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Meeting unique borrowing demographics in the residential market
It remains an ‘interesting’ time for the UK residential sector. According to the latest figures from the Bank of England the new interest rate ‘norm’ – that’s the average interest rate paid on newly drawn mortgages - continued to increase, rising by a further 7 basis points to 4.63% in June.
Similarly, the average interest rate on the outstanding stock of mortgages increased by 10 basis points, and now sits at 2.92%.
However, the appetite for mortgages is not yet slowing - The Bank of England also reported that gross lending increased for the second consecutive month, from £19.0 billion in May to £20.0 billion in June.
Net approvals for house purchases increased to 54,700 in June, the highest since October 2022. However, to maintain some perspective, it remains below the monthly average for 2022 of 62,700.
Interestingly, approvals for remortgaging with a different lender saw a significant increase from 34,100 in May to 39,100 in June. This indicates that a proportion of existing borrowers who would have settled for a product transfer rate for ease, are now willing to make the effort to switch lender to achieve a better rate, or apply for additional borrowing.
With a growing sense that inflation and interest rates are nearing their respective peaks, we are starting to see a gentle rise in consumer confidence which is steadily tricking down into the housing and mortgage markets.
As a specialist residential lender, we have to constantly monitor how a range of borrowers are generating and supplementing their incomes, especially those who may sit beyond the more mainstream lending boundaries.
Have a look at our residential borrower case studies
It’s clear that the UK workforce has evolved to become far more fluid and flexible than in years gone by, whether through multiple and/or unusual income sources, self-employment, contractors, the rise of the gig economy etc. Then there is the more stable element of this labour force, the key workers who remain the life blood of the public sector. These borrowers are not always served by high street lenders, but at Foundation, we have specific ranges for these borrowers, and we are here to help you help them.
Check out our new Key Worker proposition
By connecting with lenders who have the flexibility to consider up to 100% of those additional incomes, and manually underwrite cases based on their merits, mortgage brokers will be able to offer their clients a broader choice of lenders and maximum loan amounts.
Whatever your client’s role, how they generate their income and even their location, we believe it’s vitally important that all credit-worthy borrowers can access mortgages which meet their specific needs. If you have a borrower who does not meet mainstream criteria, make Foundation your first call.
This article was originally published on Financial Reporter
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