Good afternoon, and welcome to the UK Finance Annual Mortgage Lunch. It’s great to see everybody here. Thank you to Finova for sponsoring today’s event. 

Moving house has been ranked as one of the most stressful life experiences, surpassing job interviews, dental work and maybe even being Prime Minister. I’m not sure everyone in the room would agree with the last one, but it certainly tells us where the bar is.

Now, those findings are from last year. This is before we consider the volatility the war in the Middle East has caused to the mortgage market. Just last month, Moneyfacts reported that deals were available for the shortest time since 2011 at just eight days. 

Once upon a time, the stress of buying a property was worth it. Your home was not just your safe place and your pride and joy. It was also an investment, a safety net for your retirement, and it represented security. I fear increasingly this is no longer the case.

Successive governments have added to the financial strain of property ownership. Through increasing council taxes, stamp duty, the mansion tax. And of course, if you’re a landlord, the way rental income is taxed. Add in pressure from the green agenda and the Renters’ Rights Act, your burden is considerable. 

Each one of these in isolation may be manageable, but it’s the cumulative impact they have on homeowners, landlords, and tenants that really concerns me. 

I think there is a view in government and public policy that if someone is wealthy enough to buy a property, they can afford to be squeezed. And I think this is deeply flawed. 

What all this means, is that hard-working people who scrimp and save to buy a place are not seeing the return that they may have done in previous years. In areas like North Norfolk and Luton, our recently published data shows that homeowners are spending around a quarter of their income on mortgage payments. This is despite interest rates being nowhere near historical highs. If you add inflation, energy costs, and other rising bills, there isn’t much income left for the government to squeeze.

For landlords, particularly on the smaller end of the scale, investing in property was an attractive way to boost income. But that doesn’t hold true anymore. Across the country, from Kensington and Chelsea to Cambridge and the Derbyshire Dales, our data shows returns for landlords are just five per cent gross. You can get around that leaving your cash in a deposit account - with a lot less hassle.

Some people won’t shed many tears for landlords, but the supply of rented property is important for job mobility and for those who either prefer not to, or are unable to, buy a home.

What’s adding to my concern is that the age of first-time buyers has been increasing in recent years. Affordability problems and difficulties saving for a deposit means that many are older when they buy, and are also taking out longer mortgage terms. At the moment, a fifth of first-time buyers take out a mortgage of over 35 years. For home movers, who tend to be older still, ten per cent take out a mortgage over 35 years.  

In the coming years, we’re likely to see even more mortgage borrowers still paying into retirement. Our data suggests that over the last 10 years, the proportion of mainstream mortgages ending after expected retirement age has tripled from just under 74,000 to over 207,000. 

This is why we need better awareness of later life lending options, to allow homeowners access their housing equity and support their needs into retirement. I don’t believe there should be pressure to downsize, but for an estimated four million older people, this is something they want to do. The process needs to be made less daunting and less expensive. For example, by reducing stamp duty for downsizers. 

For us, later life lending is where our focus is. It’s a segment of the market that’s not just defined by age, but more importantly, by needs. In my own case, I’m funding care for my wife and my mortgage is due to run until I hit the age of 75. There will be other homeowners in much more difficult positions than me. So, we need better advice in place to help later life borrowers through all sorts of life events and changes. 

There are currently no regulations for mortgage or financial advisers to inform customers of later life borrowing options. Nikhil Rathi raised this at our Growth Summit just last week. The FCA is currently looking into this, and we’re supportive of their focus here. 

Efforts like this show that the regulators can, and do, have a positive impact on the market and customers. 

On the subject of regulation, I alongside many others, have long argued that the approach to mortgages was too cautious. I’m pleased that we’ve seen a number of changes recently, such as allowing greater levels of higher loan-to-income lending. I want to thank the PRA and the FCA for listening to our industry, and for their openness to change. Because change at a regulatory level is what encourages and allows innovation in our market. 

We’ve seen members across the board grasp these opportunities to help more people into home ownership. Examples include low or no-deposit lending, and mortgages supported by rental history. We have seen lenders introducing family-assisted products, that allow parents or siblings to support buyers.

It’s not just the products from lenders that I want to celebrate, but also the approach to customers. 20 years ago, people were scared to talk to their lender if they were in trouble. They might even post their keys through the letterbox and tell the bank to take their home. Nowadays, we’re all shouting from the rooftops that your lender is there to help you. The outcomes are far better, with arrears and possessions at historic lows. Our industry does everything it can to keep people in their homes, and that’s what it’s all about. We help put roofs over people’s heads and we do our best to keep them there. We enable people to have homes, not just houses.

The mortgage market is resilient, and volatility is not new. But we do need a supportive public policy environment. Last month, we saw rumours that the Chancellor was considering a year-long rent freeze, albeit it was quickly denied.

I don’t know whether this was under serious consideration or not, but the idea was clearly on someone’s mind in government. This kind of kite-flying is not helpful. This idea would have been disastrous, particularly for tenants. The wider point is that on top of the existing strain on property owners that I talked about earlier, someone somewhere thinks there is still more to squeeze from the market. I have my doubts. 

As an industry, I’m confident that we can navigate rough seas.  As always, we will be keeping a watch on our data. We will continue to work closely with our members, regulators, government and opinion-formers. And whatever fresh challenges come our way, I know our industry will support its customers.

Thank you.