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Brokers sceptical over job-specific mortgages despite potential client demand – analysis

  • 14/06/2019
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Brokers sceptical over job-specific mortgages despite potential client demand – analysis
Intermediaries have suggested that lenders promoting mortgage deals which have been designed to specifically help people working in certain professions are little more than a marketing exercise.


This week Kensington Mortgages launched a new range of ‘Hero Mortgages’, aimed at people working in “essential public sector services” such as firefighters, NHS staff and teachers.

The deals are available at up to five times income, and at a 55 per cent debt-to-income ratio.

Mark Arnold, chief executive officer at Kensington Mortgages, said the firm had used its data analytics to study the career trajectories of people working in these jobs to better understand their earnings level and job security.

He added: “By doing so, we have identified a new way of helping the UK’s heroes by creating specialised lending criteria. Launching this innovative product highlights our commitment to helping the heroes in our everyday lives buy their own home.”


Addressing an underserved market

Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said that any innovation from lenders which meant they could increase loan to income ratios was a positve, noting there was no doubt there is client demand.

He added: “The new Kensington hero products show some really good innovation for an employment sector that is relatively under-served by lenders in terms of specific assistance such as this.

“From a risk perspective the job security of these professions is relatively stable, so you can see the attraction is also there from a lender’s risk perspective.”

He noted this was a similar attraction for lenders who offer dedicated ‘professional’ mortgages such as Clydesdale and Metro Bank as these borrowers also have a “clear pathway” for future earnings.

As these clients know their income will increase in the medium term they often have an appetite to borrow as much as possible, so these options definitely serve the market place well,” he added.


A marketing exercise

Andy Wilson, founder of Andy Wilson Financial Services, suggested that as public sector workers may be deemed to have “safer” employment chances, it meant Kensington would feel happier loosening income restrictions.

But he warned that calling the deals ‘Hero Mortgages’ was purely a marketing exercise, riding on the back of public support for the those working in the public sector.

He continued: “While many of these workers undoubtedly do jobs a lot of us would find very challenging, they are not really any safer as mortgage borrowers than any civil servant.”

Wilson also cautioned that if these workers are not being paid enough, the answer is not to allow them to borrow more than normal.

Their career progressions are not generally as rapid as might be seen with newly qualified ‘professionals’ such as lawyers, accountants and doctors. Here, the career progression can be rapid and pay rises move upwards just as quickly,” he added.


Is it a gimmick?

Stuart Powell, managing director of Ocean Mortgages, noted that he had used Scottish Widows’s professional mortgage range in the past, but said the rate and fees are “rarely any different to the rates offered to non-professionals”.

He suggested that while the Kensington deals seem a bit gimmicky, they will likely “catch the eye” of some people working in those professions.

“If you look at the detail of the offers, neither the rate or income multiples are market leading. These deals should be considered by a broker as part of their research if their clients are eligible.

“A good whole of market broker would do that as a matter of course,” he added.


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