UK home owners want more innovative mortgage produc
Some 82% of home owners in the UK want more to be done to make it easier for new lenders to enter the mortgage market and would welcome more innovative products, according to new research.
Many believe that new lenders such as Tesco, Virgin Money and M&S, as well as other new entrants, can help break the dominance of the big six lenders and provide more creative approaches to mortgage lending, the research from Castle Trust suggests. Two thirds of those questioned said that they believe new lenders will focus on customer needs, suggesting some disenchantment with traditional high street banks and lenders. Just 14% said that they expect the traditional lenders to do so.
The research also shows that home owners would like to see more innovative mortgage products. For example, 40% of people aged 25 to 44 would welcome an equity loan, over half, 51%, said they trust mutual societies most to offer innovative mortgage solutions and this rises to 58% for those aged 45 and over. The higher level of trust is translating into market share with building societies now accounting for 22% of the gross mortgage lending market, nearly double their pre-financial crisis level. They are dominating the mortgage best buy tables, offering 83% of the most competitive deals currently on the market.
Quote from PropertyCommunity.com : “Remortgaging activity in the UK jumped almost 20% last month with the highest average remortgage loan to value (LTV) being recorded since January 2009, new data shows. There was also a 17% monthly increase in applications, according to February’s National Mortgage Index from the Mortgage Advice
Bureau, one of the UK’s leading independent mortgage brokers.”
‘Increased competition in the mortgage market is clearly welcome and new lenders and building societies have a major role to play. The mortgage market needs greater innovation and a wider selection of products than those currently on offer,’ said Sean Oldfield, chief executive officer, Castle Trust. ‘The legacy issues faced by many of the big six lenders have led borrowers to believe this innovation is more likely to come from new entrants, but it is an issue that needs to be addressed by the entire mortgage market,’ he added.
Castle Trust supports the drive for greater innovation in mortgage products and is offering a new type of equity loan, called Partnership Mortgages, as well as investment products, called HouSAs, which enable savers to invest efficiently in the national housing market, tax free through their SIPP or ISA.
Partnership Mortgages are for 20% of the value of an owner occupied home, taken out alongside a repayment mortgage from another lender. There are no monthly commitments on the Partnership Mortgage and Castle Trust shares 40% of any profit made by the home owner when they sell their home or come to the end of the mortgage term. The company also shares 20% of any loss made on a home bought with a Partnership Mortgage.