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An improving outlook for non-standard borrowers – IMLA

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  • 23/05/2016
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An improving outlook for non-standard borrowers – IMLA
IMLA's Peter Williams discusses how the lending environment is on the up for non-standard borrowers post-MMR.

In late 2014, IMLA published a white paper looking into the growing number of non-standard borrowers in the UK – an army of the self-employed, those borrowing into retirement and people with complex financial affairs. The paper suggested that these groups had been significantly affected by the regulatory regime ushered in after the financial crisis, and that while the industry could meet their needs, there was a danger of this being inhibited by the regulators’ interpretations of the rules.

Eighteen months on and the outlook for non-standard borrowers is now improving. IMLA’s latest research showed the number of brokers reporting no problems sourcing mortgages for any borrower over the previous six months has reached a post-Mortgage Market Review (MMR) high. Fewer brokers reported being unable to arrange mortgages for a variety of non-standard groups than a year earlier, including borrowers with adverse credit along with those looking to borrow into retirement, and the self-employed.

The biggest improvement was seen in arranging deals for those with adverse credit histories, with 9% fewer brokers (falling from 54% to 46%) reporting being unable to source for this group in the preceding six months. Furthermore, most expect to see product availability continue to improve for non-standard borrowers like the self-employed and those with irregular incomes during 2016.

There are growing numbers of people in the UK who fit non-standard borrower profiles, making it essential that the market can provide for their needs. The Office for National Statistics (ONS) estimates that the number of self-employed people reached 4.6 million by February 2016, and lenders must therefore be able to lend to them. In addition, people are living longer, getting on the housing ladder later on in life and are taking out longer mortgage terms – creating a bigger need for retirement lending products.

While the overall picture is gradually improving for non-standard borrowers, there is still some way to go and the risk of over-regulation cooling the market remains – meaning regulators and policymakers must proceed with caution.

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