Published: 13 November 2015 | Author: Bernard Clarke
Mortgage adviser David Humphrey’s proposal for an innovative ‘Building Bond’ was voted the winner of the second Rising Stars challenge at the CML annual conference earlier this week.
David, a mortgage adviser with TSB Bank, was one of four finalists who presented their proposals at the conference on Tuesday. He was voted the winner after each of the finalists outlined their ideas to a panel of judges and the conference audience.
Votes cast by the conference delegates and judges – Clydesdale Bank’s head of mortgages Caroline Graham, CML chairman Moray McDonald, Nationwide Building Society’s director of mortgages and savings Richard Napier and last year’s Rising Stars winner, Michael Rhodes, of Leeds Building Society – decided the winner. Conference chairman Sir Danny Alexander described the standard of presentations by the finalists as “absolutely superb.”
Save as you earn
David’s proposal was for a Building Bond that would help first-time buyers to save but also deliver a better balance between housing demand and supply because it would provide funding for new development.
Would-be-property buyers would use the bond to make regular savings towards a mortgage deposit, through a ‘Save As You Earn’ option if they wanted. Parents would also be able to save for their children. And the Building Bond scheme would support construction firms and planners, as well as lenders and borrowers.
Bonds would be underwritten by local and central government, and indexed to property prices, rather than low-yield interest rates. Savers would have to hold a bond for at least a year, and the indexation bonus would only be paid on maturity and if the proceeds were used to fund a mortgage deposit. Savers would not be able to transfer ownership of the bonds but transferring them between local authorities would be allowed, as this would enable savers to re-locate and access deposit funding in another area.
Funds created by Building Bonds could be used to pay start-up construction costs for local community building developments. The aim would be that they could provide a stable source of funding for builders, who would also be able to draw on information from savings account providers to support development decisions.
“Bond holders would gain preferential access to the new housing developments that are financed with bond funds,” said David. “Lenders would be able to identify savers who are potential house-buyers and future mortgage customers.”
David, who began his career in banking 15 years ago and re-trained as a mortgage adviser in 2007, is now based in Essex and regularly mentors mortgage advisers across London and the south east.
In a keenly contested Rising Stars session at the conference, each of the four finalists presented details of an entry based around the theme: “If lenders want to help my generation, they should…” The other finalists were:
- Freddie Nelson and Sarah Friedlander, of Bank of Ireland UK, who presented details of the Getting Mortgage Ready online platform or enhanced mobile banking app. Linked to a savings account, the app would enable savers to track progress towards their mortgage deposit, and work out when they might become home-owners. It would provide information on the size of deposit required, credit scoring, mortgage fees and the role in the home-buying process of professionals like brokers, underwriters, valuers and lawyers.
Freddie and Sarah proposed that the platform would also carry short videos explaining aspects of the mortgage process, and could be used to tell borrowers what to bring to an appointment with a mortgage adviser, how long their appointment would last and what they would get from it.
- Esther Theobald, a marketing assistant at Market Harborough Building Society, whose proposal for the Fun:d app would seek to provide encouragement and information to younger borrowers. In her presentation, Esther said that the app would set out to help and inspire young people who sometimes did not manage their finances carefully, partly because their financial aspirations often seemed unattainable and were therefore unappealing.
Esther proposed that the Fun:d app would allow users to synch all their financial information “under one roof” to provide a comprehensive overview of their financial profile. Borrowers could set their own financial goals and monitor their income and spending, and the app would provide advice on how to make progress towards and attain their goal. And by helping the customer work towards a goal, their finances would become better organised, so improving their chances of making a successful mortgage application to a lender.
- Dan Whittaker, a risk manager at Nationwide Building Society, presented his proposal for a rent to buy development. He argued that lenders often overlooked the private rented sector, but could use a tenant’s record of successfully paying rent to advance a mortgage of up to 100% of the value of the property if the loan had similar monthly repayments.
Lenders would be able to price for higher risk, he argued, but still offer an attractive option for a tenant aspiring to be a home-owner. Firms could also explore the potential to develop their own rent-to-buy schemes, drawing on their own data and knowledge to devise mortgage products that would provide long-term solutions to would-be home-owners.