This week Mortgage Solutions asked our experts to give their thoughts on recent launches and other changes made by lenders targeting niche areas of the market.
Brian Murphy, head of lending for Mortgage Advice Bureau explains that widening availability for niche borrowers will encourage mainstream lenders into the sector.
Chris Hall, operations director at Mortgage Guardian and mortgage adviser at 1st Call 4 Mortgages notes that buy-to-let (BTL) prisoners are finally being given a potential escape route.
Chris Schutrups, group managing director at The Mortgage Hut welcomes moves by lenders to address the growing gig economy and short term contracts.
Recent lender launches, including those by Secure Trust, Shawbrook and others in what is currently considered to be a more niche sector evidence a higher degree of lender appetite to serve consumers who are, in many respects, less served by other high street brands currently.
Although at the moment the target audiences for several of these new-to-sector brands are deemed as niche, their entry into the market provides much-needed breadth and competition.
In the future, if other lenders gain appetite for this type of business, this has the upside of making this type of product the norm, meaning that products which are currently seen as specialist become viewed as more mainstream.
This also means that consumers who would have previously perhaps had to pay more for a specialist product to suit their circumstances may benefit from the market becoming more competitive, both in terms of available rates and different types of product available.
Smaller niche lenders often prove they are nimbler on the dance floor than the larger less flexible lenders.
The Ipswich Building Society is no exception and has shown survival instinct by touting for transitional buy-to-let remortgage business. This is a useful facility for BTL mortgage prisoners who do not need to further borrow and have fallen foul of new tougher rental calculations since Prudential Regulation Authority rules were applied.
This will be especially welcomed by consumer BTL landlords who have seen the potential for profit fall.
The Ipswich is also offering a massive 50% overpayment facility on residential fixed rate mortgages. This is ideal for those interested in fixing their payments now that Brexit nears and higher inflation looms but still want the option to considerably reduce their mortgage liability.
This is a great example of how the smaller lenders are incredibly creative when attracting broker business.
If you are self-employed, getting a mortgage in the first place can be tricky. New lender Secure Trust mixes fintech with flexible personal underwriting to lure brokers into presenting interesting new clientele to them. Ideal for the newly self-employed, zero hours’ contractors and those with income from multiple sources who do not necessarily fit into the criteria box with most lenders.
The down side is limited distribution channels for brokers.
As more people choose to work on a self-employed contract basis, the Bank of Ireland can now verify income from the current contract up to 90% loan to value. This cuts out the need for three years’ worth of accounts and will speed up the buying process for many professional self-employed people.
The market needs this right now.
Anything that increases competition in the mortgage market is great news for borrowers – and it is great news for brokers like us too.
Secure Trust Bank’s arrival in the market working with Mortgage Advice Bureau firms this week provides another option for borrowers and brokers when looking for the best deal.
It is interesting that both Secure Trust and Bank of Ireland UK have recognised that the growth of the gig economy of self-employed and short-term contracts is worthy of more attention – we created The Contractor Mortgage Company as part of The Mortgage Hut Group to work with this under-served sector of borrowers.
That is a really successful part of the business and will continue to grow as the UK workforce moves more towards short-term contracts and self-employed working. Finding lenders for these borrowers can be a challenge so it is very welcome to see more focus on this from the likes of Secure Trust and Bank of Ireland.
It is very good to see some lenders thinking on their feet and being agile with their offering – but more of them need to be like that.
Lenders are really up against it with increasing competition and lower margins so to really succeed they need to be able to differentiate themselves in the market. Those that do will be getting our business because they will be the ones that offer the best deals for the consumer borrower.