Feature: Together Specialist lending steps into the breach

One in two people fit ‘non-standard’ criteria

Specialist lending needs to step in like never before

“A ccording to new research,* as many as half a million borrowers could be locked out of the UK mortgage market without the support of a specialist lender,” says James Briggs, head of intermediary sales for personal finance at Together.

“Featuring over 7,000 consumers, our nationwide study estimates one in two people in the UK (53 per cent) already fall into one or more mortgage criteria classed as ‘non-standard,’ suggesting demand for a more flexible lending landscape over the coming years.

“Our research predicts the overall UK residential mortgage market, which currently excludes many potential buyers with specialist criteria, will expand by 56 per cent over the next eight years, and of this rise, an estimated 500,000 applicants will be reliant on specialist lenders – doubling their share of the market to four per cent.

“In fact, driven by changing employment and living patterns, the growth of the gig economy, the residential specialist lending market is set to reach £16bn by 2030.”

MORE BORROWERS ARE BEING REJECTED BY THE MAINSTREAM LENDING MARKET

“Every year an increasing number of potential homeowners must navigate a complex and time-consuming mortgage process, with many facing rejection at the end of it. In fact, 19 per cent of those we surveyed said they’d been rejected in the last five years.

“Having non-standard income (including multiple and complex incomes or being self-employed) was cited as a key reason for being rejected for a mortgage (22 per cent of respondents). Having thin or impaired credit or having a ‘non-standard profile’ (such as being over 55 or divorced) also worked against applicants (both 21 per cent), as did being in a non-standard buying situation like shared ownership (26 per cent) or wanting to buy a non-standard property (12 per cent).

“As a nation we’re currently dealing with the rapidly rising cost of living, the impact of Brexit, house prices that remain high – the list goes on. And historically, when we’ve faced difficulties in the UK, mainstream lenders have tightened their criteria even further, preventing countless people from accessing the borrowing they need.

“It’s in these cases that brokers may find a specialist lender can deliver greater flexibility, which could help more potential homeowners, like the 19 per cent who were rejected from the mortgage process, find the right solution.”

MORE BORROWERS WILL NEED YOUR ADVICE AND SUPPORT

“What’s really clear from the research is that borrowers are still being turned down by the mainstream lending market for the same reasons – reasons a specialist lender like Together could help with – which suggests they’re unaware of the wider finance options available. This represents a huge opportunity, and an important responsibility, for brokers.

“The impact of being rejected is taking a significant emotional toll on would-be borrowers; of those who had been turned down, 32 per cent said the result left them feeling worried for their

James Briggs

future, 26 per cent said it made them feel depressed, and 23 per cent said they felt like a failure. To save themselves further heartache, 28 per cent of respondents said they would only apply for a mortgage again if they sought advice, and 36 per cent thought a broker would be a good source of advice.

“At Together, we’re working closely with our network of packagers to support brokers in connecting their clients to the funding they need. To support you, we have dedicated teams of specialist account managers and business development managers who can talk to you about your clients’ circumstances and provide examples of real cases we’ve been able to fund – all of which could help brokers identify those who need their support earlier, before they face rejection.

“If our community works together, we can make homeownership more inclusive and achievable.”

For professional intermediary use only.

*Research among 7,000 UK adults commissioned by Together and conducted by Opinium in June 2022. M I