Adverse credit in 2024 – the mortgage market's big opportunity?

Why the area should be getting your attention…

Adverse credit in 2024 – the mortgage market's big opportunity?

2024 is well under way and some patterns are already beginning to form in the mortgage market – none more so than the rise of the adverse credit space.

The rise, according to one expert, appears to reflect the broader economic landscape.  

How much is interest in adverse credit products growing?

Nicola Firth (pictured), founder and chief executive at Knowledge Bank, said, in 2023, Knowledge Bank saw one million searches, with adverse credit criteria accounting for 12.1% of the total queries.

“Intriguingly, despite constituting merely 0.16% of the overall criteria, adverse credit searches were disproportionately high, emphasising a noteworthy trend in user priorities,” she said.

Breaking down the adverse credit searches, Firth said 83% were related to residential lending. Buy-to-let properties accounted for 13%.

“This pattern has persisted in 2024, with ‘missed and late payments’ emerging as the predominant search theme, underscoring the significance of financial histories in mortgage considerations,” she said.

Another intriguing aspect revealed by the data, Firth added, is the prominence of searches related to ‘capital raising for debt consolidation.’

This category featured prominently in both residential and buy-to-let searches, she added, suggesting a growing awareness among individuals regarding their financial situations.

The prevalence of these searches, Firth believes, indicates a proactive approach by individuals to improve their financial standing and make their monthly expenditures more manageable. The emphasis on debt consolidation, Firth said, signals a desire to streamline financial obligations, possibly to secure better mortgage terms or alleviate financial burdens.

“This emerging trend points towards a significant shift in the mortgage industry for 2024, with borrowers actively seeking solutions to enhance their financial stability,” she said.

How lenders can react

As individuals become more attuned to their financial health, Firth said, lenders may need to adapt to meet the evolving demands of a more informed and discerning borrower base.

Lenders, Firth added, may find it imperative to tailor their offerings to accommodate these concerns.

“Additionally, staying attuned to the evolving nature of user queries becomes crucial for industry stakeholders, enabling them to stay ahead of emerging trends and align their services with customer demands,” she said.

What are some of the key trends you have witnessed so far in 2024? Let us know in the comment section below.