural living and access to countryside has increased tenfold. A trend of people wanting bigger homes with more flexible living spaces has also come to light and this may well affect the property market and the types and variety of mortgages that are available.
Again, positioning your financial services company so that you can effectively support these buyers will be key as we move into the new era of ‘normal’.