Your Business and Industry

Complex income client demands rising – how you can help them

As some lockdown restrictions are lifted, the scale of the impact on household finances and its likely consequences on the UK economy remain to be seen.

Although data is coming to light and it’s important for the mortgage market and the intermediary community to carefully follow any emerging trends.

According to the March 2021 Money Statistics report produced by The Money Charity, over the past year 11.1 million households are reported to have accumulated £25 billion in debt and arrears due to the pandemic, an average of £2,300 per affected household. 460,000 private sector renters were said to be behind on their rent in January 2021, while 2.3 million people have fallen behind on their broadband bills, with internet connectivity having progressed from its previous perceived status as a luxury to an essential utility.

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As in previous months, these numbers showing hardship stand alongside those indicators which show financial improvement for the households where members have stayed employed and saved money during the pandemic. The average household savings rate was 16.5% in Q3 2020. Meanwhile outstanding credit card balances fell by 22.4% in the year to January 2021 and the average first-time buyer house price rose by 6.8% in the same period.

We are seeing real differences in borrowing scenarios across a variety of potential borrowers and existing homeowners. With a growth in complex income demands, credit blips and also financial circumstances constantly changing, this only emphasises how important the manual underwriting process has become and how lenders need to look beyond a ‘tick-box’ lending approach. This is just one reason why specialist lenders will continue to rise in prominence across the residential sector and this is only likely to continue on through 2021.

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