For the second year in a row, Hodge and three other leading lenders in Wales came together at Cardiff’s Principality Stadium to address the challenging financial landscape for Welsh businesses and discuss solutions for the mortgage sector, homeowners and first-time buyers.
The panel was made up of Hodge CEO David Landen, Principality CEO Julie-Ann Haines, Swansea Building Society’s CEO Alun Williams, and Monmouthshire Building Society’s Chief Customer Officer Eve Wilkins.
The event superseded last year’s, with more than 150 mortgage brokers. Despite tremendously pressurised workloads, it shows the broker community is keen to find time to listen to what lenders have to say.
A week on, we sit down with David Landen to talk about the key messages from the event, from insights and predictions on the housing market in Wales, to changes needed to offer support for customers and intermediaries in this unpredictable environment.
David, what would you say are the main challenges Welsh businesses are facing?
Unfortunately, the whole of the UK is facing a difficult environment with persistent inflation, higher interest rates and a tight market for talent it seems a perfect storm. Welsh Businesses are feeling the same strain too.
What are you hearing the main challenges for brokers and intermediaries are?
We know how difficult it’s been for brokers supporting customers when products are repriced or pulled from the market, often without notice. This leaves customers who thought they had secured a solution to their needs suddenly having to restart the process.
This has been incredibly tough for brokers often having to find deals and securing them as quickly as possible to provide certainty for the customer and progressing information to the lender to secure the product. At the same time, they’re having very difficult conversations with customers, advising them of the best deals available even when that means the customer will be paying a lot more each month alongside other rising household bills.
We understand it’s mentally stressful and a very challenging environment, especially on the backdrop of the very low rates we’ve witnessed over the past 15 years post the financial crisis.
So, how are lenders supporting customers and intermediaries in the current volatile financial landscape?
Given the difficulties, it’s important for lenders to not only think about their own business but consider the customer and broker when making decisions. Hodge looks to provide at least 48 hours’ notice to the market of an impending rate change and hopefully this is a small way of supporting our brokers to support our future and existing customers.
Are the Welsh lenders who attended the event, seeing any major signs that we are heading into a recession?
If you look at some of the recent economic analysis, there are signals that the economy is slowing. However, none of the lenders on the panel today, the leading lenders in Wales, have seen this slowdown translate into significant levels of arrears. We know there will be more customers seeking help and support as we all get used to higher interest rates and Hodge is committed to providing support wherever we can.
What are your predictions for the market in the next two to three years?
Crystal ball time!
In my time as CEO, the market has been almost impossible to predict. We’ve seen economic forecasts miss the mark time and time again. The global economy is too unstable to predict the future accurately. We’re recovering from the COVID-19 pandemic, dealing with a cost-of-living crisis, seeing the effect of the war in Ukraine. And now significant movement in interest rates.
What I can see is the effect of the rates rises having a significant impact on household spending in the next 12 months. Fixed rates are coming to an end and people in rented accommodation also seeing rent uplifts as landlords adjust to higher borrowing costs, leaving less disposable income. It will inevitably slow down the economy while we get inflation back under control.
While higher interest rates will lead to slower activity in the housing market, there’s still a significant shortage of housing and this lack of supply will provide a level of support to the housing market and should mean we avoid significant falls in prices.
How big a part will sustainability and decarbonisation, as well as green mortgage products play in the future of the market do you think?
It has to be huge. The UK has some of the oldest housing in Europe, totalling 40% of the carbon emissions in the UK. UK homes are notoriously energy inefficient, pitting them as the biggest energy-wasters in Europe. We also have some of the slowest take up of green products within the home.
This means our homes have an important part to play in the decarbonisation target the government wants to meet over the next decade. There needs to be coordinated support by government and by lenders to support homes becoming as carbon efficient as possible.
Hodge has supported a local Welsh business, Sero. Its sole purpose is to enable this transition to net zero in our homes and as lenders we will need to play our part in the big task. It was great to hear at the event the small steps we can all take just by insulation and changing windows which, alongside longer-term larger investments in our homes, in the long run will save us all money and make the steps required to a lower carbon economy.
What were the key outcomes following Welsh Lenders event?
That Wales has a fantastic lending community, and that by collaborating more across the biggest issues we face we can find common ground and solutions. It’s incredibly exciting to be based in a community that is growing and collaborates to solve issues.
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