Your Business and Industry

03 February 2022

Three ways 2021 changed the mortgage market for 2022

2021 was an extremely busy year for the industry and for Foundation Home Loans. It saw a host of new challenges emerge for borrowers and opportunities present themselves across the intermediary market. As a result, we, like many other lenders have broadened our criteria to create something of a new landscape for intermediaries as we enter 2022.

  1. Specialist lending and BDM relationships

Specialist lending has been at the forefront of the mortgage market throughout 2021 and this will continue in 2022. The knock-on effect of the pandemic on income, employment status and personal finances has resulted in many borrowers being pushed beyond traditional lending boundaries and automated underwriting requirements.

Like many specialist lenders, here at Foundation Home Loans, we incorporate a manual underwriting approach which allows us to be more flexible around high bonus and commission for employees, complex income scenarios and around income/earnings for the self-employed.

Affordability is all about having a deep understanding of the customer’s real circumstances and this is an area where a manual underwriting approach can make a real difference.

Such an approach also highlights the importance of BDM and support teams to ensure that intermediary partners are fully aware of the types of cases which fit within individual lending boundaries and, as importantly, the ones that don’t. The value of these relationships will become even more prominent in 2022 as borrowing needs increase in complexity and the need to talk becomes even more crucial.

  1. The positive impact of the Stamp Duty Holiday

This government-led initiative provided a hugely positive effect not only on the housing and mortgage markets but also on the economy as a whole. A fact which was evident in a recent report which showed that the Treasury received £1.21bn in stamp duty revenue in November 2021, taking the total for the year so far to £11.44bn, the highest amount for a Jan-November period since 2017.

According to HM Revenue and Customs (HMRC), Treasury stamp duty receipts for November 2021 were 22% higher than pre-pandemic levels in November 2019 (£0.94bn).

When you consider how many transactions were exempt from paying stamp duty altogether and the amount of tax savings experienced by thousands of homebuyers over this period, these revenue figures help demonstrate the unrelenting appetite and demand for homeownership across the UK and its importance to the economy.

  1. Rewarding green endeavours

As one of the first specialist lenders to bring green mortgages to the market, this is an area which will continue to play a prominent role within our residential and BTL product ranges.

The quest for energy efficiency is a constant one for homeowners, tenants and landlords. The high-profile COP26 conference helped keep important environmental issues at the forefront of people’s minds and momentum gained from this event is resulting in a fresh wave of interest in green mortgages.

The government is aiming to support as many homes as possible to reach an energy efficiency rating of C or better by 2035, with an earlier target of 2030 set for private rented homes throughout England and Wales. It’s encouraging to see more lenders entering the green mortgage space and options emerging for homeowners and landlords who deserve to be rewarded for their environmentally-friendly endeavours.

So, let’s hope that 2022 is the year of the green mortgage.

This article was first published at www.mortgageintroducer.com

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