At the beginning of this month Skipton building society hosted a virtual talk given by their key relationships manager Derek Williams and their Head of business development Paul Fenn. The discussion was designed to give brokers and mortgage customers alike a little insight into how Skipton have viewed the past year and what their predictions are looking into the crystal ball forward to 2022 (which is less than a month away!)
Paul Fenn kicked everything off by describing his impression of 2021, uttering the words we probably all had in our heads; Confusing, Annoying, and frustrating. These words are all clearly nods to the COVID restrictions to our general life that seemed like they were on the decrease prior to Wednesdays No.10 briefing and the new restrictions and frankly harsh criteria that many lenders have been forced to implement during the pandemic.
Paul did then however lift our spirits by saying that he also saw 2021 as refreshing, full of new experiences and new reflections. Elaborating on these encouraging words Fenn lists stamp duty holidays, record low interest rates, and BDMs being able to get back on the road as all being elements that have helped the mortgage market to flourish this year.
Fenn says that the governments’ introduction of the stamp duty holiday has increased mortgage lending to record levels as more people have been looking to move home and avoid any costly property tax. Interest rates have been at the lowest levels they have ever been and despite a slow increase they remain incredibly low, encouraging more cash strapped first time buyers to start their mortgage journey and fix a specific rate in place. And more in terms of benefiting property owners rather than people looking to buy, increases in house and flat prices have seen a lot of people who already own a home making a nice amount of profit if they do decide to sell.
Fenn praises the fact that business development managers have been able to get back on the road again this year and actually meet brokers and other clients face to face, something that they haven’t been able to do safely for a long time. He said that the question of “how do you manage a virtual relationship and a face-to-face relationship differently” has been on the minds of business development managers for so long and now finally things seem to be getting back to normal. Finally, Fenn triumphantly announced that there has been an 80% growth in the intermediary market which he says is a testament to the value of advice. Fenn then moved on to his predictions for 2022.
He started by saying that he thinks there are four key things that he sees will influence mortgage borrowing and the housing market in general in 2022: Interest rates, Affordability, Average earnings and, Unemployment. Although not dwelling too long on each of these, Fenn did say that he sees a slight increase in interest rates on the horizon if not before the end of year, then in January or February of 2022 which could slow down the mortgage market as well as changes to earnings and more unemployment post covid changing the number of people being accepted for new mortgages. Fenn’s main focuses were the rise in house prices, the size of the mortgage market and value of advisors and green mortgages.
Commenting on house value increases Fenn says that, unfortunately for new buyers but fortunately for homeowners, he predicts that this trend will continue in 2022 and we will see a lot of properties being valued at above normal prices. However, he believes this will all vary with regions. The general view is that there will be a 1% increase in London and a 6% increase in more northern areas averaging out across the UK at a 3% increase. Moving on to mortgage and protection advisors generally, Fenn says that advisors will really need to take a step back and think about how they keep in contact with their clients. With fixed terms ending in 2022 he posed the series of questions “How frequently do you speak to your existing clients?
If you aren’t catching up with them and talking to them at least once a year, why not? How strong is your relationship with your client bank?”. Fenn revealed some very interesting figures that show that when a mortgage term comes to an end around 35% of the time the client is re-introduced as a case by the existing broker and around another 35% of the time the client will avoid the use of a broker. What is the reason for these low figures for return broker usage? Fenn claims it is mostly down to advisors not keeping in regular contact and nurturing the relationship.
Circumstances change all the time; people are always going to have protection needs and income and affluence often changes. Ensuring the relationship is strong will ensure you have a lucrative 2022. Fenn’s final comments were on the emergence and inevitable dominance of green properties and green mortgages and how specifically Skipton were changing in 2022.
Not offering any solutions yet, Fenn commented on the dilemmas that lenders will face surrounding making green lending fair for mortgage customers. He wonders how borrowing on purpose built green properties might overshadow standard construction properties in the future. He also made the very valid point that if say a landlord was forced to make some improvements on their property to make the EPC rating satisfactory by borrowing extra on their mortgage, should the lender’s fees and cost be the same as a normal mortgage seeing as it would be a necessity rather than a choice? All considerations that Skipton and other lenders will need to take in to account but have not decided on yet.
Finally, Paul announced that Skipton had four aims in 2022 that he is hoping they can achieve: Increase in lending across the board (might sound obvious but he hopes that flexibility with criteria moving forward should help with this), More field and telephone BDMs being brought in to give extra support to brokers, more criteria support from office based telephone representatives whose sole job is to help brokers with complicated criteria and investing in technology i.e. improving website and application technology to make the application process smoother for everyone.
Call Oportfolio now if you would like to discuss any of the above information about Skipton.