Greg Cunnington, director of lender relationships and new homes at Alexander Hall, praised Clydesdale for launching deals with a relatively low income starting point of £40,000.
He added: “One of the biggest issues for first-time buyers in the market is maximum borrowing and affordability, particularly with house prices in London and the south east, so the 5.5 times income multiple will deliver real value to these customers.”
David Sheppard, managing director at Perception Finance, said it was good that this area of the market was getting more attention, and suggested that Clydesdale’s launch may “ignite” the professional market.
He continued: “I think Clydesdale have the right idea by looking to offer the higher multiples to those who are in the early days of their career as they are looking at the earning potential making the mortgage more and more affordable over time.”
Aaron Strutt, products and communications manager at Trinity Financial, suggested that professionals do not necessarily need specific products to help them onto the housing ladder, but noted that the lenders active in this area are beginning to offer more generous income multiples, with more attractive criteria.
He continued: “The market is in a good place although the lenders are under pressure to make sure they manage their higher income mortgages very closely.”
The best lenders for professional mortgages
Cunnington said that Barclays and Santander have been good options for professional borrowers, while not having dedicated professional ranges, and noted NatWest and Accord have also started taking a more flexible approach which “has been great to see”.
He continued: “Scottish Widows traditionally set the gold standard in the professional market and they have become a strong lender for us this year. Their underwriters deal with professional clients day in day out and it is reflected with some of the flexibility they show through their knowledge of the income structures seen.”
We need more lenders
Rachel Lummis, mortgage advisor at Xpress Mortgages, said that there was definitely more room for lenders active in the professional space, but that there needed to be some innovation in the product design.
She continued: “There is a need for the lender who has professional products to offer something extra, something the other lenders who have market-leading rates don’t have. There is a need for specially designed products for professionals, particularly around the income underwriting and criteria – hopefully more lenders will look at this area and, like Clydesdale, they will be warmly welcomed.”
Cunnington added that there was a need for lenders to offer more offset options to professional borrowers. He added: “Typically professional clients, particularly those at the higher income levels, have more complex income structures and more surplus funds which can make offset a great option.”
Sheppard pinpointed barristers as being one area of the professionals market that needs more attention from lenders.
He explained: “Being self employed they often cannot borrow as much as they probably should be able to with lending being against net profit. If a lender was able to take a view on their accounting and add back in some costs that employed people have to cover from net earnings then this would be more of a level playing field for these clients.”