Hybrid mortgage products, like part-and-part mortgages, will become more mainstream, David Torpey of Bluestone Mortgages has predicted.
Speaking to FTAdviser, Mr Torpey, who is managing director at Bluestone, suggested that would be the case for specialist lenders and high-street lenders, adding: "I think that will become more the norm".
"For example, if somebody is borrowing 95 per cent LTV (loan to value) or 90 per cent LTV when they’re 30 or 35 years old, is it absolutely essential to fully repay the mortgage in a 25-35 year term? And I think we all know people don’t typically live in a property for the full 25 to 35 years, so I think on average every nine years people are moving house," he observed.
"The prospect of a large repayment at the end of the term is very remote."
He said: "I think there will be more innovation around that area and I think it’s something which would be well received from the market."
When asked what more the mortgage industry could do to help first-time buyers, Mr Torpey said he believed the mortgage products available "are strong at the moment and the fundamentals are good", pointing to the availability of high LTV products.
"So there was a dearth of high LTV products post-financial crisis. Now, it’s plentiful," he added.
"Rates are low, which is also another positive. Also, terms are being extended.
"Typically, it used to be 25-year terms, now it’s commonplace to have a 30 [or] 35-year mortgage."
But he acknowledged in the future borrowers were more likely to be paying off their mortgage into retirement.
"Average age when people get onto the housing ladder has increased materially. If it was someone in their early 20s previously, now it’s early 30s," he explained.
"A 35-year mortgage takes them well into retirement. I think people getting on the housing ladder later is an issue.
"I don’t think that’s going to change anytime soon."
On the subject of interest-only mortgages, Mr Torpey said he thought there were more interest-only products available now, but he conceded they tend to be "fairly narrow" in terms of their availability.
"It’s lower loan to values, it’s older borrowers, it’s slightly more expensive, it’s people on higher incomes. So, it’s people who have the ability to potentially downsize in future," he suggested.
In April, Bluestone Mortgages announced it had launched an interest-only buy-to-let option which aimed to help customers who were looking to reduce monthly servicing costs.
Scroll to the top of the page to watch the full interview.
eleanor.duncan@ft.com
