It is in recovery mode, says mortgage expert
The industry has to be adaptable and prepared for change, as it recovers from the unexpected shocks of recent years, an industry expert suggests.
It’s been a tumultuous period for the mortgage sector, of course – with the knock-on effects of COVID, the cost-of-living crisis and an economic slump, all taking their toll.
Karen Appleton (pictured), head of lending at fintech mortgage lender Gen H, said: “I’m personally of the opinion that the industry is in recovery mode from the recent external shocks and looking to stabilise.”
She urged: “Be prepared and be adaptable. It’s a cliche, but we’ve all been through a number of unforeseen shocks over the last few years and macro external impacts can be devastating if your processes can’t keep up with the pace of change.”
Appleton believes it’s important for the industry to appreciate, too, the changes being experienced by customers in the fallout of a traumatic few years, particularly around adverse credit.
“As an industry, we need to understand that customer circumstances are not always traditional,” she told Mortgage Introducer. “Particularly with events such as COVID, and as the nature of our economy and work changes, we should be understanding about incidental adverse and take time to consider the circumstances of customers.
“Unquestionably the biggest challenge for customers is affordability. The frustration of being told by a lender that you can’t afford a house when your rent is more than the mortgage payment is tangible.
“Affordable housing is often not available for those who need it the most so I’d also like to see the government and councils innovating in redevelopment, house building and working with lenders on long-term solutions.”
Read more: Gen H slashes rates across all products
The importance of listening properly
So what advice would Appleton want to share with her industry colleagues?
“Listen,” she said. “Take time to get feedback from customers, brokers and frontline colleagues - this is your greatest resource. Understand their experiences, don’t assume you know best and garner their ideas and suggestions to truly transform the paradigms we work within and improve customer outcomes.
“Lenders need to rely on brokers to give the best advice for the right outcome for the customer, and brokers want certainty that their policy, rates and decisioning won’t change through the application process.”
She explained: “Working with and listening to broker feedback can be transformative to propositions and enable lending to those with non-traditional family units, complex incomes or gig economy workers. Customers seek broker support for their expertise and lenders should be leveraging this valuable knowledge, too.”
How can borrowers be supported on to the property ladder?
Having previously worked mostly in credit risk with firms such as Bradford & Bingley and Marks & Spencer Financial Services, Appleton spent nine years with Skipton Building Society – where she was head of lending. She has recently joined Gen H, with a focus on risk-balanced decision making and new propositions.
“I’ll be working closely with our wider product teams to create tools that support borrowers onto the housing ladder and challenge the barriers to homeownership,” she said. “Gen H focuses on delivering value for customers and challenging the traditional pain points that make purchasing a home confusing and complex.
“With a pace of change and technological development, we’re able to bring ideas, improvements, products and new propositions to market extremely quickly whilst also simplifying terminology to support customer understanding. This two-pronged approach - simplify and improve - has already helped thousands onto the ladder.”
Appleton wants to see the industry embrace technology, including AI and the use of open banking data.
“Too much of lending relies on manual underwriting, which means underwriters are more focused on administrative tasks rather than gaining a truly holistic understanding of the customer risk, sustainability of income and affordability,” she suggested. “Underwriters are experienced and should be using their risk assessment to explore ways to lend to customers in those complex scenarios – those vanilla cases should fly straight through.
“Many lenders are looking to innovate and digitise, so I would like to see the government focus on how to help customers with systemic problems - think cost-of-living, saving for deposits and rising house prices that continue to put homeownership out of reach for far too many people. Even remaining in a home due to interest rate shocks is causing extreme anxiety for many homeowners.”
She added: “We should be aiming to remove the need to chase estate agents or conveyancers and manage the expectations of customers, providing more certainty and greater speed of transactions through to completion.”
