One of the stranger habits we seem to have as a nation is assuming the answer is going to be “no”. We queue patiently, apologise when someone walks into us and convince ourselves we’re probably not going to qualify before we’ve even asked the question. It’s an odd trait, but a surprisingly common one.
It crops up in the housing market too. Long before a broker has had the chance to understand someone’s circumstances, many prospective buyers have already decided that getting a mortgage simply isn’t going to happen. This assumption also has an impact on confidence, which is why the latest Building Societies Association Property Tracker makes such encouraging reading.
Confidence is moving in the right direction
According to the data, just 37% of people now see getting a mortgage as a barrier to buying a home, compared with 48% two years ago. At the same time, the proportion citing monthly mortgage repayments as a barrier has fallen from 63% to 55% over the same period.
Affordability remains a genuine challenge for many households, but there are signs that confidence around access to mortgage finance is beginning to improve.
I think that’s something the industry should embrace. Over the past few years we’ve seen lenders introduce more flexibility, brokers continue to adapt to changing customer needs and the FCA has proposed changes to its mortgage rules that could give lenders greater flexibility to support creditworthy borrowers.
The important thing now is making sure borrowers understand what may be available to them. The mortgage market has changed considerably, but perceptions about who can and cannot get a mortgage don’t always keep pace.
Why conversations are so important
I don’t think confidence, and particularly awareness, has quite caught up with what’s happening across the market. We still come across people who have ruled themselves out before they’ve even spoken to a broker.
Sometimes they’re newly self-employed, sometimes they’re drawing income from more than one source, while others assume that a historic credit issue or their age automatically means they’ll be turned away.
That’s where good advice really comes into its own. Brokers can look beyond the product and build a much fuller understanding of their clients, their circumstances and what they’re hoping to achieve.
Quite often, that conversation uncovers options the borrower didn’t realise were available, whether that’s making use of more than one income, involving a family member to support an application or simply finding a lender that’s prepared to look at the individual circumstances of the case.
Looking beyond the application
The same applies to lenders. The way people earn a living has changed, family finances are often more varied and there is no longer a single definition of what a typical borrower looks like. Every application tells a slightly different story, and that’s why taking the time to understand the person behind it is so important.
At Dudley Building Society, we see that every day. Someone might have taken the step into self-employment more recently than many high-street lenders are comfortable with. Someone else may need the support of a family member to buy their first home. Those situations aren’t unusual anymore. They’re simply a reflection of how people live today.
That doesn’t mean relaxing lending standards or taking unnecessary risks. It means making informed lending decisions based on someone’s individual circumstances rather than assumptions.
Good underwriting has always been about understanding risk properly. Sometimes that requires looking beyond a single number or tick-box and taking the time to understand how a customer’s circumstances work in practice.
The opportunity ahead
For brokers and lenders alike, this creates an opportunity as much as a responsibility. Helping someone secure a mortgage is important, but giving them the confidence to find out what’s possible often has to come first.
Too many prospective buyers are still answering the question for themselves before anyone else has had the chance. That is why the relationship between borrowers, brokers and lenders remains so important. A conversation can provide a far clearer view of what is actually possible than an assumption made before an application has even started.
If there’s one takeaway from the latest research, it’s that confidence around access to mortgage finance is moving in the right direction. Now the task is to keep building on that progress and make sure more borrowers understand that today’s mortgage market isn’t simply looking for perfect applications.
It’s about assessing whether the mortgage works for that particular customer and making a lending decision based on the full circumstances in front of you. Once that conversation begins, the answer isn’t always “no” after all.
