Taylor Scott International News
More mortgage borrowers are seeing their applications for mortgage loans given the green light as new products emerge to support ‘non-standard’ circumstances, according to new research. Some 26% of brokers reported having no problems sourcing a mortgage for any type of borrower in the second half of 2015, the highest proportion in the post Mortgage Market Review (MMR) era, and a clear sign of improving lending conditions. According to the Intermediary Mortgage Lenders Association (IMLA) report it represents a significant jump from the proportion of brokers experiencing no problems both in the first half of 2015 when it was 15% and the second half of 2014 when it was 16%. However, some areas beyond the ‘mainstream’ mortgage market have been less well-served since 2008/2009, with new regulations introduced to govern lending criteria and fewer products on offer tailored to meet the needs of smaller and less mainstream consumer segments. This includes products to support borrowers seeking lending into retirement, products designed for borrowers with past adverse credit records, and those tailored for self-employed borrowers or those with irregular incomes. However, the IMLA’s research shows fewer brokers are now experiencing problems with sourcing a mortgage for clients in all of these areas, with the most significant improvement seen in sourcing loans for interest only borrowers. The proportion of brokers having difficulties helping this type of client has fallen 15 percentage points year on year to 39%. Similarly, the proportion of brokers unable to source a mortgage for ‘lending into retirement’ borrowers has dropped seven percentage points to 43%. The picture has also improved for self-employed borrowers, with just 40% of brokers reporting problems over the last six months, down six percentage points from a year ago. The most common circumstances where brokers were unable to source mortgages in the second half of 2015 continue to be adverse credit at 46%, lending into retirement at 43%, self-employed at 40% and interest only borrowers at 39% although in each case, the picture has improved. The report points out that these product types are becoming increasingly important, in context of the changing UK demographic. More first time buyers are taking out mortgages with longer terms to spread out their repayments, with 60% now opting for terms that last more than 25 years, meaning more borrowers could be left paying off their debt in retirement. Meanwhile the trend towards more working flexibility alongside sluggish wage growth has boosted self-employment levels in the UK, and 15% of the workforce are now self-employed. Looking ahead, both lenders and brokers identify first time buyers as the market area with the best overall growth prospects for 2016, ahead of other segments. However, when asked about the prospects for product availability, IMLA’s research suggests further improvements could be on their way for other borrower types. More than half of lenders forecast an improvement in mortgage availability for retirement borrowers, near prime borrowers, those who are self-employed or with irregular incomes, and interest… Taylor Scott International
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