"Thanks to innovation by these lenders, ‘mortgage prisoners’ who have been locked into expensive variable rates with the large lenders, have been able to either remortgage, or move home"
We have seen Accord Mortgages create products for pilots and contractors, while Kensington has entered the HTB market, with some great new products. These specialist lenders are operating in the gaps left by other banks, typically addressing customers with more complex needs rather than the ‘vanilla prime’ segments.
This is great news for the likes of company directors, the self-employed, contractors and those with unconventional salary payments such as aviation workers. For example, Kensington is offering HTB mortgages, with rates starting at 3.64%, aimed at new business owners, contractors and those with failed credit scores.
Thanks to innovation by these lenders, ‘mortgage prisoners’ who have been locked into expensive variable rates with the large lenders, have been able to either remortgage, or move home, by switching to specialist banks that offer them much more attractive rates and terms.
The challenger banks have been able to grow their market share, as they can respond to market opportunities quickly. They have adopted the latest technology to aid distribution, are well capitalized and offer good customer service. These specialist banks have a real opportunity to take share from the larger lenders, who are under pressure from low interest rates and are more risk-averse.
All the major lenders are looking to increase their distribution in a more competitive market. While the future looks uncertain with Brexit on the horizon and house prices softening, the large banks should be embracing niche markets, as they are growing in line with economic changes.
The self-employed are a large and growing part of the UK labour force. Five million people—15% of workers—are now self-employed, and the expansion of self-employment has played a significant part in current record employment levels.
New technology has facilitated the growth of the ‘gig economy’, which is spearheading a host of new economic activity. More than a million ‘makers’ sell jewellery, clothing and accessories through the online marketplace Etsy. The short-term accommodation platforms AirBnB, Love Home Swap and Onefinestay together have close to a million ‘hosts’. There is also a growing number of self-employed in the digital sector, earning great income as app developers etc.
Brightstar has recently launched a buy-to-let product, ‘The Temporary Letter’ which has been designed for landlords who wish to let their investment property on a short-term basis, via websites such as AirBnB.
The major lenders need to adapt to the changing workforce and respond to new trends in employment if they are to maintain and grow their market share.
