In today’s market, brokers are on the front line of helping first-time buyers navigate a path to homeownership, a path increasingly obstructed by rising house prices, deposit shortfalls, and affordability challenges.
That’s why the Chancellor’s Mansion House speech and subsequent commitment to a permanent Government-backed mortgage guarantee scheme is a welcome step forward, providing it is done in a sensible and prudent way that supports customers, particularly when times are hard.
Supporting first-time buyers into homeownership is at the heart of what we do in the mutual sector, and this measure is a vital step in helping those with smaller deposits access the market.
The housing challenge in the UK is not just about supply, it’s about affordability. Many would-be homeowners, especially younger people and those affected by the economic instability of recent years, have been locked out of the market due to rising house prices and deposit shortfalls. Underwriting more higher loan-to-value (LTV) mortgages through this scheme provides an important lifeline and helps shift the balance for those on lower incomes.
We’re also supportive of the Bank of England’s recommendation to allow a higher mortgage lending limit over 4.5-times income, alongside the FCA’s work to simplify remortgaging rules. These reforms reflect a broader willingness to engage with the realities faced by today’s first-time buyers.
For our part, we must continue to ensure that the mortgages people take on are right for their circumstances, especially if times become hard. These initiatives must also go hand in hand with better financial education and long-term saving incentives that support deposit-building, including the preservation and promotion of the Cash ISA.
Delaying potential plans to cut Cash ISA limits and being willing to take more time to consult with industry experts as well as listening further to the public is a positive step forward.
In the lead up to the Mansion House speech there has been significant pushback from customers, the press, and the financial services sector and we applaud the Treasury’s willingness to engage meaningfully with our industry to explore other possible solutions.
As advocates for responsible saving, we remain firm in our commitment to promoting Cash ISAs as an accessible and impactful tool for financial empowerment. For many of our customers, particularly those saving for a deposit on their first home, Cash ISAs provide a tax-efficient way to grow savings without undue complexity or risk.
For the moment, the Cash ISA and its existing limits are safe, but reform of this savings product may still come with more details expected to be confirmed in her Autumn Budget.
Many customers choose Cash ISAs as they simply cannot afford to risk losing their hard-earned capital investing in stocks and shares. For those that can, access to low-cost financial advice remains a barrier, with less than 9% of the UK population receiving financial advice last year.
Too many people remain unsure of how or where to invest their money, particularly those from underserved communities or younger savers navigating the financial landscape for the first time. If we want people to invest, we need more initiatives to bridge the ‘advice gap’.
We also welcome the FCA’s current consultation to provide a simpler regulatory framework in this area.
The Chancellor also confirmed that there will be a marketing campaign to inform customers of the merits of investing in the Stock Market and how this could further benefit customers’ long-term savings. Any messaging to customers that reinforces and raises awareness of these established savings products, and the importance of savings is positive, providing the risks are also made clear.
Empowering people with access to trusted, affordable financial advice is not only key to increasing engagement and building trust with financial providers, but also vital to improving confidence and outcomes in long-term investment.
By investing in tools, platforms, and education initiatives that demystify financial planning, the government and financial sector can encourage a broader culture of investment, ultimately strengthening economic resilience and social mobility across the UK.
As a mutual, we want our customers to build a secure future for themselves and their families, and as such would welcome any strategies or initiatives the Government introduces which helps us and brokers achieve this.
Jonathan Westhoff is chief executive at West Brom Building Society.
