25 Nov 2024

Affordability the overriding theme of the year

By Buckinghamshire Building Society

It’s fair to say there’s never a dull moment in the mortgage industry and 2024 has been no exception. While there was further recovery, with an easing of inflation and gradual reduction in interest rates, the market hasn’t yet completely settled into the new higher interest rate environment.

Wider economic and political factors, such as the change in government (both at home and in the US), another big Budget and ongoing regulatory changes, have continued to upset the apple cart.

As a result, affordability has been the overriding theme of 2024.

Affordability constraints have threatened to jeopardise people’s homeowning dreams, retirement plans and business profitability.

At the same time, various new and impending regulation changes have hindered, rather than helped, the situation.

It’s therefore fallen largely to industry this year to keep the market moving.

As a lender, this has meant keeping a close watch on trends and staying in constant contact with our brokers to look for gaps, and then address them where we can.

Throughout 2024, we’ve launched new products, entered new areas of lending and changed criteria – often in response to broker demand, and to make homeownership as accessible as possible.

Supporting first time buyers

One of the main areas we’ve focused on this year is the first time buyer (FTB). They are the foundation of the entire housing market, yet risk being squeezed out due to affordability constraints.

By taking time to understand the challenges, our aim was to make sure FTBs still have options, despite higher rates.

To that end, we launched our brand new JBSP Deposit Lite mortgage. This addresses both the deposit and affordability challenge by combining the benefits of our JBSP and Deposit Lite products to help buyers take that first step onto the property ladder.

We also integrated our JBSP proposition across the majority of our prime range, to make it even more accessible. It was a popular move and JBSP enquiries doubled throughout the year.

This complements our other FTB-friendly solutions, such as accepting gifted deposits from more relations, 95% LTVs and considering concessionary purchases where parents are selling a property for a child to live in.

Supporting landlords

Landlords have also struggled this year in the face of new and impending regulatory changes which have led many to review their investments.

From speaking to brokers, it was clear landlords who have experienced minor credit issues were struggling to secure lending. In response, we launched a new non-standard credit buy to let mortgage to support those with minor blips such as missed payments on loans and utility payments.

It was a new area of lending for us, but one we felt was vital for ensuring landlords could still get mortgages despite minor issues that were sometimes no fault of their own.

Supporting the wider market

It’s not just FTBs or landlords feeling the affordability squeeze though. Across the market, this was one of the main reasons for applications being declined this year. We also saw an increase in applications for impaired credit, and debt consolidation was the most common reason for remortgage capital raising. 

By tracking trends in declines and seeking feedback from brokers we are able to see where the barriers are and decide if any product or criteria changes are needed as a result.

We’ve therefore launched new impaired credit mortgages, a five-year fixed term retirement interest-only mortgage and implemented a variety of criteria changes, such as considering up to 100% of overtime and commission, car allowance and town allowance.

The benefits of a building society

Being able to take a common sense and tailored approach to individual cases, while listening carefully to brokers about what they are hearing from clients, has enabled us to continue to help keep the market – and people’s homeowning dreams – alive, despite difficult economic conditions.

Through our strong relationships with brokers, and with other building societies, we can work together for the benefit of the customer. This year, for example, we have asked brokers about their understanding of customer vulnerability, both through our own database, and via an industry survey conducted in partnership with 23 other organisations.

This means we can help make sure brokers have all the tools they need to meet Consumer Duty obligations.

As the year draws to a close, we’ll continue to reflect on our offering, ahead of an exciting brand refresh in 2025.

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.