This is the new reality for large numbers of borrowers who either spent time during 2020 being furloughed, or are still part of a furlough scheme which isn’t due to finish until the end of September.
A year ago how many had even heard of furloughing?
And yet here we are with a large number of homeowners or those seeking to purchase, needing advisory support in order to help them through what is increasingly becoming a very complex and convoluted mortgage maze.
There is, of course, some positive news in terms of borrowers in such a situation actively going to advisers for support and a large cohort who are not dissuaded from continuing their purchase ambitions even when the last 12 months may not have been a pleasant experience.
Unsettled mortgage environment
However, there will also be a large number of existing borrowers who are attempting to refinance after being furloughed, and their advisers will be having to deal with a very unsettled mortgage environment.
An environment where there is little standardisation and where lenders have very different ways of assessing these borrowers, the information they require, the timeline they will use, and just how stuck to their old ways they will be in that assessment.
This is where advisers and their clients need clarity.
As yet many lenders have not got to grips with how the pandemic impacted borrowers and they are still far too wedded to a traditional way of assessing income and affordability which is only likely to lead to rejection.
The last 12 months have not been normal, and this is why many advisers have been calling for a much more flexible approach to borrower finances.
It may be in sectors like mortgages for the self-employed where the bigger problems are, but also those who would in any other period be a normal, mainstream borrower, now find themselves firmly marked as specialist by lenders who would previously have marked them as vanilla.
Borrower financial assessments can’t just be focused on short-term hits to income, or on three-month periods which look completely different to the rest of their entire historical situation.
They have to cover everything in the round, what happened during furlough, and how that has recovered.
And if the borrower is still on furlough, they need to be based on any number of considerations including job prospects, the industry they work in, the financial history, and their ability to keep on making those mortgage payments.
Advanced technology combined with artificial intelligence (AI) and much richer consumer data is set to help here, with new reports, insights and understanding being developed as I write.
This will help all – including mainstream lenders – in understanding and accepting what are undoubtedly good borrowers caught out by temporary pandemic circumstances.
However, in the meantime an individual and fairer approach most certainly is required.