The UK mortgage market has not seen a prolonged period of stability in recent years, making it difficult for many individuals and families to reliably plan their future.
While it is promising to see the government pledging to support young people get on to the property ladder through various new policies including its Freedom to Buy Scheme and the development of 1.5 million homes, these measures only touch the surface in solving the UK’s housing affordability crisis.
Therefore, it is up to the market to make a difference. Â
Housebuilders, brokers, lenders, or any other key link in the chain, have a responsibility to help reform a market that often fails existing and aspiring homeowners.
We need to introduce new products to reverse the decline in homeownership, and help homeowners to green their homes.Â
The benefits of a stable market
A stable mortgage market fosters a sense of security for both lenders and borrowers, encouraging the flow of capital into the housing sector.
This stability is crucial for long-term planning and investment, allowing people to confidently make one of the biggest purchases – a home.
This stability also underpins the construction industry, as predictable demand for new homes drives sustainable growth.
Lastly, the ripple effects of a stable mortgage market extend to ancillary industries and services, bolstering job creation and economic expansion.
The road to stability is paved by collaboration
Because of the challenges for homebuyers and homeowners, there is a gap for innovation. To truly improve consumer outcomes however, we need to collaborate.
The Deposit Unlock scheme, which we joined in April, is a testament to what can be achieved when the industry comes together to replace government support.
Filling the gap left by the help-to-buy scheme, Deposit Unlock allows consumers to access competitively priced 5% mortgages on new build homes, via collaboration between lenders and housebuilders.
Improving accessibility to retrofitting
As energy efficiency becomes a pressing item for consumers, solutions are required that offer access to retrofitting.
Retrofitting requires a concerted effort from various stakeholders, including lenders, builders, and government bodies.
By working together, these parties can develop financing options that make retrofitting accessible and affordable for homeowners.
This collaborative approach can lead to the creation of well designed mortgage products for example, which provide the incentive, alongside the knowledge and implementation support, to retrofit.
Perenna has already begun piloting a Retrofit discount range through the government’s Green Home Finance Accelerator scheme and is also providing customers access to energy-efficient technology solutions through its collaboration with Heatio. Â
In turn, a focus on sustainable practices within the mortgage market can crowd in socially conscious investors, which is a necessity given the size of the challenge.
The synergy between retrofitting and the mortgage market, underpinned by industry collaboration, is essential for future-proofing the housing stock and promoting environmental sustainability.
Housebuilders and energy suppliers are a vital part of the puzzle
Collaboration between mortgage lenders, housebuilders, and energy suppliers is essential for fostering long-term stability in the mortgage market.
By working closely together, these sectors can ensure that new housing developments meet the current demand for sustainable and energy-efficient homes, which is increasingly important to consumers.
Such collaboration can lead to the design and construction of homes that are more cost-effective to run and maintain, thereby enhancing their long-term value and appeal to both buyers and mortgage providers.
This type of collaboration not only promotes market stability by aligning supply with consumer preferences but also contributes to the national agenda of reducing carbon emissions and building sustainable communities.
By maintaining open lines of communication and pursuing shared goals, mortgage lenders, housebuilders, and energy suppliers can create a robust, resilient, and forward-thinking housing market.
A brighter future
True innovation can help break the unstable cycle that our economy faces, but to achieve this, collaboration will be crucial.
Problems of stability go far beyond a single sector or industry, and heavily entwined sectors should be working together to find mutually beneficial solutions that produce better consumer outcomes.
There will never be a time when interest rate shocks, economic downturn, and geopolitical instability ceases to affect consumers, but we can still take steps to mitigate their impact when these situations do occur.
For example, Perenna’s flexible long-term fixed rate mortgages, with early repayment charges no longer than five years, removes the risk of your payments shooting up and puts the borrower back in control.
No teaser rates, no rising payments, no shocks.
The slow winds of change are blowing, and while political support may be on the horizon, consumers are suffering now. It’s up to us in our industry to offer solutions.
Colin Bell is co-founder and chief operating officer at Perenna
