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Cost of living squeeze: Is your customer struggling to secure a residential mortgage?

Alan Kimber


Alan Kimber - Head of Sales – Precise Mortgages and Kent Reliance for Intermediaries

Published 28.04.2022

We’re all feeling the squeeze in the cost of living at the moment.

I was listening to the radio whilst driving between appointments recently when I heard one of the guests comment that prices never seem to come down as quickly as they rise – they always go up like a rocket and fall like a feather.

Yes, everything’s gone up in recent months and it looks likely that things will stay that way for the foreseeable future.

The increase in the cost of living, together with wages failing to keep pace with the rise in inflation¹, has led to some lenders warning they expect to see an increase in the number of defaults² in the coming months.

And with the price of a typical UK home now standing at £265,312³ - more than £33,000 than it was this time last year - it means many people could be left struggling to secure a residential mortgage, particularly if they’ve got an impacted credit score.

With the amount of people with a mark on their credit record predicted to rise and with the UK housing market showing no immediate signs of slowing down, it means there could be a growing number of borrowers unable to access the residential mortgage they need.

Fortunately, we don’t believe a credit blip should prevent your customer from getting a residential mortgage. We’re always looking for new ways to help borrowers underserved by mainstream lenders which is why we’ve recently widened the type of adverse we’ll accept across our core and DMP residential ranges.

We’ll now consider customers with higher levels of adverse to a maximum LTV of 80%, and we’ve increased the maximum LTV for customers with lower levels of adverse up to 85%.

Adverse credit

New 2 and 5-year fixed rates for customers with the following adverse:

  • Defaults – up to 5 in last 24 months
  • CCJs – up to 3 in last 24 months
  • DMPs – active and recently satisfied
  • Missed mortgage/secured loan arrears – 1 in 12 months, 3 in 36 months (worst status)
  • Unsecured arrears – not counted

LTV increase

We’ve also increased the maximum LTV to 85% for customers with the following adverse:

  • Defaults – 2 in 24 months (maximum £1,500 in 12 months, unlimited thereafter)
  • CCJs – 1 in 24 months (maximum £1,000 in 12 months, £2,500 in 24 months)
  • DMPs – active and recently satisfied
  • Missed mortgage/secured loan arrears – 1 in 12 months, 3 in 36 months (worst status)
  • Unsecured arrears (not counted)

For full details, take a look at our residential mortgages product guide.

It’s just another example of how our straightforward criteria can help you to offer diverse solutions to your customers, particularly those underserved by mainstream lenders who can’t find the product they need on the high street.

To find out more, or if you’ve got any questions, speak with a member of our sales team, call our dedicated intermediary support team on 0800 116 4385 or contact us via Live Chat.

Sources:

1 www.theguardian.com/business/2022/apr/12/jump-uk-wages-fails-ease-cost-living-crisis-prices

2 www.bankofengland.co.uk/credit-conditions-survey/2022/2022-q1

3 www.nationwidehousepriceindex.co.uk/reports/uk-house-price-growth-surges-to-its-highest-level-since-2004

 

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