With the cost of living remaining high, many customers are continuing to struggle with their outgoings – but not in the way that you might expect.
The Financial Conduct Authority’s (FCA’s) latest Financial Lives Survey revealed that people have been prioritising mortgage or rent payments over other expenses. Utility bills were the most commonly missed payments over the six months to January 2024, followed by credit card bills and council tax.
This comes as over one in three (36%) reportedly saw their mortgage payments increase in the past 12 months. There has also been a jump in the proportion of mortgage holders who asked their provider to reduce their monthly payments or provide a payment holiday, rising from 0.4% in the six months to January 2023 to 1.6% in the 12 months to January 2024.
Mortgage brokers helping people keep their homes
People understandably tend to prioritise mortgage payments to avoid the risk of losing their home. Yet some may not realise that missing other regular payments could negatively impact their credit profile.
When they next look to move or remortgage, these customers can no longer meet standard high street lending criteria and may struggle to find alternatives without using a broker.
Mortgage brokers play a crucial role in guiding customers with adverse circumstances towards mortgages that meet their needs without overstretching them. Brokers can help by thoroughly assessing customers’ financial situations and priorities for their mortgage to help them to find the most suitable lender and products.
They can clearly explain the alternative options available to people who cannot access high street mortgages in terms that they can easily understand.
Advising across the market
Working closely with specialist lenders can also help brokers to navigate market complexity and provide the right support for customers’ specific circumstances.
Specialist lenders provide flexible criteria and consider a wider range of factors than traditional providers, enabling them to offer solutions that address unique customer circumstances and make mortgages accessible to a broader spectrum of people.
Kensington’s Resi 6 and Resi 12 products, for example, are designed for borrowers who have experienced a credit blip over six or 12 months ago respectively. Both offer Kensington’s new Step Down option, which provides a lower rate for the last three years of a five-year fixed term.
In addition, successfully managing a mortgage, which could be made easier with specialist products, can help adverse customers to improve their credit score, enabling them to access more options in the future.
The new group of adverse customers being created by the rising cost of living are likely to require a specialist mortgage when they decide to buy, move, or remortgage, as well as knowledgeable, empathetic, and engaged brokers to help them to navigate this unfamiliar market.
By working with specialist lenders, brokers can grow their business by diversifying into this area of the market while delivering exceptional support to their customers and helping them to find the right mortgage for their circumstances.
