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Mortgage market gets millennial makeover

Mortgage market gets millennial makeover

With all due respect to Martin Lewis – the nation’s PF teacher long before lockdown – could this week’s Netflix premiere of Marriage or Mortgage finally be the moment when personal finance education crosses over to the mainstream and captures the collective consciousness?

Or could it equally be a sign of the ultimate lockdown fatigue, the nadir of compare culture and a sign of reality TV eating itself, having gorged on so many formats it’s now feeding off scraps that would make Alan Partridge think twice before pitching?

Either way, this week’s lifestyle launch feels like a watershed moment, if not necessarily for the mostly millennial cast who face the choice between spending on the wedding or home of their dreams. The concept feels a little too close to The Running Man with a 21st century twist, and begs the question, what comes next? “Food or Shelter”? “Daylight or Oxygen”?

For the avocado generation confronted by an all-too-real challenge to accomplish life milestones their parents often took for granted, it has all the makings of another uncomfortable night in on the sofa – made all the more painful by the legal requirement to remain there for at least another month.

Praise be, then, for Habito, the online mortgage broker-cum-lender on a mission to “help people find a home” by “making homebuying fit for the future” and “ending mortgage hell”. These saintly start-up ambitions quickly gave rise to a devilish ad campaign which, in less than a year, doubled spontaneous brand awareness, tripled advertising awareness and pushed the hybrid firm’s customer volumes up three and a half times.

But this mortgage morality tale is about more than slick sales patter. The latest incarnation of Habito’s efforts to “fix mortgages” (pun intended, presumably) comes in the form of Habito One, which it proclaims to be the UK’s “longest-ever” fixed rate residential deal. Backed by fund manager CarVal Investors, the quadragenarian loan premiered to the media on Wednesday and opens for applications next week.

Never mind the branding; just feel the innovation

Some might say being fixed to your loan for 40 years – keeping early adopters on the hook until 2061 – falls firmly into the category of “mortgage hell”. But like much of life in 2021, which on many levels continues to resemble an experiential Black Mirror episode gone wrong, all is not quite what it seems.

Firstly, there’s the evocative product branding itself: one part concept album, one part cologne, one part lunar voyager. Treading the same trail blazed by the company’s bold “Hell or Habito” artwork, Habito One seeks to channel the same ethos that you assume has been playing well with Netflix test screen audiences: whether or not you can afford one – or is it because you can’t afford one? – mortgages are suddenly cool, recast as objects of desire.

But never mind the branding; just feel the innovation. No early repayment charges for forty years, essentially a get-out-of-jail-free card with an expiry date four decades in the future. And no need to pay remortgage fees until you retire. Plenty there to make an industry that has long dined on commission from repeat business every few years sit up and take note.

The headline rates of up to 5.35% may look costly next to a flighty five-year fix. But when you consider the Bank of England base rate has spent roughly half of the last 40 years above that price point – including most of a decade in double digits during the 1980s – that may yet prove to be a prix fixe meal to savour.

Until this week, the longest UK fixed rate residential mortgage promised a mere 15 years of security – coincidentally, only a few years more than the average marriage which ends in divorce. The concept of mortgages as life partners is more established in the United States and Holland, so attempting to raise the UK bar by a full quarter of a century will involve a major communications challenge that goes beyond “fixing mortgages” to addressing our culture’s notorious short-termism.

Nonetheless, the combined effect of Marriage or Mortgage and Habito One – surely a brand partnership made in mortgage heaven if Netflix ever plans a UK spin-off – is a monument to the new financial realities facing a population barely reconciled with the aftershocks of the last crisis.

Covid aside, the transition of social norms before and after 2007/8 remains a work-in-progress: the gig economy has put paid to jobs for life as the average worker changes roles every five years; marriage rates continue to fall, with 42% ending in divorce; and having a family vies for space with the challenges of building a career.

Faced with this new abnormal, bold innovations like Habito One may yet make it possible to have it all once more, particularly if you hold onto the ideal that home is where the heart is. At least no-one need choose between marriage or mortgage when you can look forward to a lifetime of attachment to your loan.

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