Keeping the specialist lending doors open for credit-worthy borrowers

Grant Hendry, director of sales at Foundation Home Loans, explores the current mortgage market for both borrowers and intermediaries, and why it's vital that potential borrowers are aware of the available options, even in the current economic climate.

Related topics:  Blogs,  Mortgages
Grant Hendry | Foundation Home Loans
20th November 2023
Grant Hendry FHL

There is often precious little time to take a step back and process events which took place over any given period of time. Especially in terms of how these events may have impacted your customer base, their behaviours and future outlooks.

After overcoming the initial shock of the pandemic, the whole mortgage industry experienced a sustained period of 100mph lending. Business was coming in from all angles on the back of pent-up demand and due to the stamp duty holiday incentive.

When sat here writing this, the stamp duty holiday and its staggered deadlines to cope with the sheer volume of business being written seem like an age ago, such are the winds of change which have blown though the housing and mortgage markets in more recent times.

The fact is that this deadline elapsed just over two years ago and we are now operating in a vastly different economic landscape where borrowing demands have changed, interest rates have risen substantially and people across the UK are having to find ways to cope with rising living costs and a multitude of other factors.

With this in mind, it was telling that the results of a research paper called Project Athena – carried out in collaboration between Pegasus Insight and Mortgage Marketing Forum – which highlighted that rapid rate changes are causing stress and huge inefficiencies for mortgage intermediaries.

According to the study, six in 10 or 61% of consumers believe that it is not a good time to be looking for a mortgage, while a larger proportion – almost three quarters or 73% – have had to make cutbacks on expenditure amid economic and market conditions, with dining out and takeaways being a key cut back area.

Findings from Project Athena also showed a change in behaviours and attitudes, driven by time constraints and the changing importance of business development managers.

Whilst this makes for some interesting insight, it also got me wondering how many of these consumers thought it wasn’t a good time to be looking for a mortgage because:

a) this was simply the perceived impression from the media.

b) they don’t believe they would be accepted/qualify because of credit issues – current or historic - due to how they generate their income – being self-employed, a contractor, having multiple income streams or unusual sources of income – due to having a low credit score or being too close to retirement age.

c) they hadn’t spoken to a mortgage intermediary about their options.

If there are any other options I’ve missed I would love to hear them, but I think these help underline how important it is to ensure that potential borrowers are aware of the available options, even in the current economic climate.

It’s clear that volumes across the residential mortgage market have diminished over the past 12 months, and much of this can be put down to the significant falls in the more vanilla type of business which has, and always will to an extent, dominate. However, volumes in the specialist residential market have remained far more robust due to this sector being less rate sensitive and the incredible knowledge around lending practices and available options from a far more reactive and proactive intermediary community. And the doors of specialist residential lenders will remain open and accessible for a greater number of credit-worthy borrowers as we move into 2024.

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