More awareness towards complex credit options is needed – Gee

Close to our industry ‘home’ we’ve seen the final throes of the stamp duty holiday – partial in nature for the last few months and ultimately only available in England. It delivered at most a £2,500 saving, which undoubtedly helped some, but would have been a minimal driving force for housing transactions, particularly in the last four to six weeks of it.  

Many have welcomed the return to ‘normality’, and it’s true that we are now getting a much better idea of the medium to longer-term future for the UK housing market because the holiday has fully ended. 

The second deadline to be hit and passed was that of the furlough scheme and this clearly has the potential to have a much more sizeable impact for many more people and businesses, albeit in the context that the numbers on furlough have been dropping consistently for some months.  

At the end of June, there were fewer than two million people on the furlough scheme. Now there are none, but we await to see how many of those individuals will be returning to their old – or new – jobs. 

There will be people who unfortunately do not have a job to go back to, and it’s also clear the pandemic has had an impact on the finances of many people. The good news however is that the worst predictions of what Covid might unleash on the economy appear not to have been met.  

Financial impact on tenants 

Foundation carried out a survey focused on the housing aspirations of both existing homeowners and renters. It was encouraging to learn the vast majority of people had not experienced any negative financial impacts as a result of the pandemic, although self-employed people were three times as likely as employed individuals to have taken out a government grant or business loan. 

And the further good news is that very few people say they have been declined for a mortgage, in-store finance, an unsecured personal loan, or a credit or store card when they applied for them.  

The importance of access to finance and credit can’t be underestimated.  

Lenders want to lend, have the funds to do so, and are actively looking at borrowers who might traditionally have been under-served.  

What we can inform and educate borrowers and potential borrowers more on, is their increased ability to access mortgage finance, even if they have credit issues or are concerned about their finances during or post-pandemic.  

Almost one in four say they’re worried about being approved for a mortgage in the future, citing concerns such as a poor credit history or score and a low or unstable income as the top worries. 

Options are available 

However, the availability of mortgages for those who might not have a clean credit score or have recent credit blips has grown considerably. We should know, as we’ve been offering these mortgages for some time, and there is a flexibility in terms of accepting multiple incomes or other types of income that might not have been there the last time the borrower sought a mortgage.  

Or they simply might not be aware of these product options, if they’ve never secured a mortgage before. 

So, there is clearly a need to keep banging the drum about specialist lending options and what is achievable for all types of borrowers, especially after a period when some borrowers might be worried about the impact on their finances and how this might be perceived by a lender.  

We certainly don’t want prospective customers to think that a mortgage can’t be secured, especially when their product choice has grown considerably.