Nottingham BS  

Lender signs £600mn fintech deal to boost mortgage deposits

Lender signs £600mn fintech deal to boost mortgage deposits

Nottingham Building Society has provided fintech firm Generation Home with £600mn to fund its mortgage products over the next two years, which help borrowers afford larger deposits.

Generation Home launched in 2020 to provide first-time buyers with ‘deposit and income boosters’. 

Its deposit booster, a twist on the guarantor mortgage, allows an unlimited number of people to increase a buyer’s deposit.

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While its income booster helps someone earning £30,000 or £40,000, by allowing them to put their parents’ income on the mortgage.

The deal with Nottingham BS will provide Generation Home with £600mn in savings cash over two years to lend to its mortgage customers.

The lender’s chief executive, Sue Hayes, said it had a “resolute determination” to help people own their own home.

“This matters now, more than ever,” said Hayes. “[Generation Home] present[s] a unique proposition that, with our support, can enable home ownership to become a reality, rather than a dream.”

The fintech firm estimates that around two-thirds of first-time buyers need financial help from friends or family to afford a deposit. 

Brokers have also highlighted shrinking affordability, with loan sizes on offer by lenders falling up to 30 per cent over the course of this year.

A £100,000 loan secured with the same level of income in January shrank to between £70,000 and £76,000 in September.

Strategic development head at mortgage club SimplyBiz, Richard Merret, advises on the products developed by Generation Home.

He told FTAdviser in April the fintech was addressing two key issues - the difficulty of getting a deposit and the difficulty of qualifying for affordability.

“Brands people engage with these days are more likely to be startups and have used these routes themselves,” said Merret.

“They’re using different language - ‘booster’ versus ‘guarantor’ - and their [Generation Homes’] presence on social media has got lots of people engaging with the idea of homeownership who otherwise thought they couldn’t.”

By contrast, Merret said more traditional lenders and intermediaries “just don’t” engage on the same level.