Written by: Brian Murphy, Head of Lending at Mortgage Advice Bureau

Recent news regarding Skipton’s new Track Record Mortgage is dominating wavelengths across the UK, but it may not be the right option for as many people as it seems right off the bat. While it certainly caters to an underserved market, it’s very niche and comes with its own set of limitations. 

For those struggling to save up for a deposit, Skipton’s new mortgage option may seem like a lifeline. Rents have been steadily increasing over the last few years, and in 2022, annual rental prices increased by 4.4%1. For many, this means that it becomes more challenging to save up for a deposit, and in fact, plenty of first time buyers are entirely priced out of buying a house. 

This creates a dilemma in the market, where many renters are paying more in rent than they could for monthly mortgage payments. However, they won’t be approved for a mortgage, despite having a track record of regular housing payments. 

Skipton seeks to answer this with their new mortgage product, aptly named the Track Record Mortgage. For some, this will be the solution they’ve been looking for. 

For others, it’s potentially setting the stage for disappointment. 

Lending criteria for the Track Record Mortgage is strict, and if you go through the whole process of applying and are denied, there is no other option for you as you don’t have a deposit. Without further help from a guarantor, the possibilities of homeownership become minimal. 

However, for those who do fit the criteria and are approved, it’s an excellent way of getting on the property ladder. Though they will face higher interest rates, and the risk of negative equity is something we always need to talk about, it’s an ideal solution for those with limited options.

The Track Record mortgage may not be the golden egg some are portraying it to be, but it’s a step in the right direction, and it’s a product that could signal a new era for the property market. Namely, an era where first time buyers have more options and ultimately have to rely less on support from friends, family, and the government. Make no mistake, this new mortgage product represents an opportunity and does remove some of the barriers to homeownership, but it is for a select few. 

The key point it recognises is that rental payments have a role to play in buying a house - something that has long been a sticking point. 

For landlords looking to exit the market, it presents an opportunity to sell to reliable, long-term tenants (if they meet the brief). It’s also set to bring benefits for both buyers and sellers, with shorter chains all around and a completion day that doesn’t end with a removal lorry still on the drive. 

four hands linked

It’s this thinking and these kinds of innovations that will drive the market forward, and while I look forward to seeing how other lenders respond to this, it’s important to remain critical of all new products coming onto the market. Many will work, some will not, but universally mortgages are not a one-size-fits-all product.