“So far this year, 14% of the first charge mortgages funded by the lender have had credit issues, with this trend expected to continue amid ongoing cost of living challenges.”
In a time when high levels of inflation continue to place additional financial burdens on household budgets, it’s little wonder that a variety of payments are being missed across households which incorporate some very different income generating backgrounds.
The growth in these credit-related occurrences which are hampering present and future borrowing experiences and expectations were highlighted in recent research from Together. The research showed that around 30% of UK adults have had a credit blip on their record in the past, usually from a missed utility bill, rent, credit card payment or being in an overdraft.
In terms of understanding the impact of this, the research found that more than half of respondents were aware of their credit history status before applying for a mortgage and 14% said they were unsure of how likely they would be approved. Tellingly, internal data outlined that 66% more middle class borrowers with adverse credit have taken out mortgages between 2019 and 2022.
So far this year, 14% of the first charge mortgages funded by the lender have had credit issues, with this trend expected to continue amid ongoing cost of living challenges. Credit issues are also having a knock-on effect on future property plans. 24% of borrowers are said to be re-thinking their future mortgage and property plans altogether, compounded by recent increases in interest rates and inflation.
What’s more, 64% of those who are not confident in being able to keep up with their mortgage repayments this year had a previous credit blip – compared to 32% without any blips – in a further indication of the increased awareness needed around mortgage application support.
Some large, responsible strides have being made to accommodate new and existing borrowers who have suffered from credit-related issues in the past, large or small . However, as outlined in the comments from Alan Davison, personal finance distribution director at Together within this research; “banks and other high street lenders often stick rigidly to strict criteria and automated processes when deciding whether to approve a mortgage application, and credit blips – even if they’re historical and have been caused by a debt that has been paid off – can easily lead to rejection.”
While this is a factor the vast majority of brokers are fully aware of, the question remains if they are doing enough to generate alternative solutions for the growing number of borrowers who are falling into a credit hole either without knowing it or having insufficient knowledge to extract themselves from it?
The answer lies in the hands of individual brokers. Although, the excuses for not being in a position to service these growing demands is lessening as the specialist residential lending marketplace is delivering for those borrowers being ignored by high street lenders whose hands are either tied from a risk perspective or are unwilling to expand their lending boundaries.
With a rising number of borrowers accruing credit-related concerns, generating multiple incomes streams and/or having more complicated financial circumstances, it’s clear that borrowers and brokers need additional support to source the right option for them.
This is where a trusted packaging partner will continue to be the perfect conduit in sourcing and delivering solutions to help navigate complex and uncertain market conditions and in meeting the types of client demands which are currently testing the mettle of even the most experienced brokers.
