Don’t let adverse make things worse....
With adverse credit worrying many property seekers struggling to buy in the current economy, Mortgage Introducer hears from two industry experts who say there are solutions to turn things around
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AS THE cost-of-living crisis continues to tighten its grip, interest rates soar and inflation stubbornly shows little sign of coming down, adverse credit is something that looks set to blight the lives of many more UK householders.
Certainly, no one would wish sleepless nights of worry for the many millions of people who will fear securing a mortgage because of their financial struggles.
But these challenging times do present an opportunity for financial institutions to support customers old and new, showing them the best of what they do.
“It is going to be a big difference each month in their payments – and that’s before you factor in all the other costs which are increasing, so it’s going be quite challenging for some.”
Askham reflected on those who might be affected by adverse credit.
“It’s customers who have had a credit blip, who need help to be able to sort out their finances and put things back in order,” she explained. “It could be someone that’s had a major life event that’s impacted them: a mental health breakdown, a loss of job or the break-up of a relationship.
“It only takes something to break down in your house or a car repair, and if you haven’t got that spare cash and you haven't got anybody who can help support you for a short space of time, you may turn to a credit card or a payday loan. So, it doesn’t take much at all to put somebody in that situation, where it could lead to two or three missed utility payments, and then it can just escalate from there.”
This is where Buckinghamshire Building Society steps in, said Askham.
“We have our customers’ best interests at heart,” she elaborated. “So that means being able to support our customers to achieve their dream of homeownership and helping those customers who find themselves in situations which may prevent them from going down the route of a high street lender, because of credit blips.
“We base our lending decision on credit search and not based on the credit score. We look at the individual and their situation and everything that we do is manually assessed. We take a holistic approach to each case, which enables us to come back to ask further questions if something doesn't quite tick all the boxes, and obviously it helps us then try to identify a potential solution for the customer. We don’t put anything through a yes or no system – we don’t work that way.”
Askham concluded: “We set ourselves apart by taking a ‘human’ approach to our lending, to make sure that we do the right thing for our customers.”
Rob Barnard, intermediary relationship manager at Pepper Money, pointed to the specialist lender’s adverse credit study, which it produces annually.
“The startling figure that came out of the last survey that we did was that 7.91 million people in the UK could now be classed as having some form of adverse credit,” he shared. “When people think of adverse, they think of a CCJ (county court judgement) default or a missed mortgage payment. But it can be as simple as a missed payment on a credit card.
“Last year in England and Wales, there were approaching 900,000 CCJs registered. High street lenders, looking at somebody’s credit file, look back at least three years. So, if there’s around a million people a year registered, you’ve got up to three million people who are going nowhere near a high street lender for at least another one, two or three years. The specialist sector is there to help those kinds of people.”
“When you think about the number of rental units being built in downtown Toronto or Vancouver, there aren’t many of them,” he says. “It is far more profitable to build and sell condos. If a builder goes to the suburbs, they can buy a two-acre piece of land and put up a 100-unit apartment building. They can use less expensive technology, wood or steel versus concrete, can do surface parking, and elevator runs are less expensive in a four- or six-storey building. So it is much more affordable to build them there.”
That affordability for builders can quickly turn into value and returns for asset managers and investors who get involved with these types of properties.
Askham had some sage advice for brokers.
“The more information they can get from their customer, the more they can share with us, the easier it is for us to make a decision to support that customer,” she reasoned. “Don’t be afraid to ask questions – try to dig a little bit deeper. I’d always say try to obtain the customer’s credit report. We like to understand the full story and that enables us to make the right decision to help them.
“We see younger and older applicants who have got into difficulty – there isn’t a specific type of client who’s impacted. We would never judge anybody that comes to us, for whatever reason.
There are a lot of products that we can offer, covering all kinds
of scenarios.”
Award winning, mutually owned and independent, The Buckinghamshire Building Society was founded in 1907 and offers simple savings accounts to its members, as well as specialist mortgage products to customers, through intermediaries and direct. It is dedicated to providing excellent service to everyone from first-time buyers to later-life borrowers. The Buckinghamshire Building Society offers what it describes as a holistic and ‘human’ approach to mortgage underwriting, including a niche product range that enables people to own a home of their own, even if their circumstances are slightly complicated. It works closely and proactively with intermediaries to find life-changing solutions.
Find out more
Part of a global organisation, Pepper Money is an award-winning UK-based specialist lender. It understands that brokers have different needs, as diverse as their customers, and its purpose is to help both parties fulfil their ambitions. By offering simple, inclusive products and taking what it describes as a human approach to decision-making, Pepper Money prides itself on being easy to work with and providing specialist expertise that its customers can always rely on. All its mortgages are available via intermediaries, and it can also arrange Second Charge products directly, via one of its advisers.
Find out more
Barnard said: “I think one thing that Consumer Duty has highlighted significantly, and quite rightly, is vulnerable customers. And I think, sadly, more and more people will come into the vulnerable customer space.
“They have never needed a mortgage adviser more than they need one now – an adviser can very quickly
stop that problem worsening.”
Pepper Money does not use credit scores to make a decision on whether it will lend, Barnard emphasised.
“We just use common sense decision-making, based on the information that a broker tells us,” he explained. “We don’t use automated tools. We give a broker direct access to speak directly to our underwriter.
“I always think a two-minute conversation between a broker and an underwriter will be the best two minutes they will spend in a mortgage process, because at the end of that two minutes, they know exactly where a case stands.”
He expanded on the Pepper Money approach.
“We appreciate real-life issues,” he said, simply. “We get it. We do our credit checks and make sure that all backs up, but if it makes sense, let’s get someone back to where they need to be. Just because somebody’s had a blip on their file doesn’t mean they shouldn’t get a mortgage.
Part of a global organisation, Pepper Money is an award-winning UK-based specialist lender. It understands that brokers have different needs, as diverse as their customers, and its purpose is to help both parties fulfil their ambitions. By offering simple, inclusive products and taking what it describes as a human approach to decision-making, Pepper Money prides itself on being easy to work with and providing specialist expertise that its customers can always rely on. All its mortgages are available via intermediaries, and it can also arrange Second Charge products directly, via one of its advisers.
Find out more
“Let’s get the message out there to the consumer that they’re not being thrown on the scrap heap and that there are brokers and lenders who can help them”
Rob Barnard,
Pepper Money
In Partnership with
“We’re seeing more and more adverse credit, particularly since COVID,” said Claire Askham, head of mortgage sales at Buckinghamshire Building Society. “I think a lot of people haven’t actually been impacted by the cost-of-living crisis yet. I think it’s going to be towards the end of this year, when the majority of people start to feel it.”
She continued: “I think back to the pandemic, when a lot of first-time buyers were benefiting from the stamp duty holiday, and it was enabling them to get onto the property ladder. All those customers who perhaps went onto two-year fixed rates are going to come to the end of those deals towards the end of this year and may be going onto 5 or 6 per cent mortgages.
“We set ourselves apart by taking a ‘human’ approach to our lending, to make sure that we do the right thing for our customers”
Claire Askham,
Buckinghamshire Building Society
Industry experts
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Stewart Saunders
Heritage Bank
Rob Barnard
Pepper Money
Claire Askham
Buckinghamshire Building Society
Industry experts
With over 20 years’ experience working across all aspects of the mortgage market, Claire Askham is a well-known specialist lending expert, having appeared at hundreds of events across the UK. A firm believer in industry collaboration and happy to share her knowledge, Askham is equally at home taking part in panel debates as she is discussing complex cases with brokers and training her colleagues. Askham works creatively to solve problems and finds solutions that add value to intermediaries and their businesses. She was an Elite Women winner for 2022 and 2023.
Buckinghamshire Building Society
Claire Askham
An experienced specialist lending professional, Rob Barnard has 30 years of knowledge and experience navigating successfully through the twists and turns of the UK mortgage market. Barnard has developed and executed sales and marketing strategies throughout his career to drive growth and maximise retention. Strategy, relationship management, team building, management and motivation are at the core of everything he does, he explains – he “loves making mortgages exciting” and believes that the specialist market is able to change people’s lives for the better. Barnard remains a regularly sought-after speaker within the specialist mortgage sector.
Pepper Money
Rob Barnard
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Heritage Bank
Stewart Saunders
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Christopher Lee
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Stewart Saunders
Heritage Bank
Rob Barnard
Pepper Money
Claire Askham
Buckinghamshire Building Society
Industry experts
With over 20 years’ experience working across all aspects of the mortgage market, Claire Askham is a well-known specialist lending expert, having appeared at hundreds of events across the UK. A firm believer in industry collaboration and happy to share her knowledge, Askham is equally at home taking part in panel debates as she is discussing complex cases with brokers and training her colleagues. Askham works creatively to solve problems and finds solutions that add value to intermediaries and their businesses. She was an Elite Women winner for 2022 and 2023.
Buckinghamshire Building Society
Claire Askham
An experienced specialist lending professional, Rob Barnard has 30 years of knowledge and experience navigating successfully through the twists and turns of the UK mortgage market. Barnard has developed and executed sales and marketing strategies throughout his career to drive growth and maximise retention. Strategy, relationship management, team building, management and motivation are at the core of everything he does, he explains – he “loves making mortgages exciting” and believes that the specialist market is able to change people’s lives for the better. Barnard remains a regularly sought-after speaker within the specialist mortgage sector.
Pepper Money
Rob Barnard
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Heritage Bank
Stewart Saunders
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Christopher Lee
Share
Share
Share
Claire Askham
Buckinghamshire Building Society
Rob Barnard
Pepper Money
Stewart Saunders
Heritage Bank
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Mark HarChristopher Leeon
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Heritage Bank
Stewart Saunders
An experienced specialist lending professional, Rob Barnard has 30 years of knowledge and experience navigating successfully through the twists and turns of the UK mortgage market. Barnard has developed and executed sales and marketing strategies throughout his career to drive growth and maximise retention. Strategy, relationship management, team building, management and motivation are at the core of everything he does, he explains – he “loves making mortgages exciting” and believes that the specialist market is able to change people’s lives for the better. Barnard remains a regularly sought-after speaker within the specialist mortgage sector.
Pepper Money
Rob Barnard
With over 20 years’ experience working across all aspects of the mortgage market, Claire Askham is a well-known specialist lending expert, having appeared at hundreds of events across the UK. A firm believer in industry collaboration and happy to share her knowledge, Askham is equally at home taking part in panel debates as she is discussing complex cases with brokers and training her colleagues. Askham works creatively to solve problems and finds solutions that add value to intermediaries and their businesses. She was an Elite Women winner for 2022 and 2023.
Buckinghamshire Building Society
Claire Askham
Published 24 JULY 2023
THE ONLY WAY IS UP
Source: The Office for National Statistics
5%
Overall, the price of energy goods rose by
Air fares rose by
The price of consumer goods and services rose at
the fastest rate in four
TIMES ARE TOUGH
Source: Step Change Debt Charity
Over a quarter of Step Change Debt Charity’s new clients (27%) cite the cost of living as their main reason for debt, up
from 15%
a year ago
Almost three in five of its new clients (58%) are in arrears with their dual fuel bills
45% of mortgage holders, equivalent to 6.9m UK adults, have found it difficult to keep up with bills and credit commitments
The number of private renters in problem debt rose sharply from 800,000 people (11% of private renters) in January to 1.1m people (15%) in May
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in the year to May 2023
UK private rental prices rose by
8.1%
20%
in the year to May
between April and May 2023
decades
in the year to October 2022
“Our loan to values are lower than the high street, but people shouldn’t view it that they are using specialist lending forever – they should use it as a way back to the high street.”
Education and communication are key, Barnard indicated.
“I implore that brokers look at their websites, make sure that they communicate about the solutions they can offer,” he affirmed. “If a broker is active in a community, they need to engage to ensure it knows what they do. Make yourself the go-to person in your area for people that have got adverse credit – and it’s never been as important to keep in touch with your customers as it is now.”
Seventy-six per cent of the people questioned for Pepper’s survey said just another hundred pounds increase on their monthly bills would cause a problem. Thirty-seven per cent suggested that the current financial situation had impacted their mental health.
“That frightens me to death,” confided Barnard. “That’s a massive number of people that we can help, but we can’t help them directly – they have to come through a mortgage broker. It’s really important that we shout out about what we do, but we can only shout about it through brokers.
“Let’s get the message out there to the consumer that they’re not being thrown on the scrap heap and that there are brokers and lenders who can help them.
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their main reason for debt, up
from 15% a year ago
Askham had some sage advice for brokers.
“The more information they can get from their customer, the more they can share with us, the easier it is for us to make a decision to support that customer,” she reasoned. “Don’t be afraid to ask questions – try to dig a little bit deeper. I’d always say try to obtain the customer’s credit report. We like to understand the full story and that enables us to make the right decision to help them.
“We see younger and older applicants who have got into difficulty – there isn’t a specific type of client who’s impacted. We would never judge anybody that comes to us, for whatever reason.
There are a lot of products that we can offer, covering all kinds of scenarios.”
Askham concluded: “We set ourselves apart by taking a ‘human’ approach to our lending, to make sure that we do the right thing for our customers.”
Rob Barnard, intermediary relationship manager at Pepper Money, pointed to the specialist lender’s adverse credit study, which it produces annually.
“The startling figure that came out of the last survey that we did was that 7.91 million people in the UK could now be classed as having some form of adverse credit,” he shared. “When people think of adverse, they think of a CCJ (county court judgement) default or a missed mortgage payment. But it can be as simple as a missed payment on a credit card.
“Last year in England and Wales, there were approaching 900,000 CCJs registered. High street lenders, looking at somebody’s credit file, look back at least three years. So, if there’s around a million people a year registered, you’ve got up to three million people who are going nowhere near a high street lender for at least another one, two or three years. The specialist sector is there to help those kinds
of people.”
Barnard said: “I think one thing that Consumer Duty has highlighted significantly, and quite rightly, is vulnerable customers. And I think, sadly, more and more people will come into the vulnerable customer space.
“They have never needed a mortgage adviser more than they need one now – an adviser can very quickly
stop that problem worsening.”
Pepper Money does not use credit scores to make a decision on whether it will lend, Barnard emphasised.
“We just use common sense decision-making, based on the information that a broker tells us,” he explained. “We don’t use automated tools. We give a broker direct access to speak directly to our underwriter.
“I always think a two-minute conversation between a broker and an underwriter will be the best two minutes they will spend in a mortgage process, because at the end of that two minutes, they know exactly where a case stands.”
He expanded on the Pepper Money approach.
“We appreciate real-life issues,” he said, simply. “We get it. We do our credit checks and make sure that all backs up, but if it makes sense, let’s get someone back to where they need to be. Just because somebody’s had a blip on their file doesn’t mean they shouldn’t get a mortgage.
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in the year
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“Our loan to values are lower than the high street, but people shouldn’t view it that they are using specialist lending forever – they should use it as a way back to the high street.”
Education and communication are key, Barnard indicated.
“I implore that brokers look at their websites, make sure that they communicate about the solutions they can offer,” he affirmed. “If a broker is active in a community, they need to engage to ensure it knows what they do. Make yourself the go-to person in your area for people that have got adverse credit – and it’s never been as important to keep in touch with your customers as it is now.”
Seventy-six per cent of the people questioned for Pepper’s survey said just another hundred pounds increase on their monthly bills would cause a problem. Thirty-seven per cent suggested that the current financial situation had impacted their mental health.
“That frightens me to death,” confided Barnard. “That’s a massive number of people that we can help, but we can’t help them directly – they have to come through a mortgage broker. It’s really important that we shout out about what we do, but we can only shout about it through brokers.
“Let’s get the message out there to the consumer that they’re not being thrown on the scrap heap and that there are brokers and lenders who can help them.