Specialist lending becoming more popular among brokers

Specialist lending becoming more popular among brokers

Only one in ten brokers believe high-street lenders are understanding towards non-standard borrowers and many go to specialist lenders instead, research has shown.

A survey of 100 brokers, conducted earlier this year by specialist broker Bluestone Mortgages, found 94 per cent of brokers are likely to refer their client to a specialist lender if they have been rejected by a high-street provider, rather than try again.

Of those who responded to the survey, brokers were nearly equally split when asked if their clients were aware of the difference between a mainstream and a specialist lender with 42 per cent saying clients were aware of the difference while 38 per cent said clients did not know the difference.

The survey showed advisers were most likely to refer clients to specialists if they were looking for a buy-to-let mortgage.

Steve Seal, director of sales and marketing at Bluestone, said: "These figures show the need for specialist lending. 

"It’s a vital part of the mortgage market and serves those who may otherwise be unable to secure homeownership. There’s a clear perception among brokers that mainstream lenders aren’t very understanding towards non-standard borrowers, so it’s great to see that they view specialist lenders as a viable alternative."

He added it was becoming increasingly likely that lenders, both mainstream and specialist, will be met with demand from consumers with complex credit histories. 

"However, just because a borrower may not have a perfect track record, does not mean they should be barred outright from home ownership," he said.

"Through tailored advice and individualised solutions, specialist lenders are continuing to secure positive outcomes for a broad range of customers."

Last month data from UK Finance showed mortgage lending had seen a slow start to the year, with February figures being down on the previous month.

Mortgage lending by the main high street banks in particular had decreased, from 13.4bn in January to £11.2bn in February 2019.

Jazz Jhumat, financial adviser at Danestone Mortgages and Financial Services, said at the time she was not surprised by the figures as she herself had seen an increase in specialist lending.

She said: "We’re doing far more specialist lending, including some small adverse. The smaller building societies are also offering more innovative products, especially for older borrowers, while high net worth clients are looking to more specialist lenders also."