Special Features

How 2020 showed us the value of specialist lending

Jon Cooper | Aldermore
|
9th February 2021
Jon Cooper Aldermore
"The re-introduction of further high-LTV products will open up demand from customers who will require our support to get on the ladder and general pent up demand will be more realised"

With January now behind us I wanted to reflect on last year, which was a year that really showed us the value of specialist lending. Many homeowners and would be buyers faced major uncertainties in their lives and finances, and what they needed most were lenders who could give certainty, support, and assistance. In short, lenders that would listen.

The whole mortgage industry came together in a valiant effort to support their customers with payment breaks, and big and small lenders should be commended alike for this. But where specialist lending really proved its worth was in the new customer market.

The value of human underwriting that digs into the detail of income, the ever-widening range of individual circumstances, and potential future financial shocks, meant the door was open in 2020 for many borrowers to get a deal. This has been a key part of mitigating any cliff edge in activity, seen in other industries, and kept the market going.

In particular, the self-employed have benefitted from specialist lenders working with them and their brokers in reviewing their business for sustainability, considering only 1 to 2 years of accounts in most cases, and providing flexibility when considering future income drops or shocks. The self-employed would have felt very neglected in previous decades in times like these but specialist lenders have been able to give them options.

We remain optimistic for the rest of 2021; the re-introduction of further high-LTV products will open up demand from customers who will require our support to get on the ladder and general pent up demand will be more realised as social distancing measures soften. There is still a tinge of realism to consider as the unknowns surrounding the end of furlough and how that will affect unemployment will directly affect the overall economic recovery, therefore the housing market.

As Chancellor Rishi Sunak says, the medical emergency has now turned to an economic emergency, how the overall economy copes and recovers after 2020 will be a key factor in housing market activity this year.

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