How the housing market will change post-pandemic

  • Describe some of the challenges of the housing market, post pandemic
  • Identify ways in which providers are helping first time buyers
  • Describe the existence of green mortgages

Two themes are likely to prove important: increasing focus on the specialist lending market, and innovations powered by technology.

Special considerations 

The focus on specialist lending is likely to receive a further boost from economic uncertainty (bad credit and complex situations due to the pandemic). To date, much of the economic impact around the Covid crisis has yet to be felt.

Mortgage holidays have been extended to July and furlough to the end of September. About 5m people are still on the scheme, according to the latest government estimates.

As government support wanes, and with the Office for Budget Responsibility warning that unemployment could grow to 6.5 per cent by the end of the year, we could increasingly start to see cases requiring specialist advice. This also reinforces long-term trends, particularly the rise in self-employment. 

In the short term, the pandemic has hit many self-employed workers' incomes, emphasising the importance of advice for those remortgaging or trying to buy for the first time. 

Longer term, though, the pandemic may result in a rise in the number of those working in the gig economy, just as the financial crisis a decade ago saw a sustained boost in the numbers of self-employed.

That, again, points to the need for an increasing role for specialist lending to cater for our changing society. Advisers need to be prepared for this, whether through in-house expertise or by referring them to third-party specialists. 

A golden period for product innovation

Similarly, partly by coincidence and partly in response to increasing pressures on first-time buyers and others due to the pandemic, the crisis has seen a sustained period of mortgage product innovation.

For many buyers, these new products could provide an interesting avenue to explore. Again, if their clients are to benefit, advisers need to fully understand the latest products to offer appropriate guidance and answer their questions. 

A few of the key developments are worth exploring in more detail.

Perhaps the most interesting are the new options for low or no-deposit borrowing powered by technology from the likes of Proportunity and Generation Home. 

The former relies on technology to forecast house price growth. If buyers find a home that meets Proportunity’s expectations, they can then secure an equity loan of up to 15 per cent of the house price, which only has to be repaid in five years when they sell or remortgage. At that time, they must pay the same proportion as they borrowed, but of the current price, so up to 15 per cent of the market value.