PARADIGM MORTGAGE NEWSLETTER WINTER 2024 www.paradigm.co.uk/mortgages
CONTENTS 4 Paradigm Mortgage Services Introduction from Paradigm Richard Howes 8 IMLA Hard road ahead for government’s housebuilding plans 10 Aviva How being inclusive can help your advice business grow 12 Paradigm The importance of talking about Men's Mental Health Riona Mulherin
For Intermediary use only. Content correct at time of publishing. YOUR MORTGAGE WILL BE SECURED ON YOUR PROPERTY AND YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority. Firm reference number: 157260. Assess many types of complex income Airbnb considered Top slicing available harpendenbs.co.uk/intermediaries SCAN THE CODE TO VISIT OUR INTERMEDIARIES PAGE HOLIDAY HOME/SECOND HOME • We consider a range of incomes, including pension, trust, investment and maintenance as well as 100% of bonuses, overtime and commission (2 years proof required) • We consider latest years income for self-employed applicants • No maximum age • 75% LTV available on IO and 80% available on repayment HOLIDAY LET • 90 days personal usage allowance per annum • Airbnb considered • We lend in town and city centres as well as coastal areas • We lend on properties above commercial units • Top slicing • Minimum income of £30,000 required • Up to 3 properties on one title considered • 75% LTV available on IO and 80% available on repayment If it’s complex, we might find a way Best Local Building Society
Hello, and welcome to the final edition of Paradigm’s quarterly newsletter for 2024! So how was 2024 for you and your business? As ever in the mortgage world, it seems change is the only constant, and 2024 has been no different - with a plethora of new initiatives and policies from the now notso-new Government that will likely impact your business, your clients and your advice processes, alongside regulatory issues and the wider economy. If you take the housing arena alone, there are proposed new planning laws, new build quotas, stamp duty changes coming in at the end of March 2025, changes to second home stamp duty, the Renters Rights Bill, to name but a few. If you then add in what now appears to be consistent FCA reviews on the impact of Consumer Duty the Protection market review and the other areas of oversight, and you have yet more change and challenge in our market which in turn may impact your business. Finally, we can’t ignore the wider issues in the UK and world economy, and the areas that concern us. Namely; inflation, the Bank base rate, the new National Insurance rates which will come into effect in Q2 2025 and the impact this could potentially have on wage growth, employment levels and general business health, the wider geopolitical matters from the Middle East to Ukraine, plus the small matter of the “Donald” taking his seat in the White House! All of this combined is enough, as REO Speedwagon sang in their famous song ‘Roll with the Changes’, to adopt the maxim of “turn some pages, I'll be here when you are ready, to roll with the changes”. And that’s really all that we can do, roll with the changes. I have never liked the phrase “it is what it is” - I think it hides from the truth or of taking action - but given the above, I can’t help but think maybe that’s all we can do! I don’t think 2025 will see any slowdown in change, especially if we add in to the above listed events to those events/issues which have not yet happened! As Harold McMillan so famously said when asked what the greatest challenge for a statesman was, he replied: ‘Events, dear boy, events’; that will adequately sum up our market perhaps. It appears the housing and lending market is in a good shape overall as we end the year. Data from Lenders shows the market running at circa £6bn per week in residential applications, with BTL running at a more modest £750m per week. What is noticeable, and very important, is the First Time Buyer (FTB) market which continues to experience the fastest growth against the three buyer types in the residential area - without the FTB, there is no market. Mortgage approvals have risen by 20% during 2024, and housing transactions have increased by 10%, with house prices returning to pre-pandemic levels. There also appears to be an expectation for interest rates to settle at 3.5% to 4% over the medium term, which is leading many commentators to suggest the overall levels of mortgage lending and housing market activity will strengthen further in 2025 and 2026 which is great news. The good news continues when seeing that Richard Howes Director of Mortgages Paradigm Mortgage Market Update 04 WINTER MORTGAGE NEWSLETTER
average UK house price rose by 2.9% to £292,000, in the 12 months to September, latest official figures show. The house price index from the Office for National Statistics and the Land Registry reveals that prices in England increased 2.5% year on year to £309,000. In Wales they edged up by just 0.4% to £217,000, while Scotland saw much steeper annual growth, with prices up 5.7% to £198,000. The asking prices of properties listed for sale fell by 1.4% on average in November, equating to a £5,366 drop month-onmonth, but the outlook for next year remains positive. Following this month’s price drop, the average asking price of a property listed for sale is £366,592. Rightmove’s House Price Index covering the month to 9 November showed a bigger monthly fall than usual for the time of year, attributed to pre- and post-Budget nerves that appeared to have caused a largerthan-normal seasonal slowdown in pricing as we head towards Christmas. Annually, however, market activity remained stronger than last year despite the dampening effects of the Budget. New listings came to market priced at 1.2% more than last year, while the number of sales agreed is up 26%. Meanwhile, the number of new sellers deciding to move and coming to market is 6% ahead of the same period a year ago. ‘Rentflation’ continues with average rents for tenants of privately-let homes increasing by 8.7% in the year to October to reach £1,307 a month, this amounts to an extra £105 per month for tenants across Britain, compared to 2024, according to the Office for National Statistics’ provisional data. As important to our market, and something that is behind the scenes, is new data that shows the value of new construction work in Great Britain increased according to data from the Office for National Statistics (ONS). This growth was driven by an increase in both the private sector and public sector. To ‘chime’ with this growth, construction employment, excluding self-employment, rose by 0.2% to 1.4 million workers, with Scotland contributing the most growth at 05 WINTER MORTGAGE NEWSLETTER 1.4%, while Wales grew by 0.7% What is also encouraging to see is the number of Lenders who are looking at imaginative offerings to their propositions, many realise whilst important, rates are only part of the story for customers, what they are really looking for is simplicity in the offering. We are constantly being asked by many Lenders about a difference to their products, what new products could work and to whom; it is becoming more scientific in terms of structuring needs, value and price from a product to the end customer, which can only be a good thing, and something perhaps Consumer Duty can take credit for. Indeed, we often focus on the pressure our advisers are under, I think many Lenders will be looking at 2025 as either a re-set, continue the ‘good’ work they have done in 2024 or try and re-invent themselves. We could see further consolidation as we have seen this year with the Coventry/Co-Op and Nationwide/Virgin Money mergers - or take overs depending on your point of view. I assume most Lenders will be comfortable with their pipelines as we go into the new year as opposed to where many were in 2023/24, their main job will be to balance those two old chestnuts of volume and value. As ever, margin will be at the forefront of their decision making until the volumes are not coming in, and then to go back to my first paragraph, it will be all change! Opportunities abound I think in 2025, just looking at the Product Transfer opportunities that could turn into remortgage business - with a total value for the year of circa £400bn this is great news for advisers. Whilst I am sure Lenders will look to protect their back book and price hard in this area to retain, there will likely be just as many other Lenders who will aggressively target this market to turn it into new business for them. That should be good news for advisers who can get a realistic proc fee for a remortgage as opposed to a PT - if certain Lenders are involved (!), plus a chance to re-evaluate their clients Protection, GI, wills,
06 WINTER MORTGAGE NEWSLETTER Power of Attorney, banking and cash flow needs to name but a few! Whilst the BTL market maybe under pressure, never have your landlord clients needed your expertise, advice and listening skills as much as now. When markets are tight and when decisions need to be made that can have real and major consequences, time and time again clients will turn to you their adviser, or you can go to them first! On this note, you may find our webinar in January of interest, it is a BTL special edition with experts from across this area (not just Lenders) and your landlord clients are welcome to join too. Click here to find out more and register. Of the other areas in the market which could make inroads with you, this may be bold but I wonder if the bridging market could grow and take a real foothold in your offerings and propositions? Rates and service levels from the main Lenders remain good, and the housing market currently is lending itself to need this area at times, so I just wonder if it’s one to explore further for your firm in 2025. Here at Paradigm, we will continue to look to offer more information and education in both existing and new areas. We are really passionate about making sure you, our customers, are aware of as many offerings as possible in all areas that affect your clients, and which could benefit both you and them! As I have said before, the market is predicated on confidence, so it was good to read recently over four fifths (81%) of mortgage advisers are optimistic about business growth over the next year, according to Investec Bank. Of course, there are concerns but overall, if people feel confident this translates into action and activity which is what we all want. I hope you enjoy the newsletter, I would like to take this opportunity to thank our Lender partners for their help and support this year and to everyone who has contributed to the newsletter over 2024, it only leaves me to wish you and your families a happy Christmas and prosperous new year! Kind Regards, Richard.
The not-so-new government has hit the ground with ambitious plans to build new homes: 1.5m in England alone within the next five years. We are all too aware of the desperate need for more – and more affordable - property in the UK. But previous governments have failed to resolve the longterm structural undersupply of housing, despite making similar pledges. So, what might be different this time around? Well, Labour says that it is prioritizing the building of social and affordable homes, which are the areas where the housing shortage is most chronic, with 1.3m people currently on waiting lists for social housing alone. And they are looking to councils to play an active role in making this happen. This seems rational. It is simply not realistic to expect the private sector alone to deliver 1.5m homes in five years of the type and in the locations where they are most needed. Housebuilders are private companies whose primary incentive is maximizing returns for shareholders, not purely serving the public interest. While they will have an important part to play in joint ventures with local authorities and public sector housing providers, they cannot be expected to plug the gaps left by years of public sector neglect and under-investment. Over to councils The government says it believes local authorities are best placed to decide the right blend of affordable housing for their communities, including a mix of affordable homes for ownership and rent. It is also reintroducing building targets for local councils, which were quietly let slide under the last Conservative administration. Deputy prime minister Angela Rayner has said that, to help hit the goal of 370,000 new homes a year, all councils in England will be set mandatory targets which will be incorporated in plans that councils must draw up by 2025 identifying where the homes will be built. Compulsory targets coupled with an understanding of the different types of property and tenure people need might sound like a winning combination, and Rayner claims that improved intelligence will play a part. “The method used to calculate [targets], which relied on decadeold data, will be updated. The new method will require councils to ensure homes are built in the right places and development is proportionate to the size of existing communities, while adding an extra level of ambition in the most unaffordable areas.” But 2025 is just 6 weeks away – and the process of setting targets and making plans doesn’t happen quickly in many authorities, a number of which are already cashstrapped and lacking staff and resources. And while setting targets is one thing – delivering on them is another. Hard road ahead for government’s housebuilding plans 08 WINTER MORTGAGE NEWSLETTER Kate Davies Executive Director
Range of forecasts Indeed, the jury is still out on whether the dream goal of 1.5m new homes across the country is achievable. In November, the Office for Budget Responsibility (OBR) predicted that 1.3m homes will be built across the UK over the course of the current parliament (Labour’s target of 1.5m is for England alone). Removing new homes built in Scotland, Wales and Northern Ireland, based on historical norms, reduces the OBR’s forecast for England to 1.1m new homes. Savills’ projections are even lower at 203,000 new homes per year – unless the government introduces incentives such as a new-style of Help to Buy scheme or more shared ownership. The government refutes the OBR’s projections on the grounds that they do not take into account a prospective overhaul of the planning system, or its new towns initiative. The new homes plan involves large-scale new communities of at least 10,000 properties, some built on greenfield land, but most being urban extensions and urban regeneration schemes. A taskforce has been set up and asked to publish a shortlist of possible locations within a year. Revisions to the National Planning Policy Framework include encouragement for councils to release ‘greybelt’ land – previously-developed land in the greenbelt – for development and greater freedoms for adjusting greenbelt boundaries, while Rayner has also promised around 300 more planning officers across the country to speed up the notoriously glacial pace of planning application processing. Questions remain Obviously it is early days, and the government needs time to get all its ducks in a row. But progress does feel rather slow. The ‘decade-old data’ used to calculate housing targets which Rayner refers to won’t be updated overnight. Training a planning officer takes anything from two to five years. Once permissions are granted, building out a development also takes at least a year. And that is without considering the welldocumented shortages of skilled labour and building materials the construction industry has suffered for some years now. There are also questions to be asked about the required changes to how the housing budget is spent, which could require a radical change in policy. In the halcyon days of peak council housing of 1975/76, under a Labour government, the total housing budget was £22.3bn, with 95% spent on building homes and improving existing stock. In 2021/22, adjusting for inflation, the total was £30.5bn, but with a staggering 88% spent on local housing allowance (£26.8bn). In other words, due to changes in housing policy over the last 50 years, the vast majority of spending on housing has shifted from the supply side (providing property) to the demand side (supporting rents). Ambitious building targets, accountable councils and slicker planning processes are all well and good, but the government will face a huge challenge in finding the additional funding to build new homes whilst continuing to support those who continue to need help with their current housing costs. That could be a tricky path to navigate successfully, particularly within the four and a half years or so of the remaining parliament. 09 WINTER MORTGAGE NEWSLETTER
By Chris Bailey-Munt, Intermediary Social Media Manager At the heart of any successful marketing strategy is the ability to reach and genuinely engage customers through relevant, timely communications and support. Recognising that needs sometimes differ among customer subgroups. What is Inclusive Marketing? Inclusive marketing addresses diverse needs by tailoring creative and messaging to target groups and deliver content through their preferred communication channels. For financial advisers, inclusive marketing means tailoring your communications to be accessible and appealing to different demographic groups, ensuring no one feels excluded or overlooked. By being inclusive and representing all communities, advisers not only promote equality but also unlock new business opportunities by reaching a broader audience. The Importance of Inclusivity in Financial Services Inclusive marketing has the potential to expand your client base to communities some of whose members may sometimes feel underrepresented. By being visible members and allies of these communities, financial advisers can attract clients who might feel overlooked. It’s about creating meaningful connections with clients from all backgrounds. Promoting inclusivity isn’t just exclusive to marketing. It’s particularly important that the industry champions the visibility of advisers from all backgrounds, who can show clients protection is for everyone. This can help break down barriers, making services more appealing and accessible, helping to build trust with clients. This is essential for building long-term relationships, client loyalty, and increasing client recommendation. Stand Out in the Crowd Inclusive marketing can differentiate financial advisers. By demonstrating an authentic commitment to inclusivity, advisers can attract clients who value these qualities and seek advisers who align with their values. Implementing Inclusive Marketing 1. Understand Your Audience: Research your clients to better understand the demographics, preferences and needs of your diverse customer base. This How being inclusive can help your advice business grow 10 WINTER MORTGAGE NEWSLETTER
understanding will help tailor your marketing messages, communications and media to different demographic groups. When it comes to communicating with your clients it’s important to remember that one size doesn’t fit all. Some clients will respond to the written word, others will prefer a more visual approach with video and images. Some will want to meet face-to-face while others may prefer virtually. Feedback Mechanisms: Implement feedback mechanisms to gather input from diverse customer groups. Use this feedback to continuously improve your marketing strategies and ensure they remain inclusive. Diverse Representation: Ensure that your marketing materials feature diverse representation. This includes using images and stories that reflect different ethnicities, genders, ages, sexual orientations and abilities. Representation matters and helps all customers feel included. Culturally Relevant Content: Create content that is culturally relevant and sensitive. Avoid stereotypes and ensure that your messaging is respectful and inclusive of all cultures and backgrounds. Accessible Marketing: Make sure your marketing materials are accessible. This could include making sure that language is as clear and simple as possible, providing translations where necessary, and ensuring that digital content is accessible to people with disabilities. Awareness Training: Equip your team with the knowledge and skills to interact respectfully and effectively with clients from diverse backgrounds. Train your employees on the importance of inclusivity and how to implement inclusive practices in their work. This ensures that the principles of inclusive marketing are upheld throughout the organisation. Training can help your team understand and address the needs of different client groups. You can search for resources online 11 WINTER MORTGAGE NEWSLETTER or contact a local charity which represents your diverse community, as many offer training in exchange for a donation. Leverage Technology: Digital tools and platforms can help financial advisers reach and engage with diverse client groups more effectively. Social media platforms allow for targeted advertising, enabling advisers to tailor their messages to specific demographics. Additionally, online tools can make it easier for clients to access and manage their life insurance policies, enhancing accessibility and convenience. Regulatory Considerations: Regulation promotes fairness and transparency in financial services, ensuring marketing is clear, fair, and not misleading. All clients must be treated with respect and dignity, regardless of their background. Future Trends in Inclusive Marketing The future of inclusive marketing in financial services is promising. As visibility and awareness of diverse groups continues, the demand for inclusive services will grow. Financial advisers who embrace inclusivity authentically will be well-positioned to meet this demand and grow their business. Future trends may include using technology to personalise marketing messages and developing new products that cater to the unique needs of clients. Conclusion Inclusive marketing is a necessary approach for financial institutions that want to thrive in a diverse and dynamic market. Being authentically inclusive is a powerful tool for financial advisers offering life insurance products. Understanding and addressing the needs of all clients can help advisers to grow their client base, enhance satisfaction and loyalty, and increase recommendations from within the community. Implementing inclusive marketing strategies requires a commitment to understanding and respecting diversity, being openminded, and a willingness to keep learning. By embracing inclusivity, financial advisers can build stronger, more meaningful relationships with their clients and drive long-term business success.
Trigger warning: Mentions suicide Mental health is a critical aspect of overall well-being, yet it often remains a topic shrouded in stigma and misunderstanding. This is particularly true for men, who face unique challenges and societal pressures that can significantly impact their mental health. In November, we saw two initiatives - Movember and International Men's Day - bringing men's mental health issues to the forefront, encouraging open conversations and fostering supportive environments. I thought it would be helpful to dig a little deeper on these matters given that financial services remains a maledominated industry. Firstly I thought it would be useful to understanding the scope of men's mental health issues in the UK. Here are some worrying, yet important statistics: • Common Mental Health Disorders: Approximately 12.5% of men in the UK are suffering from one of the common mental health disorders. • Alcohol Dependence: Men are nearly three times more likely than women to become alcohol dependent, with 8.7% of men being alcohol dependent compared to 3.3% of women. • Suicide Rates: In 2023, there were 6,069 registered deaths by suicide in the UK, with 75% of these being men. Men are three times more likely to die by suicide than women. • Stress: In a survey conducted for the Men’s Health Forum, 12% of men said that the last time they took time off work to see a GP was because they were “constantly feeling stressed or under pressure” and 11% because of “prolonged feelings of sadness.” • Therapy: Men are less likely to access psychological therapies than women - only 36% of referrals to NHS talking therapies are for men Talking about men's mental health is essential for several reasons. It helps to break down the stigma that often surrounds mental health issues; when people feel comfortable discussing their struggles, it becomes easier for them to seek help and support. Open conversations about mental health can also educate others about the signs and symptoms of mental health issues, leading to earlier intervention and better outcomes. How can we help to foster environments which encourage this? In the workplace, I think developing a positive company culture where people feel they can bring their ‘whole selves’ to work is key. In addition, making support available – whether this is giving line managers more training in supporting those who are struggling, highlighting useful resources to staff or perhaps investing in someone to become a Mental Health First Aider that can take a lead on providing help and guidance. As with general mental health, men's mental health issues are diverse and complex, ranging from depression and The Importance of talking about Men's Mental Health 12 WINTER MORTGAGE NEWSLETTER Riona Mulherin Director of Marketing & Operations Paradigm
anxiety to more severe conditions like bipolar disorder and schizophrenia. However one of the most pressing concerns is the high rate of suicide among men, as shown above, men are three times more likely to die by suicide than women. This alarming statistic underscores the need for targeted mental health interventions and support systems tailored to men's specific needs. Several factors contribute to the mental health challenges faced by men. Societal expectations often dictate that men should be stoic, self-reliant, and emotionally resilient. These stereotypes can discourage men from seeking help or expressing vulnerability, leading to untreated mental health issues. Additionally, men may experience stress related to work, financial pressures, and family responsibilities, all of which can exacerbate mental health problems. 13 WINTER MORTGAGE NEWSLETTER International Men's Day 2024: Celebrating Positive Male Role Models International Men's Day, observed annually on November 19th, provides important platform for addressing men's mental health. This day celebrates the positive contributions of men to society, their families and their communities, while also drawing attention to the challenges they face. The theme for this years’ International Men's Day was ‘Positive Male Role Models’ highlighting the importance of fostering open conversations about men's mental health and creating environments that support their well-being. The day also promotes the extremely important message that seeking help is a sign of strength, not weakness, and that everyone deserves access to mental health resources and support.
14 WINTER MORTGAGE NEWSLETTER Movember: Changing the Face of Men's Health As I’m sure many of you know, Movember, an annual event held every November, has become synonymous with raising awareness about men's health issues, particularly prostate cancer, testicular cancer and mental health. The movement encourages men to grow moustaches during the month to spark conversations and raise funds for men's health initiatives – some of you may have seen that our CEO, Bob Hunt, has taken part this year! Take a look at his fundraising page (featuring an amusing photo!) here. One of the key focuses of Movember is mental health and suicide prevention. The campaign funds numerous projects aimed at improving mental health services, promoting early intervention, and reducing the stigma associated with mental health issues. Movember's initiatives include community programs, educational resources, and support networks designed to help men navigate their mental health journeys. Both Movember and International Men's Day are just two occasions providing valuable opportunities to shine a light on men's mental health issues and promote positive change. By encouraging open conversations, challenging harmful stereotypes and providing access to resources and support, these initiatives are helping to create a world where men can thrive both mentally and physically. Hopefully, together we can all continue to raise awareness and advocate for men's mental health. I’ve listed below some helpful resources that provide support for men's mental health, should you or someone you know need it: 1. Movember – As mentioned, Movember funds various mental health programs and provides resources for men to seek help. Visit Movember for more information. 2. Mental Health Foundation: They provide comprehensive information on men's mental health, including why men might not talk about it and how to get help. Check out their resources at Mental Health Foundation. 3. HeadsUpGuys: This resource is specifically designed to support men in managing and recovering from depression. It offers practical tips, tools, and information. Check out HeadsUpGuys. 4. Men's Minds Matter: This organisation focuses on men's mental health and suicide prevention. They offer psychological interventions and raise awareness about male suicide, including how to help a suicidal friend. Visit Men's Minds Matter for more information. 5. Mind: Mind offers advice and support to anyone experiencing a mental health problem, including men. They have specific resources and information tailored to men's mental health. Check out Mind. Finally, I know that the festive period, and winter in general, can be a difficult time for many – irrespective of gender. Please do take time for yourself and look after yourselves and your loved ones. Remember, reaching out for help is a sign of strength, and there are many people and organisations ready to support you. If you are worried about someone, please encourage them to talk and likewise if you need support, don’t forget you are not alone. Wishing you all a happy and healthy 2025.
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