The advice process has never been a straightforward one, although I can’t imagine a time when the lending landscape was so complex, the product arena was so turbulent, borrowing scenarios so multifaceted and the advice process so valuable for such a wide range of people.
For network members, it’s not easy being jack of all trades and as a network principal it’s our job to support our ARs to make sure that they can be masters of more than one, especially when it comes to those areas which sit outside the mainstream lending corridor. This is especially apparent as affordability is biting for many people, meaning that an increasing number are having to turn to alternative lending sources or rely more heavily on financial support from family members to minimise these borrowing costs.
This final point was evident in research from Legal & General Mortgage Club’s SmartrCriteria tool which outlined that searches for homeowners looking for joint borrower sole proprietor (JBSP) mortgages climbed by 17% in March, suggesting that more borrowers are relying on financial support. This is an interesting area as it remains a product type which tends to be the domain of specialist lenders who can adopt a flexible approach and a manual underwriting process to service a product type with so many different moving parts.
Activity in the buy-to-let market reinforced this trend, as searches for gifted equity on behalf of landlords jumped by 38%. The data also showed that demand from buyers continued despite rising living costs and soaring house prices, especially in the holiday let sector. Searches for holiday lets grew by 24% in March, implying that the sector is primed for continued growth following the boom in staycations sparked by the pandemic. Demand was also said to be strong amongst first-time landlords with searches rising by 23%.
From our perspective, we continue to see increasing levels of business emerging from the more specialist end of the BTL sector despite average interest rates rising and product ranges being ‘refreshed’ on an almost daily basis. This was illustrated in the latest data from Moneyfacts which showed that the average rate for a two-year fixed buy-to-let product stood at 3.41 per cent, up 0.51 per cent when compared to rates seen in December, prior to base rate increases. Five-year fixes now have an average rate of 3.56 per cent, a rise of 0.38 per cent from December.
Mortgage searches on behalf of borrowers with complex finances also continued to escalate between February and March, with searches for lenders willing to accept borrowers with an unsatisfied default increasing by 46% over the past month. Searches for lenders that ignore communications defaults, such as missed telephone bills, also grew by 65% in March. In a similar vein, searches on behalf of those with unsecured arrears and missed mortgage payments increased by 18% and 26% respectively. This data comes as households across the UK are experiencing a soaring energy bills making it harder for consumers to meet their monthly outgoings.
The quest for property, whether from a residential or investment standpoint continues unabated. From an intermediary perspective, the areas which have experienced an enlarged number of searches really demonstrate the value attached to the advice process and the additional support required from network partners to deliver the types of solutions which really matter to these client types. And this is a trend which is only likely to remain in place throughout 2022.
Steve Swyny, Commercial Director at F4B Network