The results showed that 53.6% of brokers are actively working on finding more specialist business, while 10.7% had not started yet but are planning to – showing almost two-thirds of the market is targeting the sector over 2018.
Meanwhile, a significant 26.8% of respondents were not looking to make a move because they were unsure where to start, and 8.9% were unclear on how to answer the question.
Real growth areas
Paul Flavin, managing director at Zing Mortgages, said that specialist sectors are due for a growth spurt – as the “vanilla clients” become less available with the market veering toward five-year fixes, high street banks focusing on client retention and competition from online advisers taking market share.
In particular, Flavin says the growing complexity of the buy-to-let (BTL) market means that advisers are turning away portfolio landlords – and creating opportunities for others in their wake.
“At Zing we are certainly placing focus on specialist lending, seeing these as real growth areas,” said Flavin.
“The BTL arena one that is very much worth following,” said Flavin, “Getting to grips with the lenders constantly changing demands is both time consuming and onerous yet, stick with it and you’ll reap the benefits of higher fees and more customers.
Flavin also said that as lenders broaden their products, specialist options are becoming more attractive.
“Not so long ago anyone with a ‘complex’ credit history was deemed ‘untouchable’ from a mortgage point of view. Yet almost weekly we see new lenders offering products catering for this very sector,” he said.
He continued: “For me, if you are looking to rely on your two-year squeaky clean remortgage cases then you are looking at a steady decline into obscurity.
“It’s time to increase your knowledge and start offering a service that not only justifies the fees but also makes the client feel they’ve made the right decision in choosing a broker for their next mortgage application.”
Sally Laker, managing director at Mortgage Intelligence, said brokers are branching out into specialist products so they can look after their customers’ diverse needs.
“Although there are people looking to specialise and extend their business in new areas, we find that brokers in the network and club, they’re looking to make sure that they can place mortgages for all their customers,” commented Laker.
She continued: “From the broker’s view, it’s not them saying that they want to do a huge chunk of business on this – it’s them saying that they want to help all the customer that they can and not turn people away.
For those brokers who are not sure where to start, Laker says they should focus on a sector area that is appropriate to their geographical area.
“Look for how to approach that market, and understand the products that are out there. Perhaps consider the value of a club or network, where there’s a broker help desk where they can get information on the criteria and help with market to clients,” she said.
“Specialist lenders bring different criteria to the party,” Laker added, “Any gap in the market is good for the specialists to come in and cover the niche the market hasn’t covered.
“This is what makes the mortgage market so interesting. It constantly changes, it’s an industry that always keeps you on your toes.”
Matt Sutton, managing director of Emerald Finance, said that he has seen a spike in activity in specialist sectors because of the diveregnce between lending criteria and borrowers’ needs.
Sutton said: “Clients continue to be ambitious in their [borrowing] expectations, but lenders are almost moving the other way – with lending being tight.”
As a result of changing market conditions, Sutton said that people are looking for alternative ways to raise funds, in particular.
Sutton added that with specialist lenders holding more roadshows and seminars to educate the market, brokers are becoming more aware of the specialist products available.
“It’s almost a necessity, really,” he continued, “If you stick to just one product, then you’re missing out on a large number of clients in the market place.
“If you want to have a well-founded business, you need to cover what your clients need,” he added.
For more information on the specialist lending sector, visit our page for The British Specialist Lending Event.