A report commissioned by the Building Societies Association (BSA) has concluded that the mortgage landscape will experience marked changes in the coming eleven years. The findings were delivered by Peter Williams - an expert in housing finance, markets and policy - who was asked to forecast what the mortgage sector might look like in 2020 and the changes that will shape it. Amongst many points, it was observed that changing lifestyles of people in their twenties is altering the way, and the time in which, mortgages are paid off. Whereas before people would typically leave school, find employment then secure a mortgage, today's younger generation is less inclined to settle down, preferring to move around the country or abroad, with the vast majority happy to rent. As a result, home loans are increasingly likely to be started later in life, meaning many will still be paying them off in retirement. Additionally, single households are set to become more usual, meaning the typical two income home will become less prevalent. A more constrained market was also predicted. As the lessons of the current downturn are acted on, consumers can expect a mortgage sector with fewer products and suppliers, tighter controls and reduced funding. Potential homeowners who are cash rich with access to credit can expect lenders to fall over themselves in a bid to secure their custom, as a new ‘super prime' category of borrowers emerges. The report also concluded that the market is likely to become more customer and regulation driven, while the link between savings and mortgages - historically a key factor in securing a home loan - will become stronger once more. Incentives from lenders and the Government should also become apparent as the sector gets back on its feet. Furthermore, Mr Williams delivered his verdict on the future of intermediary products, family options and the possible take up of the Islamic rental purchase type structures into the mortgage mainstream. A more in-depth account of the BSA's 2020 Vision report will feature in the June edition of Moneyfacts.
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