"The cost-of-living crisis represents an opportunity for brokers to reconnect with clients and understand the pain points they may be experiencing in their finances."
As this unprecedented price inflation begins to bite further, there are concerns that sky-rocketing energy, fuel and food costs will push more and more people into a spiral of debt as the cost-of-living crisis deepens.
We may have rays of sunshine to enjoy over the summer, however as the UK economy struggles to find a post-Covid foothold and alienated workers vote for sector strikes, it is no surprise that there are echoes of the 1978-79 ‘winter of discontent’ in the air.
It has led many to wonder how the lending market will react.
In 2014, the Financial Conduct Authority, introduced stricter lending criteria in the wake of the financial crisis. This led to an increased scrutiny over spending in borrowing applications, in addition to a stress test which meant borrowers had to be able to afford their mortgage repayments if there was a 3% increase in interest rates.
This meticulous analysis of an individual’s financial expenditure looks to be changing, however, with the Bank of England recently announcing the axing of this affordability guideline.
This loosening of mortgage underwriting criteria will undoubtedly bring some respite for borrowers whose affordability has been adversely affected by the cost of living crisis. Lenders too, are doing their bit to understand a consumer’s changing priorities and to help alleviate the strain on the pockets of over-stretched consumers.
This changing in priorities is stark.
Previously, what we had seen in the re-mortgaging space was an interest in accessing holiday home funding or home improvements to increase space. Now, we are witnessing a surge in re-mortgaging enquiries for debt consolidation or tax bills.
The importance of being a proactive broker
The cost-of-living crisis represents an opportunity for brokers to reconnect with clients and understand the pain points they may be experiencing in their finances.
With household budgets more stretched than ever, many people will be looking to re-mortgage if they are struggling with repayments. So it is crucial for advisers to be proactive in signposting how they can support new and existing clients.
For those approaching the end of a fixed rate deal, it is good sense to carry out a review of home finances to see if there are ways to better manage costs within the five months before your deal ends.
By securing a good product, borrowers who are struggling are offered a vital lifeline to consolidate debts and capital raise, whilst reducing their monthly interest payments and seizing better budgetary control over their monthly finances.
How specialists can help
It’s clear to see why 2022 has been coined the year of the remortgage.
For cases where borrowers have been detrimentally impacted by adverse credit during the pandemic, working with a specialist can produce dividends.
For example, if household income, or circumstances have changed, a client may struggle to re-mortgage with another mainstream lender.
Not only that, the market is a sea of changing criteria, often changing like the tides, making it hard for brokers to keep up and secure the best rates.
A specialist has a broad visibility of products and will scan the entire market for you, helping you to navigate sometimes complex criteria, and provide you with access to exclusive or semi-exclusive products with the UK’s best specialist lenders.
It’s this expert guidance and market leverage which makes working with a specialist such a gamechanger – and who wouldn’t want an additional driving force for a case’s completion.
