Talk of the ‘average’ customer within the UK mortgage market space might feel like a misnomer, given how our entire advice sector is focused on the specific needs of every single client and how products and advice or recommendations have evolved to cater for individuals with wants and needs unique to them.
However, understanding the ‘average’ consumer can still be useful, not least because of how it shapes our thinking about what circumstances a large number of people might be in, or the various extremes that are not ‘average’ at all.
Certainly, as a mortgage industry, we have become a sector much more in tune with the ‘non-average’ needs of borrowers, recognising that for every ‘vanilla’ borrower who has a significant amount of equity or a regular monthly income that rarely changes, we now have borrowers with a far greater deal of complexity.
You might say that the specialist market has grown up to deliver products for these types of customers, and knowing what the ‘average’ is helps us to cater for those who are definitely not among that cohort.
Those that don’t fit the mainstream machine, so to speak, but require a much more nuanced approach in terms of the products they require, the underwriting that comes with this, and the service that can take them through to completion.
In that sense, the residential market has changed significantly, with product options available for those who have all types and amounts of debt, who have had arrears or county court judgments (CCJs) over various time periods, but also those who are in unique circumstances – professionals or key workers, for example, those who are self-employed, those who are paid in a variety of ways, those who have multiple or unusual sources of income – the list goes on.
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However, it is perhaps the debt, arrear and CCJ element that remains fundamental to a specialist residential mortgage offering. Knowing what type of debt is held by individuals, or the number of borrowers currently in arrears, or perhaps how the number of those with certain types of CCJs has moved over time, is always going to be useful to review.
If you want regular monthly guidance on average money, debt or arrears statistics covering a whole host of different areas, then I would suggest The Money Charity’s data haul.
It covers off a huge range of information that will give advisers a great deal of insight into the ‘average’ position for many existing and would-be borrower clients, and is particularly useful in terms of setting out the finances many people now have, and how this has evolved.
For example, the latest set of stats for September reveals what is happening ‘every day’ in the UK. One person every four minutes and 20 seconds was declared insolvent or bankrupt between June and August this year, the number of UK mortgages with arrears of over 2.5% of the remaining balance increased by 38.8% per day in the year to June, and 901 people reported they had been made redundant between May and July this year.
This is of interest because it shows where potential clients might be in their lives, and it shows where they also could be coming from. Incomes might have been under pressure for some time but recovered, debts could have been incurred but now paid back, or are being paid back. The financial situation your remortgaging borrower might have been in two, three or five years ago might be very different today and therefore require a specialist advice solution.
As mentioned, this helps us as a specialist residential lender come up with product solutions for these types of borrowers, but helps advisers to deliver a growing number of mortgage options to clients with all kinds of different circumstances and situations, and importantly, financial history.
Thankfully, we are in a place where the vast majority of borrowers have options available to them.
But, it’s important we recognise and understand the shifting nature of both ‘average’ and those outside the average, in order to keep on delivering the right mortgage for them, whether specialist or mainstream.
