In years gone by, the UK residential mortgage market could – at times – be described as a relatively one-dimensional juggernaut which generated huge levels of volume driven by highly competitive rates and somewhat straightforward borrowing needs.
However, more recent years have seen it transition into a multi-faceted lending arena, largely due to the growing number of borrowers with increasingly complex financial circumstances, the generation of multiple incomes streams, the small matter of a global pandemic, record levels of inflation and varying degrees of economic volatility.
This combination has led to brokers fielding progressively varied queries around adverse credit and subsequently having to widen their knowledge of what might previously have been described as ‘unconventional’ borrowing solutions to meet this heightened demand.
A trend which continued to be evident in Q1 market analysis from TMA which revealed that the top three queries received by its Broker Support Desk over the course of the quarter were: residential income, residential adverse and residential self-employed.
This analysis outlined a sustained focus on queries around the topic of adverse credit, as brokers sought support to advise clients about missed or defaulted payments and County Court Judgements.
It will be interesting to see if the Q2 figures continue this trend but, if I were a betting man, I’d have a small wager on these type of queries still being high on the list on the back of some challenging economic times.
And I say this after working my way through the June 2023 edition of The Money Statistics, The Money Charity’s complete monthly round-up of statistics about how we use money in the UK. Within this, it highlighted that there were 30,396 individual insolvencies in England and Wales in March to May 2023. On a positive note, this did signify a decrease of 3.3% from 30,797 for the same period in 2022 but is stillequivalent to 330 people a day or one person every 4 minutes and 22 seconds.
In the 12 months to May 2023, 114,280 individuals, 1 in 411 (0.24%) of the adult population of England and Wales became insolvent. In addition, 2,846 Consumer County Court Judgements (CCJs) were issued every day in England and Wales in January to March 2023, a 14.1% increase on the same period in 2022. The average value was £4,479 according to Registry Trust Ltd.
Citizens Advice Bureau’s across England and Wales answered 429,720 enquiries in May 2023, 10.1% up from May 2022. Debt was the second largest advice category in May 2023 with 71,987 issues, behind Benefits and Tax Credits (92,051). Debt calls were 12.0% up compared with May 2022, while calls about Benefits and Tax credits were up by 12.3%. Calls about Fuel (gas, electricity etc) were down 0.2% on May 2022. Debt represented 0.3% of all issues dealt with in the year to May 2023.
The top three debt categories in May 2023 were fuel debts, council tax arrears and credit, store and charge card debts. In the year to May 2023, Citizens Advice Bureaux in England and Wales dealt with 2,257 debt issues every day.
StepChange Debt Charity reported that 14,512 new clients received full debt advice in April 2023. The most common reasons for seeking debt advice were “cost of living increase”, “lack of control over finances” and “unemployment or redundancy”. 65% of clients had credit card debt, 45% had personal loan debt, 31% had an overdraft and 33% had catalogue debt. The majority of StepChange clients are female (62% in April 2023) and young (57% under the age of 40).
I fully appreciate that this represents some extremely sobering data but it’s the kind of data which is not only impacting a growing number of your clients but also influencing criteria and policy for a host of specialist lenders who are looking to support a range of ‘unconventional’ borrowing scenarios.
Going forward, it’s key that lending propositions evolve with ever-shifting consumer needs and trends. And we, as a lender who remains committed to the specialist residential space, will continue flying the flag for all types of credit-worthy borrowers by providing them with responsible solutions which match their property-related aspirations.
Grant Hendry is director of sales at Foundation Home Loans