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Understanding the ‘average’ borrower
Understanding the ‘average’ consumer/borrower/client can be useful not least because of how it shapes our thinking about what circumstances a large number of people might be in, or the various extremes that are not ‘average’ at all.
You might say that the specialist market has grown up to deliver products for these types of customers and knowing what the ‘average’ is helps us to cater for those who are definitely not amongst that cohort - those that don’t fit the mainstream machine so to speak, but require a much more nuanced approach in terms of the products they require, the underwriting that comes with this, and the service that can take them through to completion.
In that sense, the residential market has changed significantly with product options available for those who have all types and amounts of debt, who have had arrears or CCJs over various time periods, but also those who are in unique circumstances – professionals or key workers for example, those who are self-employed, those who are paid in a variety of ways, those who have multiple or unusual sources of income, the list goes on.
It is perhaps the debt/arrear/CCJ element that remains fundamental to a specialist residential mortgage offering, and again, in that regard, knowing what type of debt is held by individuals, or the number of borrowers currently in arrears, or perhaps how the number of those with certain types of CCJs has moved over time, is always going to be useful to review.
For example, the latest set of stats for September from The Money Charity, reveals one person every four minutes and 20 seconds was declared insolvent or bankrupt between June and August this year; the number of UK mortgages with arrears of over 2.5% of the remaining balance increased by 38.8% a day in the year to June, 901 people reported they had been made redundant between May and July this year.
As mentioned, this helps us as a specialist residential lender come up with product solutions for these types of borrowers, but helps advisers to deliver a growing number of mortgage options to clients with all kinds of different circumstances and situations, and importantly, financial history.
Thankfully, we are in a place where the vast majority of borrowers have options available to them. But, it’s important we recognise and understand the shifting nature of both ‘average’ and those outside the average, in order to keep on delivering the right mortgage for them, whether specialist or mainstream.
This article was originally published on Mortgage Solutions
