EXCLUSIVE: 91% of brokers say traditional lenders have marginalized independent borrowers

“Many applicants no longer fit the traditional ‘tick box’ criteria and this group will only grow larger.”

91% of brokers believe traditional lenders have tightened their criteria for independent applicants, according to a new survey from United Trust Bank.

Findings from the independent survey of over 100 mortgage brokers suggest that “complex” income clients, whether self-employed, sole traders or with multiple sources of income, are a group that will continue to grow and grow. that having lenders who are sufficiently qualified and with an appetite to serve these customers is vital. 81% of brokers believe that overall client income has become more complex over the past 12 months.

Additionally, 88% of mortgage brokers believe independent clients, especially those who have taken advantage of legitimate Covid subsidies, are being marginalized by traditional mortgage lenders.

The brokers reported that many lenders had struggled to “have an opinion” on clients who had used a legitimate government grant and felt they should have been able to apply an objective assessment of the impact that the blockages had had on some previously successful businesses.

Research has confirmed that the key factors that differentiate ‘traditional’ from ‘specialty’ cases relate to income, credit history, credit rating, loan size and property type. However, according to brokers like Matt Arena, MD of Brilliant Solutions, what sets them apart is the need for lenders to involve human decision-making rather than applying inflexible automated underwriting. Brokers tended to describe this as a desire to “take a stand”.

29% of brokers who participated in the study said that more than half of their cases from the previous 12 months could be classified as “specialist”, while a further 24.5% said that between 25% and 50% of their cases had been “specialized”. . 78% of brokers believe that the specialty mortgage market represents a greater opportunity today than in the past.

Buster Tolfree, Director of Mortgages at United Trust Bank, commented: “Many applicants no longer fit the traditional ‘tick box’ criteria and this group will only grow. The way people earn their income or income has changed and will continue to change. Thus, income criteria will be an increasingly important factor for brokers in deciding where to place their records. Although many applications require the skill and judgment of an experienced professional to properly assess suitability, this same knowledge and flexibility can be applied when designing and managing automatic underwriting systems and criteria.

“The idea of ​​being able to ‘have a point of view’ goes beyond the mere involvement of a human. This is the approach a lender takes to underwriting and establishing criteria that recognizes that income is no longer always single and simple, credit history is not always spotless, and some properties are more unusual than others. Automated or partially automated application processes using time-saving technology do not discriminate against specialist cases per se, as long as the system is designed to meet the needs of applicants with more complex circumstances. At UTB, we have combined technology with pragmatic and flexible underwriting to provide brokers and their clients with a fast and simple experience. If a human needs to get involved, he will. But not all “specialty” cases require it every time. Forward thinking specialist lenders like UTB are now able to offer the best of both worlds.

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