Specialist mortgage lending is forecast to swell by 70% from £32bn to £54bn over the next five years as mortgages adapt to cater to the changing needs of work and family relationships, according to a report.
The research, which was a partnership between Together and the Intermediary Mortgage Lenders Association (IMLA), estimates that more than one-sixth of regulated mortgage lending in 2023 fell into one or more specialist categories – with the next five years forecast to grow by a further £22bn.
Specialist lending growth drivers
One of the three strongest drivers of lending growth is shared ownership. Shared ownership is expected to grow by 126% by 2029 from £2.3bn to £5.2bn.
Lending to borrowers into retirement has been identified as another growth area. This lending segment is expected to grow from £600m to £1.4bn.
Self-build mortgages is Together’s final segment to watch, with lending forecast to rise from £57m to £116m.
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Together’s 2024 Residential Mortgage Market report also predicts that inflation and the cost-of-living crisis will continue to harm potential borrowers’ ability to access credit, fuelling an increasing need for support from specialist lenders.
Rejected for finance
In the last five years, 7% of non-standard applicants were rejected, with 4% also denied financing in the last 12 months.
For 9% of this group, not being able to talk with an adviser who would understand their circumstances and a general lack of information about how to secure a mortgage for non-standard applicants were the biggest challenges (8%).
Of those rejected, 5% had no choice but to return to renting, and 4% gave up on homeownership altogether.
Ryan Etchells (pictured), chief commercial officer at Together, said: “With the five-year specialist market forecast looking so strong, it’s high time the industry, backed by the new government, reassess[es] how to best support homeowners in realising their property ambitions.”
Rob Thomas, economist and principal researcher at IMLA, said: “Estimates suggest that since the global financial crisis, 3.1 million households who would have been expected to enter homeownership based on previous trends have failed to do so.”
He added: “Given the substantial social and financial benefits that homeownership has demonstrated over many decades, it’s obvious that there is a need to improve awareness of the specialist options that might assist them in achieving their ambitions of homeownership.”
