There is support for individuals and households impacted by rising living costs and heightened interest rates
The following article is supplied by Foundation Home Loans
Individuals and households across the UK continue to be impacted by rising living costs and a heightened interest rate environment.
This is resulting in further complexity emerging around income structures and credit profiles which is subsequently leading to an increased reliance on the specialist mortgage market for a growing number of residential borrowers. And this is a sector which is very much rising to the challenge.
Specialist lenders are providing solutions for a wide range of customers from self-employed clients needing to use latest year’s figures through to FTB’s who may simply have a low credit score and we, as a business, have certainly experienced continued growth and demand from FTB’s in 2023.
The types of enquires we continue to receive was reflected in data produced by TMA at the beginning of August. This revealed that the top two queries received by TMA’s broker support desk in Q2 2023 were related to residential adverse credit, and residential income support.
The statistics showed a sustained focus over the quarter on queries regarding adverse credit, particularly on the residential side, as brokers sought support to advise clients around missed or defaulted payments and County Court Judgements (CCJs) for debt.
Missed payments could simply be in the form of a credit card bill, student loan repayment or mobile phone charge, alternatively if some assets are tied up in debts then this may tip borrowers into the more complex band which sits outside of some lending boundaries. That’s not to say such borrowers are not credit worthy or have a ‘bad’ credit history, one missed payment may slightly impact a credit score and push them beyond more mainstream risk profiles.
TMA’s broker support desk also saw a large number of queries related to income types, as affordability remained a key obstacle to gaining mortgage approval. In particular, a number of queries relating to clients with multiple income sources, benefit income, and income from buy-to-lets.
We know from ongoing conversations with our intermediary partners that a rising proportion of the UK workforce are far from ‘unusual’ in their borrowing requirements and nor should they be viewed as such.
Being a salaried employee with years of experience with the same firm was once very much deemed to be the norm but these days are long gone. As are the days when borrowers with even the smallest credit blemish were cast aside as lending outcasts.
Complexity is very much part of modern life so why should potential and existing borrowers be ignored because they don’t fit some antiquated mainstream lending boxes?
With a rising number of residential cases no longer ticking the more prescriptive high-street lending boxes, the intermediary community is playing an ever more crucial role in delivering the right solutions to match some increasingly complex borrowing requirements. A trend which has become increasingly evident in the volume and type of enquiries we are seeing through both our internal and field-based BDM team.
As a lender, we might not be in a position to accept every case, but these enquiries are vital when it comes to spotting patterns and trends which enable us to innovate and implement product, policy and criteria changes if and where we can within responsible lending boundaries.
We work very closely with our intermediary partners to define and evolve our proposition to find solutions to help more customer types. This has never been more evident than the recent launch of our key workers proposition which has been extremely well received.
This key worker offering forms an integral component within our overall lending proposition as we believe that all credit-worthy borrowers should have access to lending solutions which match their individual needs. And our doors are always open to our intermediary partners with residential clients who may have slipped beyond the mainstream.
Grant Hendry is Director of Sales at Foundation Home Loans
