When I speak to brokers, I often point to data that illustrates the growing number of people whose circumstances could fail the credit score for a standard mortgage application.
This includes figures from the Office for National Statistics that show nearly 15% of the workforce is now self-employed, or statistics from Registry Trust Limited that show a 24% increase in the number of consumer county court judgements (CCJs) registered in England and Wales in the third quarter of 2017 compared to the previous year.
But how can you tell if your client would be a typical customer of a specialist lender?
We undertook some analysis of our own residential completions in 2017 to help paint a clearer picture of a specialist borrower, and the results might surprise you.
The most common characteristic shared by our customers was the requirement to consider additional income as part of their application – 57% of all residential completions were categorised as complex income.
Income assessment by specialist underwriters is also important to self-employed borrowers and 29% of our customers were self-employed, which is nearly double the level of the national self-employed workforce.
Last year, 31% of all mortgages were advanced to first-time buyers, according to figures from UK Finance.
A quarter (23%) of our completions were for first-home purchases – a lower level than the overall market but still a significant part of our business.
Adverse credit not defining point
The really interesting statistic is that only a quarter of our customers (24%) had one or more CCJs to their name and the number of customers with defaults or secured arrears was negligible.
This goes to show that adverse credit is one element of a typical specialist borrower, but it’s not the defining factor.
In fact, the biggest lesson we took from the analysis of our 2017 completions was that there is rarely one defining factor that characterises a specialist customer.
A failed credit score is often the result of a number of overlapping circumstances that come with a story.
No two cases are the same, but they’re always interesting.
So what does the typical customer of a specialist lender look like? They look like your interesting cases.