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The growing number of borrowers you can help with mortgage choices
We have seen a growing band of near mainstream borrowers emerge who are more reliant than ever on the specialist lending market and an astute, professional advice process. This continues to generate strong levels of opportunity for advisers who maintain a robust handle on the ever-increasing breadth of lending propositions on offer.
This pressure was evident in the latest ‘Which?’ research that suggested an estimated 700,000 households missed a housing payment in April 2023. Missed housing payments were said to be particularly high among renters, with one in 20 (5.2%) renters surveyed missing a payment over the course of the month. In addition, 3.1% of mortgage holders surveyed, were reported to have missed mortgage payments as Bank of England interest rates continue to climb.
Overall, 2 million households missed or defaulted on at least one mortgage, rent, loan, credit card or bill in April 2023. The 7.3% missed payment rate observed in the research is in line with the level seen at the same time last year, but higher than in April 2021 (6.5%) and April 2020 (5.2%).
In response to heightened living costs, 59% of households reported making at least one adjustment to cover essential spending such as utility bills, housing costs, groceries and medicines. This equates to an estimated 16.6 million households. Adjustments include cutting back on essentials, dipping into savings, selling possessions or borrowing. This is consistent with the high adjustment level seen for the past year, and matches the level seen in April 2022, but is much higher than the 35% seen two years ago.
For mortgage advisers, naturally, you want to reach out and help as many of those customers as possible to continue with their plans to become home owners or simply maintain their current situation affordably.
This is where lenders who incorporate a manual underwriting process can play a major role as it allows us to take a wider, deeper look into credit histories and take a more holistic approach around how, why and where a credit blip may have occurred. It also allows us to go beyond a tick box approach and create a bigger picture of a borrower’s historic, current and potential earning pathway and - in many cases - we are able to help, provided no further credit blips have occurred in the six months prior to an application.
As the past few years have shown, extraordinary events appear to be getting less unique. These events have been far beyond the control of many people and it’s vital that the lending community does not stifle the borrowing needs of those who remain credit worthy going forward, while also supporting them in the present.
References:
https://www.which.co.uk/policy-and-insight/article/700000-households-
missed-rent-or-mortgage-payments-in-april-which-finds-ajYFu5w1wyK0
*This article was originally published on Financial Reporter
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