Help is now sought by lenders on adverse credit customers – Moloney

Have you recently taken a walk down your local main street? Walking through a hostel in the market town where I was staying last month, I was struck by the number of handwritten signs pasted to the windows of shops and cafes, and one behind the pub bar itself, reading: “Help Wanted”.

The UK service industry needs staff, a fact confirmed to me by my 45 minute wait for a club sandwich.

The record number of vacancies nationwide has been widely reported. There were around 1.3 million vacancies in March this year according to the Office for National Statistics, but here is the proof on my doorstep, written in black marker, and it got me thinking.

As we slowly emerge from the pandemic, the “Help Wanted” advocacy applies to many sectors of society, including mortgage borrowers. The virus has not only damaged people’s health, it has hurt their bank accounts and credit ratings, with many suffering financial damage due to being fired or unable to work for a period of time because they were isolated.

Since the pandemic hit, hundreds of thousands of people have missed credit payments or unsecured loan repayments, often due to circumstances completely beyond their control. Last year, 848,124 County Court Judgments (CCJs) were registered against consumers in England and Wales, up 36% from 625,901 in 2020, according to the Registry Trust.

But the size of the average CCJ, the amounts of money owed, fell by 8%, from £1,811 in 2020 to £1,658 in 2021. This drop in the size of debt continued a downward trend long-term, which began after the global financial crisis. crisis (in 2008 the average CCJ was £3,662).

For mortgage borrowers, this trend is significant, as it shows that credit records are being damaged for relatively minor misdemeanors – but which are causing traditional lenders to slam the door on concerned consumers.

The vast majority of would-be borrowers who have been or would be turned down by the big banks are not serial defaulters on mortgages and other debts. Most of these first-time buyers, movers and mortgagers have simply been struggling financially and need a helping hand from the mortgage industry, not Hobson’s choice of a seven per cent deal or no deal. at all.

Mortgage Advisors Need Support From Lenders

Mortgage advisors understand this dilemma and are key to solving the conundrum, because it is by seeking their professional advice that today’s adverse borrowers will find the solutions they need. But advisors also need support in this endeavor.

Advisors want to help clients restore their credit situation for the future, but they also want to give them access to a range of mortgages at great prices now. When applying for an unfavorable deal, brokers need to be sure that they are not running the risk of further damaging a compromised credit record simply by dint of applying or being rejected.

Advisors are busy people, handling more cases in the 12 months to the fourth quarter of 2021 than at any time since 2015, according to the Intermediary Mortgage Lenders Association. Granted, some of that pressure was a result of the stamp duty holiday delay, but the market remains buoyant, so the heat stays on – and adverse cases typically take longer than vanilla claims.

So, as lenders, we need to offer advisors a robust system to find the most suitable mortgage for an adverse client without the need to make multiple inquiries.

We must offer competitively priced mortgages to suit a wide range of borrowers with imperfect credit histories, whether they have recent CCJs, defaults, arrears or debt management plans ( DMP).

We need to step up when “Help Wanted” becomes obvious. And help is needed now.

Adrian Moloney, Intermediate Group Manager, Precise Mortgages (part of OSB Group)

Comments are closed.