By Craig McKinlay, New Business Director, Kensington Mortgages:
As the government begins lifting restrictions on our economic and social activities, our thoughts naturally begin to turn to what the future holds for us all.
Many of us have become used to a different way of living and working and as we navigate the post lockdown world, this looks set to continue for some time.
As one of the UK’s leading non-bank specialist mortgage lenders, we were particularly keen to understand the thoughts of our broker and National Accounts partners on the impact of the Covid lockdown, and the future of the property market. So we conducted telephone surveys and group interviews via Zoom and our audiences responses gave us a valuable insight into how the crisis has impacted consumers, how brokers are adapting to a new way of working, and how lenders will need to be more flexible and innovative to meet a new set of consumer needs as we adapt to a new reality. We’ve outlined some of the key take-outs from the research below.
For customers: The crisis has highlighted the desire to take more responsibility for their future
Unsurprisingly, brokers told us their clients had significant fears for their financial well-being over the coming months. Many were worried about their jobs and businesses and told of uncertainty over their long-term prospects.
Yet, at the same time, it was striking how many people have seen the lockdown provide a welcome opportunity to think about what is important to them. A common theme when talking about their customers was the importance of enjoying life while you can, of the need to think about spending more time with their families and their wish to put in place financial arrangements to protect loved ones.
And about property in particular, we learnt that many people, having been locked in their homes 24/7, were keen to undertake long overdue renovations or move to a more suitable property for their circumstances.
Ultimately, this once-in-a-lifetime event has focused minds and encouraged people to make much-needed changes to their lives and lifestyles.
For Lenders: Now is the time for flexibility and innovation
Among our respondents, there was a clear consensus that lenders have a crucial role to play in getting things in the property market moving again, both in terms of adopting a positive outlook and adapting what they offer to take account of evolving consumer needs. Our panellists spoke of the consumers who will have been hit especially hard by the lockdown such as the self-employed, those who rely on bonuses and those who will now need to find a much higher deposit. This is likely to result in a greater need for human underwriting to address a new set of consumer complexities that will arise post lockdown and which could present a particular opportunity for specialist mortgage lenders.
From a wider industry perspective, it was felt that there was a need for lenders to reinstate higher LTV’s sooner rather than later, offer greater flexibility in their loan criteria and take advantage of the opportunity they now have to innovate and create mortgage propositions which meet the needs of a post lockdown world.
For Brokers: They are ready to do business differently
Brokers have also embraced change, having seen how technology has helped them continue to communicate with their clients and lenders whilst working from home. However, although there is a widespread recognition that flexi-working, virtual appointments and online interactions will now be the ‘norm’ it was felt that they can’t entirely replace physical meetings.
The survey makes clear that, if the mortgage market was changing rapidly before Covid, this shift will speed up even more over the coming months. Expectations on all sides about what the ideal market could - and should - look like have changed and it was felt that now was the time for the industry to evolve in line with these changes.
We’re already making changes to the way we work
At Kensington Mortgages we have recognised this new reality and are already making significant changes to the way we do business.
1. We’re transforming our technology:
• We will soon be launching a new, simpler broker portal and underwriting platform to make it easier to complete applications and transactions.
• We exploring extending our opening hours and weekend working, as well as moving away from traditional phone communications towards interactive channels such as SMS, live chat and AI chatbots to provide a more streamlined experience.
2. We’re lending more:
• We have recently announced our new securitisation which will enable us to access more funds and help even more people.
• We’re looking at the products we offer to ensure we can meet a wider range of customer needs and circumstances
3. We’re refining our lending policies:
• We now accepting furlough income for mortgage applications
• Our underwriting criteria are unchanged for those who are self-employed or have variable income
The Covid crisis, as unwelcome and damaging as it has been, is inevitably triggering significant changes to our society and our economy. The mortgage market will almost certainly mirror this as competition intensifies, new technologies are introduced and customer expectations rise.
The events of the past three months have almost certainly moved us closer to a new, mortgage model which is much more aligned with the evolving needs of both lenders and customers.
You can watch a full summary of our Post Covid Lockdown research on our webinar here.
Craig McKinlay has 25 years of experience working in Commercially focused roles across Financial Services, Telecomms and FMCG in the UK, Europe and Africa. He is New Business Director of Kensington Mortgages, the UK’s leading non-bank specialist mortgage lender.
The opinions expressed in this blog post are those of the author and are addressed to mortgage professionals in the Kensington network. Customers should not interpret any part of this blog post as financial advice. If you require advice on a new or existing mortgage you should contact your mortgage broker.