In Text with JD – Specialist lending’s central role in modern mortgage advice

In the last decade, the industry has seen the dramatic transformation of the specialist lending market – from the last-chance saloon for those with significant adverse credit to an increasingly mainstream sector designed to support borrowers with complex incomes, evolving financial circumstances and diverse property needs.

In response to real-world customer complexities and a growing number of clients falling outside standard lending criteria, specialist lending has moved from being niche to becoming the norm.

I recently spoke with Charles Morley from Metro Bank, who is well-placed to discuss this change in the market.

The evolution of complexity

As he rightly identifies, borrower profiles have changed considerably in recent years, whether it’s the growth of the self-employed and contractor market, those requiring large or complex loans, those with non-standard income patterns or, of course, those who have experienced credit blips.

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From low deposits to high-net-worth (HNW) and those in between, specialist lending has responded. So have lenders, who continue to innovate in product design and how they underpin and deliver their products. Morley pointed out that back in the day, specialist lending was the domain of a small handful of niche lenders, where even a small county court judgment (CCJ) would severely limit your options.

Today, that simply isn’t the case. He says that every lender now plays in the specialist lending market – even if they only have one foot in it.

Even products like limited company buy to let (BTL) or joint borrower sole proprietor (JBSP) – an area Metro Bank knows well – are now widely considered mainstream products.

Alongside changing borrower profiles, economic pressures and increased lender capability, Morley argues that broker awareness is a key factor in the growth of specialist lending. In short, as systems have improved and lenders have broadened their offerings, brokers have become more confident in using specialist lenders.

He does concede that some still shy away from specialist lending – but only a minority. Instead, there is an overwhelming number who have embraced both specialist knowledge and strong lender relationships. As Morley says, combining those two elements means brokers can deliver good customer outcomes, while also building long-term client relationships. Leveraging good business development manager (BDM) relationships across all areas – not just specialist – is a great way to build that knowledge bank.

I couldn’t agree more, and it’s something we encourage all of our brokers to do at Just Mortgages. Having a deep understanding of what different lenders bring to the table not only demonstrates the expertise we offer to the process, but also puts us in the best possible position to meet each client’s needs, deliver good outcomes and win clients for life – which should be the ultimate aim for anyone in this line of work.

We’re deeply committed to providing specialist advice and working with lenders across the market to support the growing number of clients with more complex needs. In fact, we recently launched a dedicated advice team for adverse credit solutions to make sure clients are receiving tailored advice and support.

The impact of AI

Much like the rest of the market, specialist lending hasn’t escaped the rapid development of technology – particularly artificial intelligence (AI).

Morley told me that he has seen many false dawns when it comes to technology, but believes AI isn’t one of them. Given the complexities involved, specialist lending is still largely reliant on human underwriting and, in Morley’s view, that will remain the case. He believes that AI will remove friction, improve the ingestion of data and enable processes to move quicker, allowing underwriters to crack on where judgement matters.

Much in the same way, he believes that AI and technology will take over the busy work, so advisers can get on with the valuable work. It is really encouraging to hear directly from a lender just how critical brokers are to the process. In Morley’s words, brokers help cut through the noise, interpret options and apply real judgement. While tech is there to support the process, it cannot replace the trust, reassurance and expertise that brokers provide.

As choice continues to expand, cases can become less straightforward. We are in a fast-paced market where lenders continue to expand and broaden their offerings.

I think the final point of brokers not diminishing but becoming more essential is absolutely spot on, particularly as specialist lending continues to play a larger role in the market and borrowers look for that human expertise and reassurance in an increasingly digital world.