The specialist lending market is in “real growth mode” and will outpace growth in the mainstream mortgage market, a senior executive has said.
Speaking at The Specialist Lending Event 2025, Ryan Etchells (pictured), chief commercial officer for Together, said that while the wider mortgage market is “expected to grow”, the specialist lending market is “expected to grow at a higher rate”.
He said the specialist lending market is worth about £35bn-40bn in a wider mortgage market worth £327bn and expected 60-70% growth of that market over the next 2-3 years.
Etchells said customer demographics are changing, their needs are “becoming more specialist” and big banks are “stepping away from that market more and more”, creating “a lot of opportunity” for specialist lenders.
He noted that this was partially to reduce risk in their portfolio, but also as they have “taken a lot of cost out of the business over the past 10 years”.
Etchells went on to explain that as they have “fully digitalised” and taken underwriters and salespeople out of the process, they were restricting criteria.
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Regarding specialist lending, he said there had been a big shift in terms of what it entails, noting that in 2008 and 2009, it was mostly adverse credit, but that is not the case now.
“Now, it’s about understanding the income of the customer, a lot more self-employed, [a] lot more multiple incomes, non-standard properties, which are becoming more and more complicated as well as purchase with shared ownership, Right to Buy and so on,” Etchells said.
He noted that sometimes borrowers could cross over all these different categories, but that imperfect credit was only 5% of its new business.
More customers with ‘specialist characteristics’ coming to market
Etchells said that, looking ahead, there were challenges regarding mortgage pricing, the cost of living and consumer behaviour.
On pricing, he noted that economic uncertainty, like President Donald Trump’s tariff war, meant that the expectations of the base rate trajectory had changed over the past few weeks, varying between 3.5% and 4% by year end.
This has ramifications for swap rates, which are used to price fixed mortgage rates, so it is important for brokers to be aware of how they are potentially changing.
Etchells continued that while there had been a “remarkabl[y] low level of arrears” for first charge and buy to let (BTL), indicating that affordable lending changes post-financial crisis had worked, consumers were “still adjusting” to the cost-of-living crisis.
“But the fact of the matter is, consumers are now worse off than they were a couple of years ago, and they’re still adjusting to that, still trying to get their heads around what that means, and they’re still reacting to what might be some further inflationary pressures to come,” he added.
Etchells said “discretionary spending remains constrained” and higher interest rates had “definitely cooled” borrowing appetites, and the impact would have to be examined in the coming years.
Regarding consumer behaviour, he said this was “changing” as there were more “specialist characteristics” in the market.
“We’re seeing a lot more self-employed, a lot more multiple jobs in the market, where customers are working various different jobs… maybe gig economy jobs or zero-hours contracts.
“We’re seeing the make-up of a customer is changing now, more rapidly than ever. Probably 25-30 years ago, every customer looked the same, they all had a job and wage slips. That is well gone and has been gone for a while, but we’re seeing that acceleration pick up even more now. That’s something over the next few years that we should all be aware of and make sure we’re reacting to,” he added.
The Specialist Lending Event continues around the country and will take place in Aston Villa and East Sussex next week.
