FR: What is your role at Shawbrook? What kinds of things do you focus on?
I am head of field sales for Retail Mortgages at Shawbrook, which involves providing specialist lending solutions for both residential and buy-to-let mortgages through our two brands, The Mortgage Lender (TML) and Bluestone Mortgages.
A big part of my role involves managing and supporting a team of business development managers across the country, working with data, and engaging with brokers across the UK to explore how we can create opportunities to help them, and us, grow our respective businesses through our products and proposition.
In addition, I like to be involved in as much as possible behind the scenes, from product and proposition development to supporting my team with their own development and career progression.
FR: What is your view on the current UK housing market? And what key pressures do you think are shaping it?
While there have been ups and downs in the housing market over the past few years, there is cause for positivity in the medium to long term, primarily driven by stable house price growth, sustained buyer demand and increased activity.
That said, as an industry we cannot afford to become complacent. Affordability remains a persistent issue. With supply still failing to keep pace with demand, and housebuilding falling short of what is needed, it is no surprise that house price growth has significantly outstripped wage inflation over the past decade.
At the same time, increasing regulation in the buy-to-let market is likely to raise landlord costs. Some may decide to sell properties they no longer see as viable investments, and both outcomes are likely to place further upward pressure on rents.
Together, these factors underline the growing challenge facing a generation of renters. Rising living costs make saving more difficult, while ever higher house prices push deposit requirements further out of reach.
FR: How has borrower confidence and behaviour changed in a higher-rate environment?
With the Bank of England base rate coming down and now below 4%, headline mortgage rates are likely to follow and reduce further.
It is difficult to attribute borrower confidence and behaviour to a single factor. Supply and demand continue to play a pivotal role in house prices, and higher rates did slow house price growth. However, house prices have continued to rise, even when rates were significantly higher than during the 10 to 15 years that preceded them.
With rates now lower, some borrowers may feel that the cost of borrowing is more manageable, but what customers are willing to pay is a different matter altogether.
FR: What are your expectations for mortgage rates? And what would this mean for affordability?
Since the 2022 Autumn Budget, mortgage rates and the Bank of England base rate have steadily come down. I expect the base rate will continue to reduce gradually, perhaps with one or two further cuts this year, but it’s safe to say a return to the ultra-low rate environment of the 2010s appears highly unlikely.
That being said, I expect lenders to become increasingly innovative in how they approach affordability in order to support as many borrowers as possible, while remaining responsible and not putting customers at risk.
FR: Specialist lenders and intermediaries are becoming more important, especially as affordability remains stretched. Why do you think this is?
We are seeing more lenders offering enhanced affordability and small deposit solutions, which is welcome, as it ultimately increases customer choice and creates more opportunities to secure the level of borrowing required.
Specialist lenders typically look at applications beyond face value and, although many have invested significantly in process automation, a large part of what we do remains rooted in reviewing applications on their individual merits and building long-lasting relationships with our broker partners. Similarly, intermediaries are increasingly important to customers, with around 90% of the market going through this channel and a growing reliance on the depth of knowledge and experience within the specialist sector.
In a higher LTI environment, specialist lenders are having to look more closely at what affordability really means. While the principle remains that higher accepted income can improve affordability, the way income is assessed, particularly for freelancers and limited company directors, varies widely.
Many lenders average two or three years of salary and dividends, while others use salary plus net profit after tax. TML, however, assesses directors with at least 25% shareholding on salary plus their share of net profit before tax, maximising the income considered by underwriters.
FR: How have intermediary needs evolved, and what do brokers value most right now?
Rates will always matter when assessing overall cost for borrowers. However, brokers place equal value on lenders who can provide solutions and say yes when it counts.
As customer circumstances grow more complex and the market continues to shift, intermediaries are increasingly looking beyond the high street to lenders who can operate in the grey areas, with underwriting models that properly understand an individual customer’s circumstances and story.
Brokers value flexibility of criteria, as well as efficient service and strong, dependable relationships. The role of a skilled BDM or key account manager should not be underestimated, as their insight and support are often key to securing the right outcome for both broker and client.
FR: Why do speed, certainty and consistency matter more than ever for intermediaries? And how does Shawbrook implement this when helping advisers?
The intermediary market is a customer-centric one, so factors such as speed, certainty and consistency are key to driving business and maintaining broker-client relationships. At Shawbrook, we have invested significantly in technology to support the broker journey, while retaining the essential human touch required from a relationship and underwriting perspective.
Recent enhancements include the introduction of auto-income verification, AVMs, Open Banking and DocuSign, all designed to reduce friction in the underwriting journey.
We have also refined our requirements at decision in principle stage, clearly setting out what is needed so that we assess only the essentials. This helps brokers limit the information they need to provide and makes the journey from application to offer faster and more efficient.
FR: What are some examples of recent or upcoming Shawbrook products designed to meet intermediary and client needs?
We have made a number of significant enhancements to our product range, all focused on giving intermediaries greater flexibility and helping more clients access the property ladder.
Most notably, we have increased our maximum LTVs across both brands. Bluestone Mortgages now lend up to 90% LTV, while TML offers up to 95% LTV, including on new build houses and flats. This creates more options for customers with smaller deposits and works hand in hand with our criteria propositions, enabling clients to maximise affordability without compromising on suitability.
In the same spirit, TML launched its shared ownership proposition two years ago to further support borrowers who may not qualify for standard mortgages or mainstream shared ownership schemes. It is another example of how we are evolving our offering to open up home ownership to customers who might otherwise be left behind.
FR: What do specialist lenders need to do differently to genuinely support brokers in today’s market?
Specialist lenders provide solutions that mainstream lenders often cannot, making them a valuable partner for brokers with complex client needs and supporting business growth. That agility to adapt and evolve will remain essential.
However, unlike high street banks, specialist lenders do not have the scale or capacity to serve as a mass-market solution. Growth is a long-term ambition, but one that must be achieved sustainably to ensure more brokers can be supported without compromising service or expertise.
