Donna Wells

Benefits of specialist finance

Donna Wells

director, F4B

In last month’s piece, I looked at some of the economic outliers that are affecting the specialist mortgage market and a variety of borrowing demands. These have been further emphasised by a somewhat shambolic political landscape; other words that are largely unprintable in a PG mortgage trade article also apply there. But before I get into too much trouble, let’s shift emphasis to focus on happenings in and around these specialist markets and how brokers and a growing proportion of their client base could potentially benefit.

BRIDGING FINANCE

Technology and bridging finance have not always been a marriage made in heaven due to the field’s complex nature and manual underwriting requirements. However, that’s not to say that technology doesn’t have its place, and it was encouraging to see Tuscan Capital add a fast-track process to its residential bridging loans in a bid to streamline its lending. This comes via the employment of an automated valuation model to decide whether a desktop or short-form valuation should be used.

In further bridging news, it will be interesting to see the impact of Castle Trust Bank on the sector after the launch of a bridging proposition that includes separate ranges for bridging and BTL. This features specialist products for heavy refurbishment and light refurbishment, and a bridging product that will be overseen by dedicated sales, underwriting, and processing teams.

There are positive announcements, as technological enhancements that make the intermediary and client journey simpler and more efficient should be commended. And it’s always good to see competitive options emerge within the bridging finance sector, especially those from established and wellrespected lenders.

ADVERSE

Harking back to the challenging economic environment for many people, it’s clear that a growing number of people need an extra layer of support when it comes to dealing with any financial difficulties experienced over the past couple of years. The scale of this issue was recently highlighted in research from The Mortgage Lender which suggested that 3.2 million UK adults missed some form of major payment over the last two years as the pandemic hit some households’ finances hard.

This equates to six per cent of the UK population missing their usual payments, including on major expenses such as their rent, mortgage, or credit cards. Four in a hundred UK adults admitted missing multiple payments, representing a significant proportion of the population who’ve been financially squeezed throughout the pandemic and who may have fallen into adverse credit.

Young adults are reported to be the group most likely to have experienced financial difficulty throughout the pandemic. Eleven per cent of 18-to34-year-olds have missed at least one usual payment in the past two years, nearly four times the number of over-55s (three per cent). And six per cent of young adults admitted having missed multiple payments. Prospective homebuyers are more likely to have accrued adverse credit recently, with 10 per cent admitting to having missed one or more payments in the past two years, putting them at risk of having a mortgage application rejected.

COMMERCIAL

Challenges also remain for a range of SMEs, and additional support is required when it comes to finding the right funding solutions to overcome short-term obstacles or to maximise any opportunities to facilitate growth.

Focusing on the imminent challenges, a survey from Time Finance revealed that 65 per cent of intermediaries predict a rise in business insolvencies as a result of rising costs. When asked which areas of business were most affected by price hikes, materials and stock from suppliers ranked the highest at 64 per cent, closely followed by energy and utilities at 45 per cent. Employment costs and National Insurance both came in at 36 per cent. In addition, of the businesses surveyed, one in three said they are now scaling back investment, with 27 per cent freezing wage increases, 18 per cent halting recruitment, and one in ten reducing their personnel.

Whilst much of this data paints a somewhat damning picture, there remains a host of available, accessible funding solutions to cover a range of business and individual needs, if brokers know where to look. This is where a packaging partner who offers insight, experience, and expertise within the bridging, adverse, commercial, and semi-commercial fields can really demonstrate their value in terms of sourcing and delivering the types of solutions that can make a real impact for a variety of borrowers in the current economic climate. That is value that will only increase in prominence over H2 2022 and beyond.

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