October 25, 2016

Specialist Mortgage Market Business News

specialist mortgage market news 2016

In September, we partnered with Financial Adviser magazine to survey over 100 mortgage brokers, to understand their views on specialist mortgages. However, we included a couple of questions that revealed the extent to which mortgage brokers are participating in specialist lending categories today, as well as exploring some of their attitudes which may be driving how brokers engage. With some extra analysis, these data reveal that:


  • Brokers are much less likely to broker the specialist versions of their mainstream mortgages. 53% of brokers will do 1 first charge mortgage per week, but just 1% will do 1 second charge. Likewise 26% will do 1 BTL a week vs. 3% for complex BTL deals
  • This drop-off is not just because there are fewer specialist deals than mainstream equivalents. In all cases, there’s a huge drop-off in participation between being “familiar with” and “doing a few a year”, suggesting reticence in engaging with these products
  • 39% see real business opportunities in specialist sectors, with a further 48% possibly so, but...
  • ...28% believe that specialist lending is complex and 47-71% would like to learn more about commercial, bridging, complex BTL & second charge mortgages, suggesting experience and understanding is as important a barrier to participation as deal availability
  • In particular, bridging finance is least appreciated, with only 7% doing 1 a week and just 45% seeing business opportunities in bridging vs. 72% and 75% for complex BTL and Commercial mortgages respectively

We believe many brokers who only have basic familiarity with specialist lending, are missing opportunities to place business for clients because they don’t know the full range of circumstances that specialist lenders will consider. Client needs are therefore not being met in some cases.

The solution has to be providing you, with the tools and support you need to get to grips with the complexities of specialist lending.

The situation is most evident with bridging, with lowest participation rates and weakest perceptions of business opportunities, alongside strong recognition for the need to know more. This sits in marked contrast to the bridging marketplace, which has doubled in a couple of years – reaching £4.4Bn gross lending, according to the West One Bridging Index. This growth has far outstripped both the mainstream mortgage market and other specialist lending, reflecting the flexibility of bridging finance. With a good exit strategy, a borrower can access finance quickly, and for almost any purpose – even funding small businesses.

Google Trends Graph of People Searching for Bridging Loans

Whilst bridging clearly offers an income opportunity in itself, you may not have considered that many borrowers also exit bridging deals through refinancing – often to a buy-to-let mortgage. That can mean two occasions for you to arrange mortgage finance for your clients in any one year. And with the kinds of borrowers who do the majority of bridging in the market being professionals doing multiple deals in a year, the opportunity for you is strong.

Broker Video Guide to Bridging Loans

You also might be interested in our video: The Broker Video Guide to Bridging Loans. It's packed full of informative info. 

Source: ‘Funnel’ graphs on this page are based on research conducted by Financial Adviser with 149 of their readers who have mortgage permissions. Fieldwork conducted July-August 2016. Funnels derived from analysis of Q14: “How much experience do you have with any of the following mortgage lending and associated insurance / protection?”