Good mortgage advice remains crucial post-pandemic

Cat Armstrong - Dynamo
9th June 2021
Cat Armstrong Dynamo 580

We’ve all spent more time in our own homes over the course of the past 18 months than any of us ever expected, or probably wanted. The importance of the space which we occupy, whether owned or rented, has been exacerbated over this period and it has forced a variety of people to make decisions over what they need from their home, where they want to live and how they want to live going forward.

Servicing a mortgage or a rental agreement will always form the largest regular outlay for the vast majority of people and throughout the pandemic, the government has supplied some much-needed financial support across many areas. Additional help has also come from sources closer to home, with research from OneFamily suggesting that over 50s have lent a total of £8.2 billion to relatives since the beginning of the pandemic.

25% of over 50s are said to have provided some degree of financial support during this time, with an average of £1,298 being lent per person. In order to lend money to family members, 44% said they had strained their own finances to do so, with 21% admitting feeling the pressure to step in. Seeing younger generations suffer a decrease in income (34%) was the key reason given for this intergenerational lending, with family members getting furloughed (18%) or losing their jobs (14%) also key factors. People over 50 have been withdrawing money from savings accounts (53%) and their current accounts (37%) in a bid to financially prop up their families. Credit cards didn’t remain untouched, with older generations resorting to raiding them to help their loved ones (5%), and some (2%) of over 50s even having to sell their belongings to access some extra cash.

As outlined in the data, millennials are often cited as being the most severely impacted by the pandemic from a financial perspective but this research also demonstrates the pressure being placed on all age demographics. Through no fault of their own, many people have suffered changes to their financial and employment status – whether short or longer-term – and whilst government and family support has helped, there may be lasting legacies to overcome. With many FTBs relying on the Bank of Mum and Dad for financial support when bolstering deposit pots, it will be interesting to chart this impact a little further down the line and the potential impact on the BTL sector.

This data highlights two areas that will prove integral in supporting the shifting borrowing demands of various age groups going forward: the advice process and specialist lending. The importance attached to the advice process after such a turbulent period in our history is clear, as is the ongoing strength of the connection between the intermediary market and specialist lenders.

Lenders have all had to adapt and evolve their offerings to provide access to residential solutions which meet a range of borrowing scenarios including multiple income streams, credit repair, self-employment and those affected by furlough. This is also the case in the BTL market where we are seeing lenders extend product ranges to match the needs of landlords who are looking to restructure and diversify their portfolios, in addition to moving to a limited company structure.

It’s certainly an interesting time to be operating in these markets and as these become increasingly complex for borrowers, the value of the advice process will only continue to rise.

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