Nearly every day brings yet another admission from the boss of a ubiquitous high street name that sales have slumped and jobs will be lost.
Debenhams, John Lewis, House of Fraser, Coast, Patisserie Valerie…the list goes on.
Figures from the Centre for Retail Research suggest that job losses on the high street are expected to rise by 20 per cent this year, leaving more than 160,000 people out of a job.
For those who are facing redundancy, it’s a far bigger worry than simply the closure of shops and increasingly ghostly high streets.
Cannot foresee the three Ds
Forgive the gloom, but this raises a really important consideration for both lenders and brokers.
The three Ds – death, divorce and debt – are a reality that all of us have to deal with at some point in our lives, whether directly or through someone we know.
Each of these circumstances can throw off even the best laid financial plans.
The most stringent affordability assessment in the world cannot foresee the breakdown of a marriage in five years’ time or the loss of a job held for the past 20.
How lenders deal with the changes in circumstances for borrowers who must deal with these challenges is fundamental to our responsibility to treat all of our customers fairly.
The Financial Conduct Authority has been assiduous in its encouragement of forbearance and repossessions have been extremely low for more than a decade as a result.
Careful, sensitive underwriting
In the majority of cases where customers lose their jobs, they will find another one and avoid arrears or manage to get their finances back on track after a few months.
But this leaves them in a really disadvantaged position, especially when it comes to getting approved for a mortgage – or, more often, a remortgage.
It requires careful and sensitive underwriting to assess these borrowers’ affordability and it never makes sense to give a borrower a loan they cannot afford to service.
But there are tens of thousands of people in the UK whose credit is inadvertently damaged temporarily who are nevertheless financially responsible.
At Precise Mortgages we require a customer to have been in their job for at least three months and be able to demonstrate a 12-month continuous employment record.
A blip in credit is just that, a blip.
Customers must be aware that there is help out there and brokers are ideally placed to advise as to how they can access that help.