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Specialist lending moves into the mainstream

    Specialist lending moves into the mainstream


    Dominated by the sub-prime market, many blame the proliferation of sub-prime mortgages for contributing to the financial crisis, and it is only now, eight years on, that lenders are starting to creep back into the market.

    The more popular areas of specialist lending are buy-to-let – clearly a favourite among those already owning property who have the wherewithal to expand their property portfolio - have started to slow down due to stamp duty changes.

    Second charge mortgages, however, have become more popular, with people taking out a second mortgage on their home to fund home renovations, or personal needs. Figures for second charge mortgages showed a rise in new business of 40 per cent over the past year.

    In conjunction with Enterprise Finance, Financial Adviser conducted research on its readers to find out what they think of specialist lending, and if it has a long-term future.

    The findings show that specialist lending is increasing, with three-quarters of financial advisers having a substantial amount of specialist loans on their mortgage books, while lending into retirement has become a particular area that has taken off.

    However, it would appear that for some advisers, specialist lending is an area that some feel unprepared for – commercial and semi-commercial mortgages is the most significant area where advisers feel they need most training and education. In addition, two-thirds of respondents believe specialist lending is reasonably complex.

    Despite this, many think that specialist mortgages will be a new business opportunity, although just under half in the survey, were only partly sure. Sub-prime has some way to go before making it a strong feature on advisers’ choice of products, while the top LTV on these products amounted varied mainly between 70 and 80 per cent.

    After a torrid few years during the financial crisis, the mortgage sector has come back in a considerable way, but for those looking to diversify, specialist lending may be one way forward.

    Melanie Tringham is features editor of Financial Adviser

    In this special report


    Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

    1. Nearly a quarter of advisers in the research claimed to advise on buy-to-let mortgages how frequently?

    2. According to figures from the CMLspecialist lenders and challenger banks increased their gross lending by how much last year?

    3. 77 per cent of respondents said how much of their mortgage books consisted of self-employed loans?

    4. More than half the survey respondents believe that specialist mortgages will be a new business opportunity. True or false?

    5. What percentage of respondents would be a lot more likely to advise on adverse credit than a year ago?

    6. How much was written in bridging loans last year?

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