There is no denying the UK is going through a period of significant political and economic change. However, the mortgage market remains buoyant despite the wider uncertainty, with first-time buyer numbers at a 12 year-high.
But it’s not just new borrowers who need help and support during these turbulent times. Brokers provide valuable guidance to buyers and remortgagers across the whole market. Increasingly, it’s those with more complex circumstances who have been turning to advisers for help.
Having more than tripled in under ten years, the specialist lending market was worth £17 billion in 2017, according to the Intermediary Mortgage Lenders Association (IMLA). This is largely made up of buy-to-let property, whilst residential lending is estimated to be around £3 billion.
Brokers, though, still see substantial opportunities in this area – something that was highlighted in our recent Specialist Lending Tracker.
Over half the brokers (52%) surveyed expected to see growth of at least £1 billion in the specialist market over the next 12 months. Of these, more than a third (37%) believed it would increase between £1 billion to £5 billion and on top of this, almost a quarter (23%) believed the market will grow by £5 billion or more.
Changes in society are helping to support that growth – self-employed workers now account for over 15% of the UK workforce. The number has increased from 3.3 million in 2001 to 4.8 million in 2017 and is expected to rise even further. Within our survey, brokers cited irregular or multiple income streams as among the most common reasons to refer a client to a specialist lender.
Spread the word
However, despite the growth of specialist business, brokers see relatively little appetite from mainstream lenders to move into this space. Only 9% believed major banks have become more understanding towards non-standard borrowers in recent years. It’s no wonder many borrowers still find it difficult, or impossible, to access finance on the high street – especially those who may have experienced a bump in the road and have a low credit score.
Usually, these types of customers are rejected by high-street lenders. It’s perhaps why only 23% of brokers would refer a client with a CCJ, Bankruptcy or IVA to a specialist lender, as these borrowers may be reluctant to look for funding having been rejected once already. But the good news for brokers is that this represents an opportunity for them to better support this segment of the market, and ultimately grow their business.
As the number of complex borrowers increases, brokers can tap into a growing pool of customers who need proper advice and support. In these cases, the importance of brokers cannot be understated, as consumer awareness of specialist providers remains very low. Many potential borrowers simply do not know that there is a specialist mortgage lender out there willing to take them on as a customer.
Here is where we need to spread the word and where brokers can really add value. By helping a client achieve their housing dreams – whether that is buying their first property or moving away from a product which isn’t right for their circumstances – they can gain a customer for life.