According to recent estimates, the mortgage market will reach £230 billion by the end of the year, resulting in even more lenders competing for the same business. However, specialist mortgages which form around 6% of today’s UK market, will prove to be the exception.
Educating the sector
I anticipate this could possibly reach the 10% mark in the next few years, as new mortgage products and lenders continue to emerge. In addition, better awareness and acceptance of the specialist lending market is also imperative to the success of the market as a whole which underpins the expectations we have for the sector.
In light of this and as even more mortgages become available, educating brokers will be more important than ever, particularly in terms of what is available for their clients while taking into account their individual needs and circumstances.
A new year
A range of new entrants entered the market in 2015 and it is probable that we will see as many, if not more in 2016, with existing lenders looking to develop further and prime lenders considering moving into the specialist arena. In previous years, many people were often declined due to adverse credit, but new lenders are now assessing people based on their current situation, and not on their past circumstances.
Therefore, borrowers that have formerly struggled to get a mortgage due to poor credit history are now more likely to maintain their mortgage and financial commitments, to avoid a repetition of their previous credit position.
Buy-to-let and the self-employed
Although demand for buy-to-let for student lets and HMOs is on the increase, there are only a limited number of lenders who deal with it, as it is a specialist market. In addition, the new tax changes will impact those investing in buy-to-let properties, meaning it will become more pertinent for the broker community and its clients to work closely with tax consultants.
In addition, specialist lenders have a growing appetite for self-employed borrowers and, with approximately 4.5 million self-employed workers in the UK, we simply cannot and should not disregard it. Interestingly, there is a misconception that the self-employed find it difficult or impossible to find a mortgage. In reality, a growing number of specialist lenders are opting to work with more and more self-employed people and, as a result, we are seeing an increasing number of mortgage solutions available from the specialist market.
An evolving sector
The specialist lending market will continue to evolve as a result of continued growth, education, understanding and acceptance. Consequently, brokers will no longer lose clients because they cannot find them a suitable mortgage, and even fewer clients are excluded because they only have an option of going to a mainstream lender. This will prove to be beneficial for the broker who can not only utilise master brokers such as Brightstar, but will stand them in good stead to ensure increased client retention, while also looking after their general insurance and protection.
Chris Bramham is Brightstar’s director of specialist mortgages and buy-to-let