The first charge mortgage sector in 2021: Pushing forward, not bouncing back

As I write this post, 2021 is beginning with another lockdown to help curb the spread of COVID-19.

When the coronavirus pandemic began last year and the initial lockdown was introduced in March 2020, the market was hit significantly from a physical point of view. Valuers were unable to visit properties and so purchase business was more difficult. Many lenders had teething problems in mobilising their teams to home working whilst still being able to maintain their volumes.

However, once people were able to return to work – including valuers – the market quickly picked up again and we saw pent-up demand coming through. Since then, brokers have reported record-breaking months; this was also accelerated by the Stamp Duty holiday. In December 2020, the Financial Conduct Authority reported that the value of new mortgage commitments was 6.8% higher than a year earlier, at £78.9 billion — the highest level since Q3 2007.

Whilst it will be interesting to see if we have a big Q1 before the Stamp Duty deadline (and if there’s any drop off afterwards), I imagine volumes this year will be very similar to 2020, which only saw a small drop from 2019’s recorded figures.

This shows the resilience of the housing market and I believe we can look to 2021 as a year of not ‘bouncing back’ from another lockdown, but continuing the momentum of H2 2020.

The need for specialist lenders

COVID-19 has caused much upheaval in people’s personal and professional lives. These changing circumstances have meant that many customers who were previously mainstream borrowers have found themselves with small missed or late payments. Whilst unavoidable, the result of these blips and changing credit scores will see more people seeking the expertise of a broker this year.

Fortunately, we at Pepper Money have a range of products to help them.

We’ve always been the perfect home for borrowers who have suffered from adverse credit, but we know now that there will be non-adverse borrowers who are still let down by the mainstream credit scoring systems. This could be due to small missed payments on unsecured borrowing or simply by reaching their limit on their credit and store cards.

Whatever the circumstances, our product range is designed to help these borrowers. We offer a more human approach to underwriting; we don’t use credit scoring and turn our cases around speedily.

During 2020 we carefully monitored the market to ensure the products we provide suit the needs of brokers and their customers during the pandemic. We have exciting plans in place this year and our focus continues to be on improving our proposition and service.

New methods, same results

We are currently seeing an influx of business where one of the driving reasons for the broker choosing Pepper Money has been the certainty of the speed of service.

Many people – customers, brokers, and lenders alike – have had to change the way they work and communicate with each other. It would be naïve to think that, at the end of all this, we will simply return to the way we were. It’s essential, given the uncertainty around the pandemic, that brokers can rely on a lender to provide an outstanding service regardless of the obstacles placed in their way.

We’ve always been a champion of people at Pepper Money and 2020 has brought its challenges with the inability to see each other in person. It’s been said to me more than once recently “I miss my colleagues!”. The pandemic has left many transactions in our lives very ‘faceless’ and we know brokers have been feeling this too.

We’ll meet again

Whether it’s in the sales environment that both BDMs and their intermediary partners work in, or simply just as human beings, the importance of face-to-face interaction and the positive culture it drives can’t be understated or replaced.

Human interaction is something we were keen to emphasise in our application journey and has been part of what’s driven us to upgrade our service infrastructure. We announced in November 2020 that upon packaging their application, each broker is offered their own Case Owner; building more holistic relationships with our internal teams and not just BDMs.

When we come out of the other side of this pandemic, I imagine there will be added excitement around seeing each other in person but with an appreciation for the productivity benefits provided by virtual meetings and home working.

I believe that everybody’s learnt something from the way we’ve worked throughout the pandemic and we may find that customers wish to deal more virtually than before.

But whether it’s online or in person, we will always adapt and change as time moves to continually deliver a five-star service to our partners and customers.

To find out more about how Pepper Money is helping brokers and their customers in 2021, contact Ryan on LinkedIn.