The Intermediary – May 2025 - Flipbook - Page 38
RESIDENTIAL
Opinion
Supporting
borrowers on the
road to recovery
S
everal years of economic
upheaval and cost
pressures have led to
a shi in the housing
market, most notably
in the needs and
circumstances of the average buyer.
The sudden rise in interest rates,
energy prices and inflation, coupled
with changes in legislation, have all
le their mark.
Any of these factors alone could
have been enough to push someone
into the red. We’ve all heard of
cases where mortgage repayments
practically doubled overnight. Add to
that the impact of a global pandemic,
during which many lost their jobs or
businesses, and it’s no surprise that the
market has suffered.
As it oen does during times of
crisis, the industry has pulled together
to keep things moving. While much of
the focus has been on helping people
buy a home, there’s also been a strong
effort to prevent homeowners from
losing the one they’ve got.
Although it feels like the initial
storm has passed, nothing is
guaranteed. The threat of economic
uncertainty, both globally and at
home, continues to loom.
With one eye on the future and
a focus on protecting borrowers in
the long-term, we also need to make
sure we’re supporting today’s buyers,
many of whom are still living with the
impact of recent years.
Brokers are increasingly working
with borrowers who have had to
take extreme measures to make ends
meet. Some have simply been unable
to do so. If we look at arrears and
possessions data from UK Finance, for
example, we’ll see that while mortgage
arrears are now trending downwards,
there were still 104,780 people in
arrears in 2024, and 107,260 in 2023.
This is significantly higher than the
pre-pandemic figure of 80,857 in 2019.
At the same time, 1.8 million fixed
rate mortgages are due to expire this
year. Brokers can therefore expect
to meet clients who have missed
repayments on their mortgage, and
possibly on other secured or unsecured
loans as well.
Even if they are now in a more stable
position, the legacy of that financial
strain could follow them for years.
But it shouldn’t have to be that
way. So how can brokers help clients
rebuild their credit profile?
Reviving and restoring
Over the past year, we’ve seen a rise in
applications from those with impaired
credit. Debt consolidation is now the
most common reason for mortgage
capital raising.
CLAIRE ASKHAM
is head of mortgage sales
at Buckinghamshire
Building Society
We know people have relied on
secured and unsecured borrowing
to pay the bills. Some have struggled
to keep up repayments, leading to
missed payments, mortgage arrears or
debt management plans. But pushing
borrowers down a specialist route,
or shuing the door altogether, risks
making things worse.
That’s why a core part of our revised
offering is about helping borrowers
recover. We’ve looked at how to make
it easier for those with a less-thanperfect credit history to move forward.
That might mean supporting
financially stable individuals
with a couple of historic missed
payments. It could also mean helping
those whose borrowing options
are limited due to past financial
setbacks, such as bereavement or a
marriage breakdown.
We’ve responded by increasing loanto-values (LTVs), raising maximum
loan values, and updating our credit
matrix to be more inclusive of those
with credit issues.
Helping brokers
Today’s buyers are presenting more
complex cases, so we need to adapt our
offer to reflect that.
We want brokers to know that
just because someone has a lessthan-perfect credit history, it
doesn’t mean they have to rely on
alternative lending.
There are options available. With
our manual underwriting approach
and case-by-case assessment, we’ll do
what we can to help people move on
from the setbacks of recent years. ●
