Although family life has to some extent always driven trends in mortgages, Ipswich Building Society is anticipating that as consumers adapt to new ways of living and working, lending will become more notably family-centric in the coming year.

Ipswich Building Society’s head of mortgage sales, Charlotte Grimshaw, walks us through four key themes that are starting to emerge and are likely to continue throughout 2021:

Working from home will see a shift in people moving to rural areas

Start of the new year could mark a turning point for prices

“As remote working and hybrid models become more prevalent, being tied to large cities and commuter towns could become a thing of the past. If employees are only required to visit the office occasionally, suddenly it becomes possible to have the best of both worlds; a successful career and an ideal work-life balance in a location of your choosing.

“More people will be able to achieve their dreams of escaping to the country, but crucially, before retirement. Many may take this opportunity to move closer to family, especially as the cost of childcare remains unrealistic for some.”

Midlife borrowing to rise thanks to divorce-fuelled downsizing

“As multiple lockdowns place a stress on married life and, sadly, divorce applications rise, those who share children are likely to be searching for two smaller family homes, leading to a spike in single application mortgages.

“People who might have had the end of their mortgage in sight, may now take on more debt to be able to afford a house on their own, possibly extending the length of their mortgage too. With protracted divorce settlements and custody arrangements, the full impact of lockdown divorces on the mortgage industry likely won’t be realised fully until the second half of 2021 or beyond.

“However, it’s important to remember, just a few years ago this kind of midlife borrowing wouldn’t have been available as providers were far more hesitant to lend to people in their forties and fifties. Those in this situation now should be able to choose between a wider variety of lenders and mortgage deals.”

Multi-generational living on the rise

“Being isolated from our loved ones over the past year reminded many of us of the importance of friends and family, whilst others took the opportunity to blend homes and create support bubbles for lockdown.

“The effects of this are likely to outlast the pandemic, with an increase in multi-generational living. This could be within a traditional property, or in the form of adapted homes, such as an annexe or extension to house elderly parents, grandparents, adult children who have returned home, or young couples unable to afford their own home. It’s quite likely that we may also see a rise in the number of self build or major renovation projects undertaken to accommodate this trend.”

Gifted deposits continue to be pivotal to getting a foot on the property ladder

“With fewer high LTV deals, this past year saw growing numbers of later life borrowers seek to remortgage and unlock a chunk of capital from their homes, to gift to adult children looking to get a foothold on the property ladder.

“We’re forecasting this to continue in 2021, with parents and grandparents helping to boost the size of their deposit, unlocking their offspring’s ability to buy their own home, buy a larger property than they could have otherwise afforded, or secure a better mortgage deal.

“Whilst many families have made the best of the adverse situations they’ve faced, suddenly welcoming additional family members long term isn’t without its tensions, which may be an added motivation for gifting a deposit.”