Smaller but beautifully formed
With so many niche mortgage markets requiring significantly more expertise, effort and time than run-of-the-mill vanilla lending, it is easy to see why some smaller lenders are making steady inroads into areas that offer the possibility of more margin for those that can, for example, manually underwrite when the occasion merits it. This lending is taking the form of large loans, self-employed, shared ownership, and first-time buyers to name a few. These are areas that also rely more heavily on sound advice from mortgage experts.
The house is an asset that has to do so much more than just provide a home and the right advice can be the difference between residing in a property and being imprisoned in it (remember interest only?). Small niche lenders will require intermediary partners that understand clients' needs, not just in the 'now' but with a view to the future.
Over recent years, we have seen the definition of words like niche and specialist morph in meaning. An intermediary operating in the market fifteen years ago would have likely considered a product such as Buy-to-Let a type of specialist lending. It's fair to say that Buy-to-Let as a niche came of age and is now a mainstream product for high-street lenders, who have seen its potential to supplement thinning margins in the highly regulated and competitive prime market.
Now, specialist lending and niche markets include sub-prime, second-charge and self-employed mortgages, as well as bridging loans and lending into retirement. These areas of lending have re-emerged from the shadows of the credit crisis era to once again bask in the warmth of regulatory and market approval.
A number of building societies, including ourselves, have been developing niche products for borrowers who, post-MMR, may have felt uncatered for. But above and beyond the more obvious 'riche' groups there are opportunities to help the newly-divorced, recently returned expats, first-time landlords and parent/student purchasers. These types of borrowers and their mortgage needs are the hunting ground of the smaller lenders. Expect more innovation aimed at these borrowers in the months ahead.
There are many further opportunities to explore. Recently returned expatriates, who are not yet on the electoral register, offer one such constituency. Conventional approaches to so many elements of lending are letting many people down without good reason.
It's logical that, in a crowded market place, smaller mortgage lenders design new products to win borrowers marginalised by new affordability rules and automated credit scoring processes. Their willingness to look at cases individually and reach a common sense decision provides an improved market for consumers. Next year the mortgage market is likely to grow its support for the 'niche' borrower, which is good news for advisers.
If you have any other queries you'd like to discuss with us, please don't hesitate to get in touch with our Intermediary Support Team by calling 0345 602 2338 or via webchat (Monday to Friday, 8am to 6pm).
This information is for use by authorised mortgage intermediaries only and should not be relied on by customers.