Gen H, the fintech lender aimed at supporting those with affordability struggles, has outlined further plans to support first-time buyers, as brokers praise the firm for its innovation.
A core tenant of Gen H's offering, also known as Generation Home, is to “play in places that the banks don’t play” in the home-buying process.
Fundamental to this is its plan to generate additional revenue in those parts of the market and give it back to the customer.
Speaking to FTAdviser, Gen H chief executive Will Rice described it as “a bit of a Robin Hood strategy”.
The fact that they have this cheap money means they can be rubbish in all other respects — Will Rice, Gen HThis involves “taking revenue that either estate agents, mortgage brokers or lenders are monetising - capturing it and giving it back to the consumer”, he explained.
Rice outlined how the lender plans to launch its own in-house not-for-profit conveyancing service in the coming months which will see borrowers benefit from a lower interest rate as the lender “reinvests” its profits.
“On a two year fixed-rate mortgage, we’re going to be rolling out a range that will be 30 basis points cheaper when you appoint Gen H legal as your conveyancing solicitor and that reflects us giving you all of the value back,” Rice explained.
“What it will present to the customer is a premium standard service quality, it will be unique in terms of the advantages that come from the integration between our lending and conveyancing businesses - but also we will provide it to the customer essentially for free,” Rice said.
In Rice’s view, this innovation speaks to the overall philosophy of the firm.
“The big big challenge with housing, and mortgages, is the cost of capital," he said. "The funding costs of big banks and building societies presents a phenomenally large barrier to entry.
“They’ve got cheap money, you don’t have cheap money. And the fact that they have this cheap money means they can be rubbish in all other respects.
“And so our challenge in trying to transform the market is how do we deliver really competitive rates to our customers while also being able to innovate and deliver great propositions and service and change the way that the home-buying system works,” Rice said.
Gen H launched in 2020 and provides first-time buyers with ‘deposit and income boosters’. It has proven to be a success with first-time buyers and brokers alike.
Its deposit booster, a variation on the guarantor mortgage, allows an unlimited number of people to increase a buyer’s deposit.
Meanwhile its income booster helps someone earning £30,000 or £40,000 by allowing them to put their parents’ income on the mortgage.
Nationwide’s chief economist, Robert Gardner commented earlier today on the increasing challenges being felt by first-time buyers, largely in the form of affordability.
“Despite the modest fall in house prices, for a prospective first-time buyer earning the average income, mortgage payments remain well above the long run average as a share of take-home pay,” Gardner said.
“In addition, deposit requirements remain prohibitively high for many and saving for a deposit remains a struggle given the rising cost of living, especially for those in the private rented sector, where rents have been rising strongly.”
A number of mortgage brokers and experts have highlighted Gen H as one of the most innovative lenders on the market trying to solve some of the big challenges for first-time buyers.
When the Bank says No, managing director Emma Jones said the lender is a prime choice for struggling first-time buyers.
“Generation Home is a textbook lender for first-time buyers struggling with affordability, as they allow not just the buyer but up to five additional, what they call ‘income boosters’, on the application,” Jones said.
“This can considerably help those first-time buyers struggling to hit affordability in the more expensive areas of the country to buy. There really are options when the bank says no,” she added.
Model Financial Solutions director, Hannah Bashford agreed and described the lenders’ customer service as “outstanding”.
She added that it has a “sensible approach to underwriting.”
Gen H is not alone in disrupting the mortgage market, Advantage Financial Solutions advising director, Steven Morris pointed to a number of other firm that have a good track record of supporting buyers with the purchase of their first home.
“There are so many examples of innovation for first-time buyers,” Morris said.
The equity loan providers like Ahauz and Even, the 'rent-to-buy' style companies like Keyzy and Wayhome. Even 'normal' lenders like Nationwide offering their ‘Helping Hand’ scheme. For us, though, Generation Home takes the crown,” Morris confessed.
He noted that its flexible product offering along with its lending policy, “which seems to borrow the best bits from high street names” means Gen H is “right out at the from at the moment”.
Rice believes part of the reason for this success is down to the fact that no one fundamentally has buyers’ backs at the moment.
“We’ve designed all of our products to give financial security to families who want to help their loved ones onto the property ladder - so broadening access to the bank of mum and dad rather than having it limited to people who have the luxury of gifting.”
jane.matthews@ft.com
