What is your role within The Mortgage Lender?
My role with The Mortgage Lender (TML) is Head of Sales. This includes leading and supporting our team of Business Development Managers across the UK and ensuring that the many ways we can offer solutions for brokers and their customers are known in the market.
How has the demand for specialist lending changed in recent years and how have lenders evolved to meet this demand?
There is no doubt that specialist lending continues to grow, and that more and more brokers are turning to the specialist market to find solutions for their customers. More than anything else that’s changed, however, is the specialist customer.
Not so long ago, if you said ‘specialist’, you typically meant adverse credit or subprime, and that is still a market that is supported strongly by lenders such as TML. However, the market has evolved significantly, especially in recent years, as we’ve battled with the cost of living crisis, the 2022 mini budget fall out, and global events impacting domestic living.
Affordability remains a massive challenge for existing and would-be homeowners alike, and specialist lenders can, in many cases, provide greater flexibility on assessing a customer's income to maximise their borrowing potential - though this is just one example. The market continues to evolve to meet borrower needs, whether that’s more lenders looking at higher LTVs, shared ownership, schemes such as Deposit Unlock or Own New, increased LTI’s, Joint Borrower Sole Proprietor (JBSP), as well as the recent significant uplift in second charge lending. The list goes on, and that’s before you even turn your attention to the BTL market, with SDLT and tax changes having been significant in recent years. The complexities associated with owning investment properties have increased, and specialist lenders have risen to the challenge through means such as limited company lending and varying fee structures, as well as catering for increasingly diverse investment strategies such as HMOs, MUFBs and Holiday lets.
What would you like brokers to know about specialist lending and working with specialist lenders if they haven’t come across many specialist cases before?
Specialist lenders are there to provide solutions when traditional lenders are unable to. They can help your clients achieve the level or type of borrowing that they want, and their scope is much broader than traditionally thought - there is so much more to specialist lending than just complex credit backgrounds.
Brokers may have come across specialist customers and circumstances without knowing it – I would always encourage brokers to reach out to specialist lenders and view their criteria and products as an opportunity to write more business rather than risk potentially turning customers away. We may be able to help that customer transact now and buy the house they want, rather than having to wait 12 months for an additional set of accounts, or their credit file to improve for example, and having to compromise on their goals as a result of this.
How have recent economic challenges impacted buyers and borrowers? What can specialist lending do to support them?
There are a number of economic challenges that have needed navigating. The Autumn 2022 mini budget and subsequent fall out, when combined with the global economic impact of the preceding COVID-19 pandemic, and the Russian invasion of Ukraine and cost implications for consumers, meant it has been a tough time for many, and for those looking to get on or move up the ladder there is likely to be a greater reliance on the specialist lending market.
Rents and house prices continue to rise. Some areas have experienced a correction of sorts, but over the medium term, house price growth still exceeds real wage growth, and whilst that remains the case, saving for a deposit and affordability will remain a challenge. The opportunity that specialist lenders like TML provide by maximising affordability for those who are self-employed or have complex income structures will be a source of relief for many. Similarly, the cost of living crisis experienced by many will see more customers having had adverse credit episodes. These customers still want, and need, mortgages – and this is an area specialist lenders excel at.
What actions do you think need to be taken, within the industry and beyond, to better support those trying to get on the property ladder?
Innovation is important – and the mortgage market is very good at that. You have lenders offering up to 100% mortgages, with others offering up to six times LTI, and further innovation is on its way.
I don’t think there is a single solution to answer all the needs of the market. It’s more a case of many pieces coming together to an already existing rich tapestry of solutions and opportunities.
Having worked closely with many new build brokers over the years, the elephant in the room is the obvious lack of government support following the highly successful Help to Buy scheme. Is Government support for buyers needed to bridge the affordability gap? Maybe.
What is important, and is something that cannot be ignored, is that whilst it’s imperative that buyers and would-be buyers have solutions to meet their needs, lending should be done in a responsible way. Customers should be fully informed, and care should be taken so that they’re not exposed to unnecessary and avoidable risk. Stressed affordability has been proven to work in ensuring customers aren’t financially overstretched, so I would like to think the industry doesn’t lose sight of this in pursuit of lending targets.
