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Placing borrowers cases

Journalist: Jake Carter, Mortgage Introducer

ended 19. April 2023

Pepper Money and Mortgage Business Expo’s online survey of more than 500 brokers found that around 26% of brokers are concerned about finding a mortgage for customers with adverse credit in the next year.

Are you expecting for borrowers with adverse credit to struggle this year?

What could be done to help assist their moves?

Given the economic outlook, are lenders more open to accept customers with adverse credit??

5 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
When the housing market struggles, those most affected are customers with adverse credit. The market is on rocky ground and prices are likely to fall another 10% so I expect criteria to remain tight for advert credit applications in the medium-term. As interest rates slide into the summer, this will ease the pressure on customers with bad credit.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Whilst I don't usually struggle to place a case somewhere, the issue I do tend to find is the cliff edge in pricing that occurs. With some minor, or more historic, poor credit it is often possible to place these clients on standard rates with mainstream lenders, but once a client's bad credit passes the tipping point and we have to look at specialist lenders to secure a deal, then the jump in both interest rates and set-up fees can be quite sharp.
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Graham Cox
Director at Bridging Hub
The biggest obstacle for anyone with adverse credit is mortgage affordability. High street lenders tend to shy away from anything but the most benign bad credit, which means a smaller building society or specialist lender. They tend to charge higher interest rates, affecting overall affordability.

With the cost of living crisis impacting households, I expect all lenders will need to become more tolerant of defaults, CCJs etc over the coming years. It's a market segment only set to grow.
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Amit Patel
Adviser at Trinity Finance
Adverse credit applications will increase as more and more borrowers end up with credit blips which will impact their ability to secure a mortgage with high-street lenders as they tend to only want to lend to people with a clean credit history.

Adverse applications are time-consuming as the lender will usually ask for more documents and a detailed explanation of why the borrowers ended up in a financial pickle.

It would be helpful if high street lenders were more lenient towards borrowers with minor credit issues.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
It is concerning to hear that brokers are experiencing challenges in finding lenders for clients with poor credit histories. Unless there have been very recent payday loans or very recent missed secured loans/mortgage payments, there should be a lender willing to consider such cases, albeit with a higher interest rate starting with a 7 or even 10. It is crucial for borrowers to approach a firm with access to a vast network of lenders. Our firm, for instance, has access to over 80 lenders, which increases the likelihood of finding the right lender for the borrower's specific needs.