Let’s look ahead to a year of optimism and growth for specialist – Morley

The weeks that followed saw most elements of the UK mortgage market significantly impacted as a consequence of the lack of physical valuations, with some lenders completely retreating and others operating with significantly reduced loan to value (LTV) limits. The months that followed centred on talk of the level of house price correction; not whether it would happen, but what the percentage move would actually be.  

Fast forward nearly two years and the market has come through relatively unscathed, demonstrating an immense amount of stamina and durability, with average house prices now sitting at record levels.  

The market was of course buoyed by the government’s stamp duty holiday initiative that drove significant purchase activity in 2021, supported by customer desire for larger homes with more outside space to allow different working patterns that many of us have now adopted.  

“You’re on mute” continues to be one the most commonly used expressions in the English language as we have all adapted to the age of the video call, utilising technology to stay in contact with colleagues, business partners and more importantly customers. Let’s not forget the interesting home décor we have all become privy to. 

The last two years have brought considerable challenges, but have also cemented the importance of the specialist mortgage market, as it has diversified, grown and evolved from the early 2000s when the central focus was customers with a less than perfect credit profile.  

Role of specialist lending 

When Metro Bank launched into specialist mortgages in March 2021, we also conducted research in partnership with You Gov, which revealed that more than eight in 10 people (81 per cent) with adverse credit history agreed that banks and other lenders aren’t interested in helping people like them. This rose to nine in 10 (90 per cent) amongst those aged 45-54.  

The research discovered that more than four in 10 (41 per cent) of the respondents agreed that they have been prevented from getting a mortgage or remortgage as a result of their poor credit history. A similar amount (43 per cent) of people were worried that their mortgage lender options were limited and they won’t be able to access a mortgage or remortgage their current home, due to their credit history. 

When one considers data from PWC suggesting there could be up to 14 million people in the UK with less than perfect credit history, the importance of this traditionally underserved market becomes even more apparent.  

Large market to be served 

Most lenders have adapted criteria to support the evolving needs of the UK population. From those requiring large loans in the high net worth space, to the self-employed through to customers requiring a joint borrower sole proprietor loan – all in their own way, key specialist segments that require lender adaptability and specialism.  

My word of caution is that UK Finance does expect the general mortgage market to reduce slightly this year. One thing we know for sure is that technology is going to grow in importance – Teams and Zoom have demonstrated how quickly that can happen.  

My advice to everyone working in our industry in 2022 would be to neither resist nor dismiss change, but instead adapt and adopt the changes that most suit your customers’ needs.