"As mainstream lenders put greater focus on streamlining the mortgage process, the demand from customers with more complex requirements has continued to rise. "
Intermediaries said self-employed mortgages represented up almost one quarter (23%) of specialist lending cases in Q3 2018, followed by interest only (16%), complex income (13%) and high LTV cases at 12%.
At the moment, lending into retirement accounts for a fairly consistent proportion of specialist cases at around 11%, but it’s in this area that intermediaries see the highest potential for future growth.
However, intermediaries warn that further product enhancements will be needed if the market is to provide the solutions that customers really need. These include higher maximum age limits; diversity of acceptable income sources; availability of interest-only products and choice of repayment strategies.
John Heron, director of mortgages at Paragon, said: “Innovation has been a significant casualty as the mortgage market has adjusted to the changes we have seen since the financial crisis. Tougher conduct of business regulation, increased capital requirements and robust governance has made the market safer but constrained the development of new solutions for the challenges that consumers face.
“As mainstream lenders put greater focus on streamlining the mortgage process, the demand from customers with more complex requirements has continued to rise. We’ve already seen this with the self-employed and now intermediaries are giving us a clear signal that demand for later-life borrowing is set to boom. It remains to be seen whether there is adequate flexibility in the market to meet consumers’ expectations.”
