Instances such as furlough and redundancy have meant thousands, if not millions, of consumers are now in a more precarious financial position than they were before the crisis hit.
For some, keeping up with regular payments has become a struggle, with Citizens Advice reporting this has been the case for approximately six million people during the crisis.
For others, however, the pressure has been even greater; between October and December last year, 194,203 new County Court Judgements (CCJs) were issued in England and Wales, compared with 112,261 the previous quarter.
Unfortunately, instances like missed payments and CCJs are only set to become more common as the impact of the pandemic continues.
These factors are likely to create a larger cohort of consumers with more complex borrowing needs, many of whom could then find they are disenfranchised from high-street lending – even if they are perfectly eligible for a loan.
For many in this position, support from a complex credit mortgage lender could be a vital lifeline. However, as the complexities and intricacies of borrowers’ needs continue to build, lenders in the complex credit mortgage market will need to evolve and adapt accordingly – and this is an area where we will see further development and growth over the coming years.
While driving product innovation will continue to be a priority for many in this space, it is more likely that we will see lenders adapting their credit policies to suit new and evolving customer demands.
Shorter recovery periods
For lenders who are looking to capitalise on the growing long-term demand from complex credit borrowers, it will be crucial that their appetite to serve these consumers is reflected in their credit policies.
We may also see lenders in the complex credit mortgage market basing their lending decisions on shorter periods of recovery when assessing applicants.
For example, before the crisis, some lenders may have only been able to accept a borrower who could prove they had been in a financially secure position for at least 12 months, even if they had suffered from a setback before this.
However, once the pandemic subsides, this period could shorten as lenders are approached by a growing number of borrowers who have experienced more recent financial glitches but have subsequently recovered.
Post-crisis, the complex credit mortgage market will be more important than ever as thousands of borrowers emerge with more complex borrowing needs, and it will be vital that lenders, as well as advisers, are well-equipped to serve this community.
To this end, the complex credit market is sure to be one to watch in the years to come as lenders seek out new ways which will enable them to provide complex credit borrowers with the financing they need.