Let’s be clear; this is because of unprecedented help from UK PLC. Through the Funding for Lending Scheme (FLS) and Bank of England has injected lots of cheap cash into mortgage lenders. New business rates have dropped markedly as a direct result but not, as brokers will be aware, right across the spectrum.
Vanilla, straightforward, low LTV borrowers who would have got a mortgage anyway now have lots of historically low rates to choose from – as a direct result of FLS. The Treasury has done its bit with a number of high LTV initiatives, the latest of which, Help to Buy, puts taxpayers cash directly behind such mortgages.
So, that’s standard low and high LTV applicants looked after. All is well with the market?
Actually no.
The many people whose situations don’t fit the narrow requirements of so many lenders, continue to find the application process challenging. And I’m not necessarily talking about people with an adverse credit history. Why is it that what we tend to call specialist lending is so often taken only to mean adverse credit?
There are many aspiring borrowers who have no adverse credit, but who have something about their lifestyle situations which don’t fit so many narrowly designed decisioning systems. The self-employed are an obvious example, ranging from typical one-man bands to larger family owned limited companies.
And there are many who work as contractors, consultants and interims. Again, the strength of their covenants is rarely reflected in major lender credit scores designed fundamentally for salaried applicants.
I could produce a long list of applicant types where brokers have to squeeze strong but non-standard profiles through unsympathetic lenders, but I’d only be telling you what you already know. Let’s just finish by saying that we won’t have a ‘normal’ market until more lenders design products for applicants facing special situations.
Colin Snowdon is mortgage strategy consultant for Saffron Building Society
