There has been a lot of noise around the impending referendum and how the buy-to-let market isn’t as strong as it was in the first quarter, although this was to be expected after the buy-to-let surge. It is therefore a good time to draw attention to the positive aspects of the market, particularly in terms of specialist lending. For example, the sector has recently seen many encouraging developments including a host of new lenders entering, or looking to enter the market, including The Mortgage Lender and Bluestone, the re-engineered Kensington proposition and the already established specialist lenders such as Precise, KRBS, Saffron and Together which are making changes to product and criteria.
In the mid-2000s, many banks handed out loans freely to those who were often likely to default and it is widely argued that this set the stage for the financial crisis of 2008. In light of this, there is a misconception that fewer mortgages are given to those with a poor credit history, but this is simply not the case.
Specialist lenders that deal with borrowers with adverse credit conditions look at each case on an individual basis. The growing need for specialist lending means more borrowers can get a mortgage, particularly those who don’t necessarily tick the boxes of the high street lenders, although their risk profile is often more than satisfactory. As a result, the belief that it is more difficult for those with poor credit records to get a mortgage is quickly becoming a thing of the past.
In addition, criteria is continuing to shift, propositions are changing and products are becoming even more competitive and it is therefore no surprise that there is a growing demand in the market for specialist market experience and expertise. Therefore, although we are approaching a period of uncertainty with many buyers and investors waiting to see the lay of the land following the outcome of the vote on Thursday, it is more important than ever that we focus on the positives. For instance, the market is now so heavily intermediary centric which fundamentally means that mortgage brokers are in demand, they have business coming through the door and there are lenders who want to lend. How more positive can it be?
The specialist lending market will continue to fill the gap by providing non high street clients with a solution based on their financial situation which means these borrowers are no longer squeezed out of the property market and are, more importantly, given a second chance. The market is clearly set for continued growth and as consumer requirements continue to change and as more brokers embrace the sector, I believe specialist lenders will continue to lead the way, irrespective of the outcome on Thursday.
Chris Bramham is Brightstar’s director of specialist mortgages and buy-to-let