Is this the road to residential revival?

This article was produced in partnership with Together

There’s an old saying that knowledge is power, and it’s wisdom that should be applied to the mortgage industry — especially these days, says Together’s Maeve Ward.

“The education piece, for me, is key,” Ward, head of intermediary sales personal finance, explained. “Our Residential Property Market Report is fantastic: it’s educational, insightful, and articulates clearly where the opportunities are to help clients feeling underserved by the High Street now and in the future.”

The timely rise of specialist lending

The Residential Property Market Report looks at the past, present, and future of the residential mortgage industry through new consumer research as well as insights from economist Rob Thomas and other experts. With a focus on the personal finance side of the market, including homeownership ambitions, the report asks: Is this the road to residential revival?

Ward would argue yes, pointing to the marked rise in specialist lending as one sign that the industry is serious about forging a path to homeownership for a wide variety of borrowers. Non-standard applications — which can include self-employed, high-net worth, or credit impaired borrowers or an outside-the-box property type such as timber framed or with a thatched roof — have boomed in response to what can only be described as a turbulent past few years. 

From the credit crunch to a COVID-19 pandemic-driven appetite for more work-life balance, customer profiles are changing. Many might struggle to evidence their affordability in a way that’s acceptable to the High Street because it’s perceived as complex.

“It’s very much a tick-box exercise, where an algorithm in the background determines whether or not you are approved,” Ward said, adding that one of the biggest factors is credit score, but in the case of a high-net-worth individual, for example, their score might be artificially low simply because they don’t need and therefore don’t have any active unsecured credit.

“This makes them a perfect specialist customer which needs a more flexible and pragmatic approach. Building a relationship and understanding circumstances can enable a specialist lender, like Together, to come in and provide an alternative lending solution when the High Street says ‘no’.”

Another important shift is that the age demographic of borrowers is getting wider. According to the report, the average age of the first-time buyer (FTB) has increased to 33. The two main drivers behind this trend are affordability and ability to raise the deposit. While interest rates coming down are helping with the former, the latter is still a challenge due to increasing cost-of-living and wages not rising in line. The result is less disposable income for savings, including for a home. 

In another example of how specialist lending fills these gaps, the report touches on alternative ways to access the property ladder, such as via bridge financing or shared ownership, which are both gaining traction.

Cost-of-living is also having an impact on borrower confidence when it comes to remortgage applications. The report found that 59% of homeowners are concerned about their chances of approval, and this ties directly back to the importance of education, Ward stressed.

“Anxiety is born out of the fear of the unknown,” she noted. “The biggest thing for advisors generally is to be best informed about the specialist market.”

If the High Street says ‘no’, there are still options — and it’s incumbent on the broker to understand them and be able to suggest another way if a remortgage isn’t on the cards. Product transfers, while less popular now than a year ago, are one possibility and for borrowers sitting on a preferential mortgage rate looking to release some equity, remortgaging may not even be the right outcome. They’ll want to do everything in their power to protect their preferential rate, so a second-charge mortgage might be a better alternative.

The takeaway? Specialist lending has made impressive inroads solving many of the challenges borrowers face, evolving alongside the industry rather than fighting against the current. Ward has dedicated her entire 25-year career to the specialist side of the fence and has never once questioned that decision.

“It’s a passion of mine; my heart’s always been in specialist,” she said simply. “We’re there for people who feel that there are no alternatives. We listen to understand their unique circumstances — and then we find unique lending solutions.”

The writing’s on the wall: The future is specialist

The statistics evident in the report show exponential growth of the non-standard space and speak for themselves. By 2029, the specialist sector is expected to boom by 70%, with 20% of all mortgage applications fitting into the category in some way. There’s an anticipated 126% uplift in shared ownership applications, a phenomenal figure, and, looking back to 2023, the lion’s share — 65% — of specialist lending was for self-employed borrowers, and that cohort of the market continues to ramp up significantly.

“You can see where the growth is coming from, as more and more people fall outside High Street,” Ward said, adding that it’s about specialist lenders continuing to collaborate on educating advisors on how they can help their clients.

“To protect your client bank, to protect your income moving forward, you must be able to diversify or partner with specialist brokers so you can refer people across.”

Ward urges brokers to read the report and then reach out to Together, where they’re always happy to forge new connections that result in someone being better informed about the specialist space. She’s only been with Together for a short time, but recalled she always knew it was her end game. As the biggest specialist lender in the market today, “we just do it so well”, pointing to the cutting-edge technology used to transact at speed, broad product offerings, impressive market reach, and a bold flexibility as the main differentiators.

But Together hasn’t reached this height in its journey by resting on past accomplishments. Always examining things from a new angle, committed to engaging with broker partners and customers to understand what the market looks like, this dedication shines through in the report in terms of the time and effort of the people involved.

“It navigates the complete landscape of the residential market by reflecting on the past, looking at the now, and projecting into the future,” Ward said. “It’s a real testament to how Together wants to help the underserved. While there are encouraging signs of recovery, the market isn’t out of the woods yet. We will continue as we have over the last 50 years to find alternative ways to fulfill property aspirations.” 

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