Lessons from the utility sector on sharing vulnerability data – Gething
A few days later, the Department for Business and Trade issued a consultation paper calling for greater sharing of consumer vulnerability information.
Simplistically, the two papers are asking for greater sharing of vulnerability data, because consumers can find the process of disclosing their issues to multiple providers both time-consuming and stressful. Additionally, companies are investing both time and money to create and maintain their own data systems – which is inherently inefficient.
The above papers are focused on the utility sectors, where vulnerability data have been collected for many years.
Utilities sector firms have ‘Priority Service Registers’ – essentially lists of vulnerable consumers, which they act upon. Consumers volunteer their data to be on these registers, so they can be treated appropriately for their needs. These registers were all built separately – and then, later, firms started to share data – since it isn’t in the interest of the consumer to keep repeating themselves, plus maintaining multiple sets of data is costly.
These sharing initiatives have been slow to gain ground, so the regulators are now pushing to accelerate this.
How this relates to Consumer Duty
Should the finance sector learn from the utilities sector? In the utilities sector, consumers typically have to liaise with multiple utility companies – gas, electric and water.
In the finance sector, due to the distribution chain, there are even more firms to deal with and there is the potential for even more frustratingly repetitive work for consumers. Many firms are considering amending their own internal systems in order to meet the Consumer Duty regulations.
But is this an expensive, short-term solution?
At present, the Financial Conduct Authority (FCA) does not specifically require firms to share vulnerability data. The FCA does require that firms monitor consumers through the lifetime of products – and, to accomplish this, advisers and manufacturers will either have to repeat vulnerability assessments or share their data.
There isn’t another option. It is, therefore, going to be far more cost effective to share data, using external systems that are capable of this.
Managing client vulnerability
The finance industry’s Building Resilient Households Group in its report to the Insurance and Financial Services All Party Parliamentary Group has called for “smart, safe and secure data-sharing to speed and improve support for vulnerable customers”.
Will these customer vulnerability data be available for the finance sector to use? This depends on the consumer, as they will have the ability to select with which organisations they share their data.
MorganAsh is working with one utility company that already has 1.9 million customers on its vulnerability list, covering four million households. While these data cannot be shared today, the aim is to empower the consumer to be able to share it with whichever organisation they wish – saving them considerable hassle.
Consumer Duty’s rules state that firms must accept data on vulnerability when consumers provide it to them, so firms may well be forced into accepting these data by their vulnerable customers.
It is clearly in the customers’ interest to not have to repeat going through their issues to multiple organisations – and there is both research and evidence to support this.
Part of improving our interaction with vulnerable consumers is how we can make interacting with them easier and frictionless – rather than forcing them to repeatedly disclose their issues, which can be massively stressful.
Too many organisations see consumer vulnerability as an issue from which they need to protect themselves – whereas we should be looking at how we protect the consumer from multiple, identical processes – making it easier for them.
Lenders may sell closed books with looming Consumer Duty deadline – Oldfield
However, regarding the impact of Consumer Duty on lenders’ closed books (or ‘back books’) – while some have considered it, many have not fully reviewed it or thought it through. Yet, with the looming July 2024 deadline for Consumer Duty compliance on closed books, the risks to lenders are now very real.
For some firms, this second stage of Consumer Duty could be even tougher.
This is especially for lenders managing large closed books of legacy business efficiently and profitably. We’re seeing quite a disparity between lenders who have put the work in to prepare for Consumer Duty, and those who are yet to fully realise the implications on servicing existing mortgage-holders.
For lenders that don’t have good servicing capabilities and systems, this could well lead to more lenders looking to sell on their mortgage back books over the next year or so, or needing to bring in third-party administrators.
Consumer harm expected
The challenge that Consumer Duty brings lenders is that there is likely to be an amount of foreseeable or actual harm in lenders’ back books. Accessing the data – assuming they hold it, in some legacy cases – so that they can put the required actions in place will be a challenge for many lenders, especially those with legacy systems.
If a customer falls into arrears, for example, lenders need to dramatically change the way they communicate with them compared to before.
The crux of the matter is that, while there is a lot of scope for interpretation of the Consumer Duty rules, lenders need to evidence case reviews, monitoring and assessments – and tailor communications on the back of that. To support customer engagement and ensure good outcomes, lenders will want to optimise operations and support IT enablement.
They will also want to think about how they’re meeting the needs of those customers that require additional support at every step of their journey.
Enlisting software for Consumer Duty requirements
While innovative specialist servicing software can easily segment customer groups and tailor communications accordingly, lenders with legacy systems will have a lot of hard work to do to achieve the same result.
As a result, and to avoid business risk, we may well see an increase in the number of lenders selling their back books or bringing in third-party administrators to administer the books for them. The majority of third-party administrators have the most up-to-date servicing systems. They will be better-placed to comply with the regular communications demands and record-keeping that Consumer Duty requires in order to establish and cater for the additional needs of different customers.
By July 2024, lenders must know which borrowers are on which mortgage products, and how susceptible each borrower is. They then need to monitor them on an ongoing basis and communicate appropriately.
Sending a client a detailed PDF for them simply to view no longer works under Consumer Duty.
The communication has to be simple, understandable and easy to read on any device. Lenders need to close the feedback loop on communication. This may mean opening up completely different communication channels that a customer prefers to use but that the lender has never before considered.
Lenders must ask themselves three critical questions: “Am I communicating often enough and using an appropriate medium?”, “Am I saying the right thing to this customer?”, and “Do I have the systems in place to be able to do that?”
Landlords’ need for adviser support will not fade anytime soon – Cox
I fully understand why, for example, UK Finance suggested buy-to-let purchase business will be £7bn in 2024, while remortgaging will be down at £19bn, but my own belief is these are conservative estimates.
Certainly, our own figures for last year did not drop by anywhere near those of the wider buy-to-let sector, and perhaps I’m therefore looking at this with a specific Fleet Mortgages’ hat on, rather than in a wider sense.
Reasons to be optimistic
Even so, I think there is much to be positive about in the buy-to-let market, albeit we should highlight some of the ongoing challenges that remain for landlords, not least higher mortgage costs, increased taxation requirements, etc.
That said, when it comes to the former, rates have fallen off those 2023 highs and therefore affordability is easing, and for the latter, well landlords have had to put up with this for many years. We may all be hoping for some respite via the March 6 Budget, but one wonders how the news that the UK is now in recession will be met by the Chancellor and what that does to any plans he may have had to act, specifically when it comes to stamp duty?
Those challenges may well remain, however clearly landlords have benefited from strong tenant demand driving rents and yields, plus of course the fact we still have a shortage of private rental sector (PRS) property for tenants to choose from in a large number of areas in the country.
It is not a uniform picture by any stretch of the imagination. My own opinion is that rental levels are likely to cap out during 2024 after a period of significant increases. However, in our experience, landlords are not leaving the sector in droves, and – where possible – there is still appetite to add to portfolios, because landlords are aware of the demand/supply imbalance.
A vital need for landlords
This has eased somewhat but the demographics won’t change.
Just look at the increase in the UK population over the past 10 years, the forecasts for many more millions of people in this country over the next couple of decades, the current house-building impasse, the lack of social housing, the increase in the number of single households, the cost of living crisis and the ongoing difficulty in purchasing a first home, and you should come to the conclusion that the PRS is going to be needed even more than it has been up until now.
Of course, we have a General Election this year, which might well herald a new government with a new agenda, but whoever forms the next administration is going to be facing an economic situation which is far from ideal. Solutions are not just expensive but are going to take a long time to deliver any tangible improvement, so the short to medium-term environment looks likely to be similar.
Which means the need for ongoing advice by landlords remains strong, particularly as the sector has become more professional, more portfolio-focused, and of course, more complex, with a greater number of product solutions available, and a much more difficult path to traverse in terms of dealing with landlords, their financial situation, and what they want to do with their portfolios.
The further good news comes in the form of lender appetite, product options improving, rates easing slightly, and a genuine commitment to the sector and ensuring advisers can support as many landlord clients as possible.
Providing certainty and transparency is key here, which is why we launched a product transfer range last year, which in Fleet’s case, comes with less all-in costs than our rates for new business. We wanted to ensure existing borrowers had options from Fleet as they came to the end of their deals, and we also didn’t want to harm loyal customers who wanted to stay with us.
Overall, I’m positive in the way the year has kicked off, and in what is to come through the rest of 2024. Advisers should feel similarly.
The buy-to-let mortgage market is dynamic and changes constantly; landlords are far less likely to want to carry out this work on their own and the security and benefits of using a professional adviser are unlikely to lose their allure anytime soon.
Why January’s mortgage business upswing could be bad for your company – Flavin
After a decade of all time low rates, 2023 saw numerous bank base rate increases, a distinct loss of appetite for the buy-to-let market and house sales fall off a cliff. The press obviously enjoyed fuelling the fire with predictions of doom and despondency for homeowners.
Q4 saw a modicum of stabilisation and a slight return of house sales. With everyone wishing away 2023 and holding their breath for a positive 2024, January seemed to have answered all of our wishes. Brokers are inundated with work and firms are phoning anyone with a pulse and a CeMAP qualification to see if they are interested in joining.
Not a novel thing
How short our memories are.
January historically has a bounce. The housing market quietens before Christmas then receives a defibrillator like hit on Boxing Day, which means brokers returning to work at the start of January are inundated with enquiries.
February and March then quieten down and so normality begins.
What 2023 should have taught us is vanilla mortgages are exposed to bank interruptions. How many product transfers will you do before customers start realising that it’s easier to go direct? With unprecedented growth in automation and technology, vanilla mortgages could be a race to the bottom.
But all our learnings from 2023 are soon forgotten when, as now, business seems to return to normal and we can get on with life as it was.
Soon we could be at a junction where vanilla is a flavour the major banks keep for themselves and the broker world is forced to work in the grey areas where knowledge, diligence and service are the key.
Find your broker niche
Let’s learn from how exposed we were in 2023 and start focusing on areas where a broker’s specialist knowledge is rightly rewarded, the world of the niche product.
Even with rates dropping, Joe Public is going to remortgage to a far worse rate than for the past decade. This will obviously cause a rise in defaults so the sub-prime market could be a great choice.
The number of sole traders is on the increase with circa four million businesses having no employees and one million having less than 10 employees. That’s five million companies, making it one hell of a niche.
What other areas could be considered niche by the applicant but pretty run of the mill for a competent broker. Specialising means it’s easier to target your audience with bespoke messaging as well as attracting higher fees through perceived ‘expert’ status.
Specialising in niche areas doesn’t negate the possibility of completing vanilla mortgages. You’ll still have your existing client bank to work with but if you are seen as the company that can cope with the unusual it’ll be far easier to stand out.
Consider expanding your niche offering and become more resilient to market trends.
Increased confidence and optimism for greater opportunities in 2024 – White
Interest rates have come off their highs off the back of a steady and unmoving Bank Base Rate (BBR), with lenders coming to market with greater confidence and increased appetite, while the Bank of England (BoE) has suggested it expects to reach its target inflation rate of two per cent by May 2024.
Should these conditions continue to prevail, it is likely that the central bank will move to cut the BBR in the second half of the year, helping to drive down swap rates, reduce the cost of borrowing and ease the affordability pressures facing consumers.
This presents a great opportunity for advisers to capitalise on increasing optimism, with falling rates likely to lead to a growth in demand for mortgage advice as those borrowers who sat on their hands and adopted a wait-and-see approach last year begin to return to the market.
Better conditions for borrowers and brokers
Similarly, falling interest rates mean many more borrowers may now be able to meet affordability criteria, enabling them to remortgage away from their current lender rather than having to accept a product transfer (PT) deal.
Not only will this help borrowers secure a better rate on their mortgage, but in some cases, it can also help advisers generate more income by placing the business with a new lender.
This is particularly important, given the fact that figures from the Financial Conduct Authority (FCA) show around one-and-a-half million homeowners are expected to come to the end of their fixed rate mortgage deals in 2024, while those that took out short-term fixes over the last year may also be looking at ways to secure a better rate.
Just over six months on from the introduction of the FCA’s Consumer Duty standard into the financial services market, advisers have also now had some time to adapt to the requirements of the regulator’s expectations and begin to implement any required changes and improvements needed to ensure a customer-centric approach.
This presents increased opportunities for advisers to adopt a more holistic take on the advice process, seek ways to diversify their income streams and tap into other areas of the market by addressing any protection or general insurance needs their clients may have alongside their mortgage.
Whether this means working collaboratively with other adviser firms, or joining a network, Consumer Duty does open up the potential for advisers to address the challenges and barriers, particularly around consumer understanding of protection products but also in other ancillary sales areas.
Is change afoot in the mortgage market?
As we head towards the spring, there is also a growing expectation the Chancellor will announce some key housing and mortgage-related measures at the next Budget, which will take place on the 6 March.
There have been rumours these might include a cut to inheritance tax and the introduction of a new 99 per cent loan to value (LTV) mortgage scheme, while it is also hoped he may consider calls for an extension to the current cut to the stamp duty levy, or even its complete abolition.
Given the notable absence of any measures focused on the housing market in last November’s Autumn Statement, any developments in this area could deliver a considerable boost and give the market a much-needed push forward.
There are many reasons why 2024 looks set to be a better year than last, all of which should instil a greater level of confidence and optimism among advisers working in the mortgage market.
Certainly, this was noticeable, and in abundance, at our recent Kick-Off meetings in January for our appointed representative firms, who presented a much more confident demeanour about what the market could bring them this year.
As the economy hopefully continues to improve and the opportunities in the market begin to increase, advisers – and their clients – should find themselves in a more stable and fruitful environment.
However, it is important advisers make the most of all the opportunities available to them by establishing new relationships and seeking out those right in front of them, particularly if they are members of networks, as this can help them navigate any market challenges they may face and ensure they make the most of all favourable circumstances.
Ageing first-time buyers are blurring mainstream and later life mortgage lines – Bamford
Yet, as I’m sure we all recognise, the average age of first-time buyers has been going up for some time. It may now be in the mid-30s, but some research from mortgage lender Tembo reveals there are large numbers who are not so fortunate and are having to wait much longer.
The number of first-time buyers in their 20s is in decline, while the number of those aged over 40 continues to increase and, perhaps somewhat shockingly, the number of those who are over 50 has increased by 30 per cent over the past five years.
And, of course, there will be a large cohort of people who no doubt feel the chances of them ever getting on the ladder are slim to none, never mind having a first mortgage at an age at which, traditionally, many people were paying theirs off.
Ageing out of mainstream mortgages
It feels bizarre to be saying this, due to the fact we are referring to first-time buyers, but this is effectively ‘later life lending’ because of the mortgage term and where it takes these borrowers.
It is perhaps unsurprising, therefore, that there is growing noise around the ‘merging’ of mainstream mortgage options that segue way into more specialist later life residential lending.
After all, if you are unable to get on the housing ladder until you are 50-plus years of age, a 25-year mortgage term takes you well into your 70s, and well past what is – right now – the traditional state pension age.
Of course, you might still be working in a full-time job at that point, but lenders in particular have to anticipate that the first-time buyer may not be. That buyer may potentially be on a fixed pension income of some sort, which could impact their ability to afford that mortgage at that older age.
I wonder as well if advisers will now need to focus more on this potential blurring of the mortgage lines.
Indeed, the client doesn’t need to be in their 50s and buying a first home; those in their 40s will have similar issues, while those in their 20s and 30s are already having to take out mortgages with longer terms, which again might not be finished until they are well into ‘retirement’.
All parts working together
The phrase ‘a mortgage for life’ seems particularly relevant, therefore, and one can’t help but feel advisers in future are going to need to be just as au fait with later life lending options as they are with traditional, mainstream ones. Perhaps we have already reached that point, because affordability and underwriting will be predicated on the ‘end age’ of that borrower when they take out that first (or any) future mortgage.
Again, it is no wonder that we are seeing a hybrid approach to borrowing becoming more widespread and accepted – mainstream mortgages morphing into residential interest-only or lifetime mortgages, allowing the borrower to keep paying off the loan (or the interest) and still being able to stay in that home for as long as they wish.
I appreciate it seems odd to be even talking about equity release in relation to first-time buyers, but these first-time buyer age figures are going to necessitate such conversations. Perhaps this will be the major growth market for advisers for the future, especially given the amount of equity tied up in property, a lack of pension provision and all the extra financial responsibilities that most people have later in life.
With all of this, it is perhaps no wonder that – prior to next month’s Budget – we have heard a lot from various sources about both further support for first-time buyers and, indeed, a rumour of widespread stamp duty changes for those in later life who feel they can’t sell or downsize because of the cost of moving, including a large sum for this tax.
A holistic approach to mortgages
As always, the interconnectedness of the mortgage market always has to be considered. Maybe that has been a failure of our policymakers over the last two decades in terms of not recognising how, when one area is impacted, so are multiple others.
There has never been a more important time to look at the mortgage and property markets as a whole and to act on that basis. The days of silos appear to be over, and the sooner we have solutions which recognise this, the better.
AE3 Media’s Beisiegel shares his day in the life for AMI’s Working in Mortgages
On the Working in Mortgages (WiM) website’s ‘day in the life’ section, Beisiegel (pictured) talks about his involvement in industry events such as the British Mortgage Awards, the Later Life Lending Event (LLLE) and the British Mortgage and Protection Senate.
He also discusses how he manages a healthy work/life balance, as well as the support he has received while working in the mortgage sector.
WiM launched in 2022 to promote professionals in the sector, the different roles, and spotlight the diverse individuals that make up the mortgage market.
The website also aims to encourage recruitment and has a mentoring scheme to provide support for new entrants.
The ‘day in the life’ blog was an idea from Jeffrey Krampah-Williams, national key account manager at Santander for Intermediaries. It has been going for 18 months and was created to provide more information on the profession.
A representative for WiM said: “We aim to show that our industry has many roles on offer – it’s not just boring bank manager-type jobs. From underwriting, to social media manager, to compliance, we’re trying to cover off as many profiles as we can. It is also highlighting that the people doing these roles are from many different backgrounds, with varying education history – you do not need a maths degree to be involved in our industry.
“As we expand on the roles, WiM is collectively building a job description page, as we know everyone has different strengths and it will hopefully guide people into looking at roles that best-suit their strengths. Someone who’s less confident about speaking in front of a crowd may not be comfortable in a business development manager (BDM) role with a lender, but that doesn’t mean there isn’t space for them somewhere in our inclusive industry.”
They added: “We’d love to hear from anyone who thinks their role or experience is unique that they’d like to share.”
Professionals from across the sector contribute to WiM, spanning lender, adviser and recruitment businesses.
Appropriate homes will move dallying downsizers, not a stamp duty giveaway – Wilson
Part of that pre-Budget inevitability is a continued focus on stamp duty, with many in our sector continuing to call for – sometimes radical – change in this area.
Over the last few weeks, I have read articles suggesting further ‘holidays’ for first-time buyers, increases to the thresholds in order to take more people out of the tax when purchasing, plus calls to scrap stamp duty altogether.
A further suggestion – and one that has been notable in recent years – comes in the form of whether stamp duty for those wishing to downsize property is still viable. Also, it has been asked whether the government should instead exempt downsizers to allow them to move to smaller properties, and free up the larger homes that are hard to come by for those seeking to move up the ladder, particularly families.
Suitable houses for downsizers
A recent report, commissioned by the Family Building Society and sponsored by Lords Mandelson and Heseltine, urged policymakers to look at this option. It suggested there were considerable numbers of older homeowners who wanted to downsize but were put off by the large costs involved, particularly stamp duty on the purchase.
I’ve no doubt there are some individuals in this situation, who would ideally like to move out of larger properties and are perhaps being put off by the sums of money involved, not just of course in stamp duty – which could well be seen as ‘wasted money’ – but also in terms of moving and estate agency costs and everything else that comes with downsizing.
Historically, of course, downsizing was essentially the only option available to those who felt their property had outgrown them and their needs, or were looking to extract some of the capital value they had accrued in a home.
Nowadays, as advisers will know, there are other options available, including different types of later life lending such as lifetime mortgages, which allow people to stay in their homes if they do not want to move or can’t get that downsize to work.
That last point is crucial, because there’s a wider issue at play here for older homeowners, and it comes with the nature of today’s UK housing market. Back in the day, for example, there might have been a much greater supply of suitable homes for downsizers to move into, and the cost of those homes would have allowed them to extract capital value as well as afford the purchase.
A lack of choice
Now, for many people, there are fewer options. Take, for instance, the historical mainstay of the older homeowner – the bungalow. Research at the end of last year from Quickmove Properties revealed that just 1.2 per cent of all new-build completions are now bungalows, and this kind of home accounts for only 7.6 per cent of the UK’s entire housing stock.
In other words, the number of bungalows has been shrinking, because, quite frankly, why would a new-build developer with a finite amount of land build a property that takes more of that footprint when they can use less land to build two- or three-storey homes?
It’s a question of economics. Therefore, not just bungalows, but the wider supply of properties available to those wishing to downsize has shrunk, and of course the price of property has continued to rise, making it more difficult to move, certainly to properties that fulfil the needs of the ‘average’ downsizer.
While I believe a stamp duty cut, holiday or simply getting rid of it for downsizers might well provide the impetus for some to be able to move, I certainly don’t believe it will be a game-changer in terms of freeing up the property required for those wishing to secure bigger family homes.
In fact, without greater levels of property supply right across the board, the likelihood is that more and more people are going to be staying in their home for longer. As a result, they’ll look at the ways by which they can do this, releasing the money they require, and reshaping those properties to fit their needs in later life.
In my view, until there is a concerted focus on new-build provision and increasing this dramatically to fit the demand needs of all types of homeowners, we are likely to see continued – and greater use of – later life lending, and advisers certainly need to be prepared to meet this demand both now and in the future.
Changing your work culture: How to grow and retain talented teams – Roach
Even five years ago, the thought of most office-based teams working one to two days per week from home would have been unfathomable. Now it’s the norm.
Working patterns have also evolved. Flexible working – where employees have more power over when they work – is more common. Employees also want condensed hours. There’s a new focus on the importance of work/life balance – something that, only a few years back, was not on the HR radar.
This change in outlook and low unemployment means people can afford to be choosier. Employee turnover has increased by 8.7 per cent in the UK since 2019.
How can employers retain their top talent in a time of rising turnover?
Listen, trial, learn – the four-day week
We recently trialled a four-day week across our business, following demand from our teams.
For six months, we offered a sample of teams the chance to work four days per week but for five days’ pay. We needed a sample group to benchmark against the rest of the firm, but the process was broad, providing a sound data set.
The results make for interesting reading. Over 50 per cent of managers observed productivity increases and 58 per cent observed no improvement. While attrition was reduced (and is now the lowest since 2021), this was offset by a rise in month-on-month absences.
This inconclusive data means that, for the time being, we won’t be switching to a four-day week. But it doesn’t mean we aren’t learning from the trial. It revealed how much our teams prize annual leave, viewing it as one of the top benefits. That’s why we’ve recently increased our annual leave allowance from 24 to 30 days per year for all colleagues. This gives everyone a chance to relax and recharge, doing the things they love to do. Working condensed hours could also help employees balance their home life better, a policy we’ve had for a while now.
While the trial was not the productivity silver bullet we thought it might be, neither was it a wasted exercise.
Culture is not just about physical presence
Workplace culture is now a key selling point for an organisation as, for many candidates, it can be the deciding factor. As we spend so much time working, it’s helpful to like where you work, and it’s better for mental wellbeing.
But building a defined workplace culture in the hybrid working age is not easy. We have worked hard to help drive ours, incorporating everything from monthly ‘staff in’ days – where colleagues (even remote employees) come in to help drive a collegiate atmosphere and closer collaboration.
We’ve found remote working a boon to our business, widening the talent pool and introducing fantastic new personalities to our firm. Even if they are not in the office full-time, remote workers have plenty to give, and have helped us build our culture from afar.
Firms’ footprints are increasingly important
While ESG is increasingly under the spotlight, we can’t deny its importance for our teams. Our people want to ‘give back’ and our offer of volunteering days can put us head and shoulders above the rest. Our people also hold us to account for our carbon footprint. Engaging our teams in these issues has resulted in a vocal and invested workforce. It has no doubt helped contribute to our lowest attrition levels in three years.
Retaining talent is vital to keeping businesses on track. But it’s not cheap.
According to Gallup, the cost of replacing an employee can range from one-half to two times the employee’s annual salary. This probably does not factor in the productivity lost while they work their notice and their replacement gets up to speed. As job hopping becomes the norm, it’s up to employers to get creative with remuneration and retention strategies.
I hope 2024 sees a move away from focusing on time in the office, and instead focuses on a more holistic package, suited to today’s more complex workforce needs.
Credit repair options for adverse clients – Denman-Molloy
Figures from mortgage broker, The Mortgage Expert, show that 2,846 consumer county court judgements (CCJs) were issued every day in England and Wales from January to March 2023 alone, a 14.1 per cent increase on the same period in 2022.
Similarly, data from UK Finance reveals there was a slow but steady uptick in the number of borrowers falling into mortgages arrears, with numbers increasing by 2.5 cases a day in the first quarter of 2023.
Continued challenges in improving conditions
Despite the fact that the Bank of England recently revised its outlook for inflation to reach its target of two per cent in May 2024, the current and challenging economic conditions facing the UK look set to persist for much of the year as the effects of the last 12 months continue to filter through to homeowners.
As a result, many more borrowers are likely to have experienced financial challenges that may have resulted in a missed or late payment as they struggled to keep their finances on track in an environment of uncertainty.
This is likely to lead to growing demand among consumers for more versatile borrowing options that take into account the increased pressure on household budgets, by offering a more sympathetic and considered approach to their circumstances and giving them the flexibility they need to get their finances back on an even keel.
An alternative to the ‘tick box’ mentality
Typically, this demographic of borrowers is often underserved by the mortgage market and many frequently find themselves falling foul of the tick box mentality of many mainstream high street lenders, leaving them somewhat high and dry.
However, with many more borrowers likely to fall into this category as the year unfolds, catering for their needs will be crucial, which is where specialist lending products specifically designed to meet the needs of this demographic come into their own.
For example, Mansfield Building Society’s recently launched credit repair proposition has been designed to help borrowers who have experienced past credit problems such as missed payments, defaults, CCJs and even bankruptcy, as well as those currently seeking relief through active debt management plans (DMPs).
Broadening the scope for brokers and their clients
Catering to the needs of those with historic adverse credit or those who have suffered a temporary blip in their finances is crucial in helping to address the challenges facing borrowers in the current economic climate.
It is also useful for those brokers looking to help clients repair their credit rating as it broadens the scope of products available when sourcing solutions for this type of borrower.
By enabling these borrowers to access finance, meet repayments and prove their creditworthiness over the term of the loan, brokers and lenders can work together to provide good outcomes for them and maintain a healthy mortgage market.