Over a quarter of brokers (26%) reported having no problems sourcing a mortgage for any type of borrower in the second half of 2015, the highest proportion in the post MMR era. It represents a significant jump from the proportion of brokers experiencing no problems both in H1 2015 (15%) and H2 2014 (16%).
Fewer brokers are now experiencing problems with sourcing a mortgage for borrowers seeking lending into retirement, borrowers with past adverse credit records, and self-employed borrowers or those with irregular incomes.
The most significant improvement has been seen in sourcing loans for interest-only borrowers, with the proportion of brokers having difficulties dropping 15% year-on-year to 39%.
Similarly, the proportion of brokers unable to source a mortgage for ‘lending into retirement’ borrowers has dropped seven percentage points to 43%. The picture has also improved for self-employed borrowers, with just 40% of brokers reporting problems over the last six months, down six percentage points from a year ago.
Looking ahead, both lenders and brokers identify first-time buyers as the market area with the best overall growth prospects for 2016.
More than half of lenders forecast an improvement in mortgage availability for retirement borrowers, near-prime borrowers, those who are self-employed or with irregular incomes, and interest-only borrowers. In each case, lenders’ confidence exceeds that of brokers.
Over half of lenders (54%) reported feeling that mortgage market conditions are currently improving. A total of 68% of lenders and 59% of brokers are confident that gross lending will meet the industry forecast of £237bn for 2016. Additionally, over a quarter of brokers (27%) feel confident lending will exceed this forecast, while more than one in ten (11%) expect 2016 gross lending to exceed the forecast by a significant margin.
Peter Williams, Executive Director of IMLA, commented:
“If lenders’ expectations are realised, 2016 should see the mortgage market broaden out and start providing greater support to the substantial and still growing non-standard segment of borrowers. Although recent conditions have supported standard homeowners, who are enjoying record low rates and attractive remortgaging options, niche consumers have found it harder to find their feet in the new regulatory landscape. This has been made more difficult by those structural changes triggered by the economic recovery – for example, rising self-employment.
“The FCA has acknowledged this in its call for inputs on mortgage market competition at the end of last year and in its launch of a ‘regulatory sandbox’ to allow the testing of new innovations in a less constrained regulatory environment – to help encourage innovation and new solutions. Lenders, brokers and regulators all have a responsibility in this area to make sure the market adapts and isn’t overly constrained in terms of choice.
“It is, therefore, a very positive step that lenders are expanding their range of products to serve the growing number of non-standard borrowers. This will mean greater choice for the growing segment of borrowers who are self-employed, along with increasing the number of products to support lending into retirement, as well as expanding the options for near-prime borrowers. The survey results offer good news for UK mortgage borrowers and the broker market.”
