"Further innovation from our lender partners during 2017 has included new products to cater for the self-employed which now allows for 1 year trading, and also to assist the grey market."
2017 has been a great year for the sector in terms of growth and this has been driven by many factors that include the rise in number of self-employed workers, which has increased to 4.8 million people in the UK. Also, there were a record 912,000 county court judgements issued against consumers in England and Wales** which is likely to disenfranchise them from mainstream lending for many years.
These are just some of the factors that are encouraging new entrants which is driving competition and innovation across the sector. Specialist borrowers are still subject to stringent affordability checks as mainstream borrowers; however, more of our lender partners have brought new income calculation methods and technology to the market and are moving towards a ‘take a view’ stance on client circumstances. Not only has this resulted in a greater deal of flexibility, it has strengthened relations with many of our lender partners through the ability to chat through the merits of a client’s case. Furthermore, we now have several onsite underwriters from our key lender partners which has allowed for even stronger relationships and the production of offers ‘in house’.
Further innovation from our lender partners during 2017 has included new products to cater for the self-employed which now allows for 1 year trading, and also to assist the grey market.
However, the road has not been entirely clear on account of Brexit and the time in which it is taking to thrash out a deal; this has of course had an impact on confidence in the wider property market in respect of property values, down-valuations. The Bank of England base rate has risen for the first time in many years; but we have noticed many of our lender partners have remained static and therefore, many clients have not had to absorb these costs so far.
IMLA recently reported that specialist mortgage lenders’ gross lending has grown threefold since 2009, an increase of 19% per year, with 2016 totalling £17bn. The report also suggests that specialist lenders are now in a position of strength following the financial crisis which resulted in tougher regulation, an increase in financial provision, and has since made the entire process more complex and tougher for large institutions. This has paved the way for specialist lenders to cater for the growing number of ‘non-standard’ borrowers who are not catered for by the mainstream lenders.
Specialist residential mortgage product of the year
Our residential mortgage product of the year has to be a semi-exclusive deal from Kensington. It has a max LTV of 90% and is available on a 2, 3 or 5 year fixed rate basis.
As long as there are no CCJs or defaults registered within the last 2 years and unsecured arrears do not exceed a ‘status 2’ in the last 12 months, subject to affordability, Kensington will look to offer a solution. In addition, the lender will ignore all adverse that has arisen from communication contracts, regardless of when it occurred. This means that first time buyers and home owners/movers are able to obtain a mortgage with a small deposit or high gearing in their current property.
If there are no CCJs or defaults registered within the last 3 years, the customer will qualify for ‘Select’ premium rates making the proposition even more attractive.
Many borrowers looking for 90% LTV have limited funds available for the associated costs of obtaining a mortgage (i.e. product fees, valuations and legal costs), the lender offers a fees free option for a small rise in the interest rate.