Specialist lending market will fill gap for first-time buyers – Gee

Over the course of the pandemic, issues facing the lending community were multiplied due to numerous factors including ongoing lockdown restrictions, the stamp duty exemption (and subsequent extension), furlough, mortgage payment holidays, in addition to a range of grants and bounce back loans.

During this period, circumstances changed within the blink of an eye as the government had to act swiftly to support individuals and businesses. On emerging from this unprecedented time, it’s clear that a different set of challenges have now emerged, and we are still operating in a complex and fast-paced economic and political environment.

Challenging circumstances but specialist lending robust

Challenging economic conditions continue to impact a variety of personal finances which are leading to more questions being asked of potential borrowers and existing homeowners in terms of their first, or next, property move. From a purchase perspective, the volume of residential transactions has fallen but remain higher than expected in many quarters.

Activity levels in the specialist residential market have certainly remained robust in the wake of heighted interest rate movement and swap rate turbulence. This is largely due to such transactions being less rate sensitive, but it remains the case that all borrowers are becoming more conscious of their budgets and outgoings.

Prospective buyers are cutting their budget

A recent survey from Savills revealed that home movers who are most reliant on borrowing are starting to reduce their budgets due to increases in the cost of living and the threat of further interest rate rises.

Over 1,000 prospective buyers surveyed at the end of summer 2022 revealed that their commitment to move has also fallen, at least in the short term. On a more encouraging note, sentiment remained positive for the medium term, with a net balance of plus 15 per cent stating that they are more committed to moving in the next two years, which is on par with last Autumn (September 2021).

First-time buyers tend to dominate the narrative when it comes to the challenges being faced by a rising housing market. In fairness, much of this is justified but we’re also operating in a transitional market for some existing homeowners looking to remortgage and potential home movers, many of whom may have suffered from changes in employment statuses, income levels, missed payments or life events which may have subsequently pushed them beyond mainstream lending boundaries and automated underwriting requirements.

This is where the specialist lending market will continue to deliver the types of solutions which can offer still credit-worthy borrowers the opportunity to secure competitive mortgage payments or move homes.

It can even help support those FTBs who may have also fallen off the mainstream lending radar and this is a combination which signifies why specialist lenders maintain such a prominent presence within the intermediary market.