Page 13 - The Pulse Issue 6 Online

The big questions clouding the industry over How will lending in the adverse sector of
the past 12 months have been surrounding how the marketplace evolve in the next 2 years?
Brexit negotiations will impact the mortgage and
property market. Keith Barber, The Family Building Society: With the
economic fallout from Brexit, and a number of new

To help to shed a little light on what direction lenders may entrants to this market in recent times, it’s a sector that’s
intend to take in the next few years, in terms of products, set to increase. We’ve recently seen Barclays have relaxed
criteria and outlook, we’ve hosted a discussion with both their criteria in this area.
high street and specialist lenders to provide you with the
burning answers which may impact your business in the Louisa Sedgwick, Vida Homeloans: As we know, utility
years to come. companies and mobile phone providers are getting more
proactive in managing customer account arrears, leading
How do you think the base rate will move to an increase in CCJs registered, a great example of
which is the uplift in 2016 to 900,000 CCJs registered
in the next 2 to 3 years? (from 700,000 in 2015). This means that more customers
will be affected and will have to turn to lenders who
Ross Turrell, Fleet Mortgages: The future is looking very specialise in adverse lending. We are seeing a greater level
interesting, with Brexit on the horizon the Bank of England of innovation coming from the specialist lenders who are
will be looking to create stability, as a result interest keen to support borrowers who may not fit the high street.
rates will remain as they are (current Bank of England This is the area I think where we will see more growth
yield curve support this view) in the near future due to – non ‘mainstream’ customers being in a position to buy
uncertain times ahead. their own homes.

Keith Barber, The Family Building Society: The answer is, it Terry Jordan, RBSIP: As the economy continues to remain
depends. Six months ago we all thought the Fed in the US strong and unemployment rates low, more lenders will be
would lead the way with a series of rate rises starting 14 encouraged to review their stance on the adverse sector.
June, now that seems less likely. The Bank of England has As such, niche lenders will be growing their lending to
said it will ignore inflation, normally the trigger for higher support this sector.
rates, as it’s short-term caused by exchange rate changes.
We could easily continue to have low rates for some time Peter McGuinness, Bluestone Mortgages: We expect to see
to come. an increased use of credit score models to assess customers
with adverse credit history, particularly from higher volume
Louisa Sedgwick, Vida Homeloans: It’s unlikely we will see lenders. This may assist develop certain segments of the
a great deal of movement in the Bank of England bank rate specialist lending market but fundamentally many good
over the next two to three years. The mortgage market is quality applicants are likely to continue to find it difficult
still ascertaining the new ‘norm’. We have seen one or two to access credit.
individuals of the MPC vote to raise interest rates, however
as they remain in the minority against what is still a fairly Bluestone is at the forefront of a lending industry that is
unstable economic background, the expectation is that catering to a growing number of people who are currently
rates will remain static for the foreseeable future. unable to access credit. With the recent growth in the
supply of specialist lending products, and the increased
Terry Jordan, RBSIP: We are at the bottom of the interest awareness and confidence of both intermediaries and
rate curve with little opportunity for rates to go anywhere consumers, we expect to see steady growth.
but up. Whilst the economy is uncertain as a result of
Brexit and the General Election, my short term forecast What impact will the uncertainty of Brexit
would suggest base rate remaining the same but over a have on the mortgage market and the
two to three year time period the likely trajectory would be
a slow increase into the 1% to 2% range. economy in general?

Peter McGuinness, Bluestone Mortgages: With the base rate Ross Turrell, Fleet Mortgages: We are already seeing ‘part-
at an all-time low, it is not unreasonable to think that the time‘ landlords sitting on their cash during this period
Bank of England may increase rates over the next couple of uncertainty, taking the view that if they do nothing,
of years. The decision to hold the base rate over recent they will be no worse off than they are now. However the
months, coupled with prolonged market uncertainty, could professional and semi professional landlords are still active
cause many mainstream lenders to further tighten their with a high proportion of purchases transacted through a
lending criteria, excluding responsible applicants from the Limited Company structure
mortgage market. Specialist lenders therefore have an
important role to play to ensure borrowers are assessed Keith Barber, The Family Building Society: Uncertainty
on a case-by-case basis and are offered appropriate, about the future tends to dampen activity, as we saw last
affordable loans. year after the vote to leave the EU. Housing transactions
are fewer than they used to be and more are financed
by cash, particularly in the buy to let sector. To keep
business levels up, brokers need to pay more attention to

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