Omicron variant expected to lead to rise in complex credit customers ‒ Seal

However, greater signposting is needed from across the industry.

Speaking to Specialist Lending Solutions, chief executive of Bluestone Mortgages Steve Seal (pictured) said that whilst there had not been a dramatic surge in unemployment with the furlough scheme ending, the rapid increase in the cases of Omicron is expected to place a “greater strain” on the economy and jobs market.

Consequently, he said that there would be more customers facing financial challenges and that some may even struggle to meet specialist lender’s policies.

He added that government support could not go on indefinitely and the variant was “raising alarm bells”. Moving forward there should be “tailored industry support”, especially for sectors significantly impacted by restrictions.

Seal said: “Without this support, individuals working in these industries could struggle to keep up with mortgage payments or find themselves unable to secure a mortgage through conventional routes.”

He noted that complex credit customers covered a wide variety of people, as people could have thin credit files if they were new borrowing, new to the UK, self-employed or had a “life interruption” like a critical illness, divorce or redundancy.

He said: “Yet despite their financial situations being more complex and needing more time to understand, all are very real human situations and ones we believe should not lead to financial discrimination if they have the means to meet the financial commitments required.”

He said that the complex credit market had been “traditionally underserved”, but it was “critically important to the levelling up of our society”.

Seal explained: “There are great opportunities for innovative lenders, such as Bluestone, to get involved and provide the opportunities the mainstream market is walking away from. This is an area of the market that is only set to grow given the rise of customers facing some kind of financial difficulty and the complexity of working lives today.”

He noted that there were a number of challenges but one of the most prevalent was being turned away because a “computer says no” and borrowers consequently “feel that they have nowhere to turn”.

However, Seal said that specialist lenders invested in having the capability to evaluate each individual loan, so they could take the time to fully understand each client’s unique needs and circumstances.

More signposting to specialist lenders needed

Seal that the main change needed from mainstream lenders would be at the point when the case was rejected. Rather than dismissing an individual a mainstream lender should go “one step further” and reassure the complex credit customer that other options are available.

“That in itself would transform the market for the good of all,” he said.

Seal added that whilst awareness of specialist lending was growing, the increase in borrowers facing financial challenges and the lack of signposting means many are “simply unaware” that other lending options were available.

He said: “Particularly if they’ve been turned away from a mainstream lender, they may think they have no other viable options. Looking ahead, signposting will be vital and this is an area where mainstream lenders must improve”.

He explained that “flexibility and innovation” were key as there was “no one size fits all” approach to complex customers.

Seal said: “The industry as a whole needs to come together for these individuals, so if a mainstream lender can’t support them, they signpost their way to a solution. This will make a critical difference to the confidence of these individuals and the impetus to seek the right solutions, which in turn will provide better outcomes.”