Senior mortgage industry figures have warned MPs that Britain’s worsening home-affordability challenge will not be solved by demand-side subsidies alone as they called for more focus on housing supply and stable regulation to support first-time buyers.
Giving evidence to the Housing, Communities and Local Government Committee (main picture), senior executives from Nationwide, UK Finance, the Building Societies Association (BSA) and the Association of Mortgage Intermediaries (AMI) said the market was continuing to innovate for new buyers but remained constrained by tight supply, high prices and the legacy of recent interest-rate volatility.
Henry Jordan, director of mortgages at Nationwide, told MPs that branch networks still play an important role for customers needing face-to-face support, despite consolidation across the sector.
BROKER BOOST
Nationwide, he said, had committed to keeping all existing branches open until 2030. But he noted that “85 to 90 per cent of new lending goes via brokers”, with most customers now accessing advice digitally or through intermediaries.
Industry leaders said the dominance of mortgage brokers – now responsible for more than 90% of new loans – was helping maintain access to advice despite the closure of many high-street branches.
Pic credit: Parliament TV
Stephanie Charman, chief executive of AMI, said the UK has about 25,000 mortgage advisers, offering specialist support to first-time buyers, downsizers and those with complex circumstances.
“Consumers are choosing that route to gain access to their home-ownership dreams,” she said.
HIGH-STREET PRESENCE
Robin Fieth, chief executive of the BSA, said building societies were expanding their high-street presence and working with community organisations to keep local financial services accessible.
But he added that the sector was awaiting clarity from the Financial Conduct Authority’s review of the “advice–guidance boundary”, which could determine what services can safely be delivered in person.
HELP TO BUY
The panel offered a “qualified success” verdict on Help to Buy, arguing that while it increased supply and supported first-time purchasers, it also pushed up prices and was too broad in scope.
Industry data showed the early years of the scheme skewed demand toward larger new-build homes, with a significant share of purchases involving detached or four-bedroom properties.
More recent government efforts, including the new Freedom to Buy mortgage guarantee scheme, drew a similarly mixed reaction.
REDUCED RISK
Charles Roe, director of mortgages at UK Finance, welcomed its permanence but said take-up data was not yet available and called for the Bank of England to recognise the reduced risk for lenders using it through lower capital requirements.
Some lenders, including Nationwide, said they preferred to self-insure, judging the government guarantee to be too costly relative to historic loss rates.
NOT 2008 AGAIN
Executives also rejected comparisons with the lending practices that led to the 2008 financial crisis.
Roe said stress-testing rules introduced since 2012 had ensured borrowers retained significant affordability headroom, even during the sharp rate increases of 2022.
Six consecutive quarters of falling arrears had reinforced lenders’ confidence, he said.
Lenders pointed to a wave of product innovation targeted at first-time buyers, including high loan-to-income products, track-record mortgages and family-assisted deposits.
Nationwide’s “Helping Hand” scheme alone has supported about 65,000 first-time buyers since 2021, Jordan said.
Asked whether the UK should shift toward long-term fixed-rate mortgages, as in the US and parts of Europe, executives said consumer behaviour and funding models made such a transition difficult.
Longer fixes, they said, carry higher upfront costs and face challenges around portability and early repayment charges.
Fieth said the bigger structural challenge remained unchanged: “Ultimately, the question is how we improve supply – not how we try to subsidise for lack of it.”
Watch it all HERE.
