Customers becoming more specialist creates ‘massive opportunity’ for brokers – Hall

Speaking to Specialist Lending Solutions as part of the Get to Know Your British Specialist Lending Award Winner series, Kensington’s key account manager Eloise Hall said that what was defined as specialist lending and specialist customers had changed.

She pointed to self-employed borrowers, who she said would benefit from a more “understanding and specialist approach”. She also noted that customers with minor credit blips and first-time buyers would also benefit from a specialist lending approach.

Hall explained: “The high street algorithms just can’t cater for those types of customers, and although these customers aren’t what we would traditionally consider specialist customers they do benefit from that kind of tailored approach.

“I think that’s why we’ve seen the market grow and I think it’s why we will continue to see the market grow as we’ve seen more customers become or have specialist needs.”

She added that this specialist type of customer would be a “massive opportunity” for intermediaries to expand their business.

Hall said aggregators and other types of automation “can’t touch specialist lending” so intermediaries will be able to build business more effectively.

“I think that awareness is growing and will continue to because I think it’s slowly infiltrating brokers businesses, whether they’re aware of it or not,” she said.

She added that self-employed borrowers were a “huge part of the market” and around half of its business came from customers who worked for themselves.

Hall said the self-employed market had a “bit of a bad rep” because of how difficult it could be to place on the high street, but it was an area “where the specialist [sector] gets the chance to shine”.

She said that Kensington had done some research a few years ago on different self-employed and employed people. It found that employed people on average had 31 days of financial reserves, whereas those who were self-employed had six months of financial reserves on average.

Hall said from a lending perspective this showed self-employed borrowers were a “safer bet”.

She added: “It’s being able to re-look at how lenders have previously looked at self-employed because I think, historically, they’ve been penalised and it’s about trying to find a sensible way forward to encourage self-employed business.”

She added that the self-employed market had increased over the past 20 years and would continue to expand in the future as more young people opted to work for themselves, pointing to the growth of online influencers.

Affordability challenges and Help to Buy replacements

She added that another challenge, which was not necessarily new, was around affordability and deposits, as some borrowers could struggle to raise a sufficient deposit to access better affordability.

Hall said the lender’s flexi fixed for term products was “designed to offer first-time buyers that affordability booster” to get on the property ladder and give customers “peace of mind” with set mortgage payments.

She added that it could help those with a limited deposit and was hoping this kind of solution could replace Help to Buy

Hall explained: “I think with Help to Buy coming to its end we’ve already seen shared ownership start to overtake as an option for first-time buyers. From memory, I think last year seven per cent of the first-time buyers used Help to Buy as their strategy to get onto the property ladder and actually 10 per cent of first-time buyers used shared ownership.”

She added that Kensington had “really launched into shared ownership” and said there were not very many specialists in that space.

“It’s about innovating to find replacements that and also expanding propositions into those markets as well,” Hall said.

Green mortgage

Hall said green mortgages had become a “very popular topic” with lenders and landlords would become a “big focus for lenders” as new proposed EPC rules come into play.

She urged brokers to get in touch with landlord clients and discuss ways they could help.

Hall said the current approach with some green mortgages, which offer a discounted mortgage rate to properties with a good EPC rating, could have unforeseen consequences as “lenders could start to penalise customers that are struggling [to improve] or have the lower EPC ratings”.

She pointed to its eco-cashback mortgage, which offered £1,000 cashback once customers have improved properties by a certain amount.

“It basically incentivises anybody to improve their EPC rating rather than giving preferential rates to those that have already been able to do that,” she explained.

She said: “I think we’ve been really productive, and we’ve got a lot of green propositions and products out there very early, and that puts us in a great position to be able to continue, reflect and expand the range.”

She said the lender had expanded this offering to new build, where it offered £500 cashback or immediate cashback for an A or B rated property and the product was eligible for residential and buy-to-let purchase and remortgage.