INTERVIEW
MORTGAGE LENDER REPORT
More people “falling outside of the high street’s remit” Head of distribution discusses adverse credit report warnings
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esearch released by The Mortgage Lender showed that more than three million people have missed a major bill payment over the last two years. The report, titled Exploring Adverse Credit, also found that four in every 100 adults in the UK admitted to having missed multiple payments. Worryingly for the mortgage industry, the report noted that a tenth of people who said they were planning to buy a property within the next year had missed a payment in the past two years. The report also noted that missed payments could have “big implications for a person’s access to credit in the future,” including for large loans like mortgages. Mortgage Introducer reached out to Sara Palmer, head of distribution at The Mortgage Lender, to discuss with her the report’s findings and what they could mean to both industry professionals and borrowers in the near future. Do you think the number of people missing monthly payments will increase significantly over the coming months because of the cost-of-living crisis and a possible recession? Knowledge Bank reported that applicants with ‘missed or late payments’ entered the top five criteria searches in May. While we can’t say for sure that we are seeing the full effects of the costof-living crisis, this increase in criteria searches coupled with our own experience of increased enquiries is starting to show a trend. Since we improved our residential criteria to help customers
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who had missed unsecured credit payments, we have seen an increase in our application volumes, which would point to more people falling outside of the high street’s remit. How do you think this will affect the mortgage sector, given that, according to the report, “a tenth of people planning to buy a property within the next year have missed a payment in the past two years”? The past few years have been particularly hard financially for many people, and brokers are well placed to advise anyone with a blip on their credit score on how to get mortgage-ready and find the right lender. [The report,] Exploring Adverse Credit, showed that six per cent of people in the UK had missed a payment over the last two years – that’s almost 3.2 million adults in total. The research also shows that one in 10 aspiring first-time buyers currently use a buy now, pay later [BNPL] scheme such as Klarna, with 18 per cent of those who use these schemes missing a payment in the last few years. The rise in BNPL schemes could see more people being classed as [being in] adverse credit without realising it, which might soon see more needing support from brokers and specialist lenders. What advice would you give to people who are planning to buy a property within the next year but who have missed a payment in the past two years? Our advice would be to speak to a mortgage broker and use their expertise to understand the best options for moving forward with their homeownership plans. They can advise on how
Sara Palmer
to get mortgage-ready and look for the best solution available. How should the mortgage industry support those who’ve missed payments? Most specialist lenders already offer solutions for customers with missed payments on their credit profile. However, these can vary in terms of the recentness of the missed payments and what that means to product availability. Clear and consistent criteria, as well as easy access to business development teams, are vital so that brokers can provide the correct advice and improve the customer journey by placing the case with the right lender the first time. M I www.mortgageintroducer.com
