"The key to this is the strength of links between lenders, specialist distributors, advisers and consumers."
Many specialist lenders and building societies are leading the way both in terms of the education process and through some innovative and highly competitive product ranges.
There is no hiding from the fact, or should there be, that borrowing demands are shifting and many high-street lenders are struggling (or unwilling in some cases) to adapt to them. The last thing we want to do is return to some archaic and risk-heavy lending practices of old, but the fact is that growing levels of credit related issues are emerging. In the vast majority of cases these remain minor, but this doesn't stop concerns being raised over credit histories and consumers' future ability to secure a mortgage.
As such, we as an industry, have to step up to the plate and meet the needs of such borrowers in a responsible manner. The key to this is the strength of links between lenders, specialist distributors, advisers and consumers. Despite many forward strides being made there will always be difficult questions to be asked of lenders from the intermediary community in this area, and rightly so. A recent study from Smart Money People suggested that brokers are least satisfied with how lenders handle adverse credit and commercial buy-to-let cases. Following broker feedback in its Mortgage Lender Benchmark, broker satisfaction with mortgage lenders’ handling of adverse credit cases is 74.6%, rising to 77.1% for commercial buy-to-let cases. The average satisfaction across all mortgage case types is 81.1%.
When it comes to adverse credit cases, brokers were particularly dissatisfied with the speed to process applications through to offer. The average adverse credit lender received a 59% rating around speed, 15% lower than the average across all cases (74%). Broker satisfaction with the ease of determining the maximum loan amount was cited as another key weak spot and stands at 76% which is 7% lower than the average (83%). Meanwhile, the ease of determining product eligibility proved to be the key point for brokers leaving feedback for commercial buy-to-let lenders.
This data comes on the back of additional research from Pepper Money which suggested that the majority of people who have experienced credit problems in the last three years are worried about being declined a mortgage. Its survey found that 69% of those who are seeking a mortgage or remortgage in the next 12 months are concerned about having their application declined due to their credit history.
We have spoken to many clients who, due to their credit history, felt that they either couldn’t get a mortgage or remortgage from their current lender. On the back of this, we are forming even stronger alliances with a variety of lenders to help get this message across and ensure that our brokers have the knowledge and access to the types of deals which can help such borrowers to achieve their homeownership aspirations. Indeed, we have just announced a referral agreement with Habito which will allow homeowners who have poor credit history access to Impact's specialist broker services at no cost. The deal will see Impact offer its advice to these customers while waiving our standard fee.
It's these types of fresh approaches which will enable brokers to assist more people with the appropriate solutions (even if by referral) and help their clients put their past credit issues behind them. Let’s hope that 2020 is the year that the adverse mortgage market starts to generate headlines for the right reasons.
