Looking beyond what’s unfamiliar – Blewitt

What are we actually looking at? It sounds obvious, but I think it is easy to let the circumstances of a case shape our thinking before we have really understood the borrower themselves. Once that happens, there is a risk we are responding to what is different rather than what is important.

Foreign currency income is probably one of the best examples of that. As soon as those words appear, it is easy for the mind to move towards exchange rates, policy and complexity. None of those things tells you whether somebody is a good borrower though, they simply describe one aspect of how that person is paid.

If you look at the way people build careers today, it is hardly surprising that more borrowers are earning outside sterling. International businesses recruit globally, professionals move between countries without necessarily relocating permanently and technology means people can work for organisations, based thousands of miles away while continuing to live in the UK. None of that feels particularly unusual anymore, which is why I do not think being paid in euros, US dollars or another major currency should automatically make a case feel exceptional.

The questions that are most important have not changed. Is the employment sustainable? Is the income consistent? Does the application demonstrate a sensible long-term ability to repay? Those are the questions I would always want to answer before worrying about the currency printed on a payslip.

Looking at the whole picture

If I am honest, I do not think foreign currency lending is really a conversation about currency at all. It is a conversation about how lenders think about risk. Do we begin with the assumption that something outside the ordinary must automatically be more difficult, or do we begin by understanding why it is different before deciding how it should be assessed?

Exchange rates clearly need to be taken into account because they form part of the overall picture, but they shouldn’t become the whole picture. If they do, there is a danger that one characteristic of the application starts driving the decision before the wider circumstances have been properly understood.

That is why we manually assess every foreign currency application, converting income into sterling using the live XE exchange rate before applying a prudent adjustment to reflect potential movements in exchange rates. That is not about trying to make cases fit. It is about recognising one element of risk while still assessing the borrower as a whole.

In many ways, I think foreign currency lending simply illustrates a much broader principle. The same thinking applies whether you are looking at complex income, later life lending, self-employed borrowers or any other more specialist cases. The question is not whether the case is different. The question is whether we have taken the time to understand that difference before reaching a decision.

Confidence comes from understanding

That is really what sits behind our new Confidence in Every Case approach. It is probably worth explaining what we mean by that because I think the name could easily be misunderstood.

It is not about having confidence that every application will be approved because, quite simply, that is not how responsible lending works. It is about giving brokers confidence that every case will receive proper consideration, confidence that experienced underwriters will look beyond the unfamiliar and confidence that every decision will be based on the individual circumstances of the borrower rather than assumptions attached to a particular type of case.

I think brokers instinctively recognise the difference because they do not expect every answer to be yes. What they do expect is consistency. They want to know that somebody has genuinely understood the case before reaching a decision and that, whether the outcome is positive or not, they will be able to explain the reasoning to their client with confidence.

Keeping pace with today’s borrowers

I suspect we will continue to see more borrowers whose circumstances do not fit the mould that mortgage lending was originally designed around. That is simply a reflection of how people live and work today, and I do not see that changing any time soon.

The challenge for lenders is not deciding whether those borrowers should be treated differently. It is making sure we do not mistake difference for risk before we have properly understood what is sitting in front of us. Foreign currency income is just one example, but I think it highlights something much bigger. The strongest lending decisions don’t start with assumptions about the case. They start by understanding the person.