Gary Salter is head of corporate accounts at Nationwide Group Intermediary Sales
Much has been made of the struggles of first time buyers, trying to find a way onto the housing ladder. In fact, the challenges of saving for a deposit, meeting the affordability and income criteria and finding a home now that prices have started to rise are frequently grabbing the headlines. Yet there is little mention of the first time seller, whose challenges may be different but are still significant, challenges where intermediaries can make a real difference.
Many first time sellers will be those who, bright eyed with enthusiasm, picked up the keys to their new home, only to watch as house prices fell and the financial climate as a whole grew chillier. The counterbalance to that is that while wages overall may have remained static, interest rates have remained over the medium term at an all time low, and so the affordability ratio for those already with a mortgage has remained at an average level too. And, with the advent of new schemes to help first time buyers and home movers, and with house prices across the country starting to rise - and in London rising significantly - new challenges are starting to present themselves to first time sellers.
One of the first things any first time seller will notice is that the lending environment is entirely different to the one they experienced only a few years ago. The frustration for this group of borrowers stems not necessarily from any concerns in their own circumstances, but rather how the lending world around them has significantly changed. Some may be more than ready to move, but the value of their home may have decreased or remained flat, or certainly not risen by the amount required to make a move to a more expensive property. Others may feel financially able to move and the value of their home may have risen, but they do not qualify for the loan they want due to more exactly lending criteria.
Crucially, this group of borrowers may feel more vulnerable than those further up the property ladder because they have never been through the selling process before. It has arguably become harder to move up the property ladder than it is to get on it in the first place, as a result of the increasing number of boxes they need to tick, as well as the not insignificant costs of moving itself.
What is clear is that first time sellers are crucial to a healthy mortgage and housing market. Without them, first-time buyers cannot get the type of property they need, which then has a domino effect on the rest of the chain. First time sellers are also the life blood for estate agencies, as their properties not only attract first time buyers but also empty nesters looking for a more modest home and other choosing to downsize to minimise their expenses, such as retirees.
A lender such as Nationwide is in a position to offer discounted product fees, low deposit mortgages, free valuations and legals, and providing access to such schemes as NewBuy, MI New Homes and support the Help to Buy equity loan scheme in England, Scotland and Wales, via intermediaries.
In turn, intermediaries know that well thought out advice will be crucial to those buyers, both during their first experience of selling a home and likely thereafter. After all, these are the brokers’ client bank of the future. This is a return to the art of mortgage broking, accurately matching a customer to a lender’s criteria, and it’s a focus that will continue to apply both pre and post MMR. Given that the mind-boggling range of schemes and deals that have been introduced to get help the market moving can be confusing enough to the mortgage professionals, just think how crucial the support and advice of mortgage intermediaries will be to first time sellers.