Although inflation has reached the Bank of England 2% target, the prolonged impact of the cost-of-living crisis and high-interest rate environment isn’t going away. Our own research shows that the average consumer is worse off by £229 per month compared to last year, and this figure increases to £267 for those with adverse credit.

As such, it will be more important than ever for brokers to be able to provide support for this growing cohort of customers, whether that be signposting them to products to suit their unique circumstances or educating them about the help available from the wider industry. While we as an industry know there’s usually a viable option for customers whose financial circumstances have seen them rejected by mainstream lenders, they themselves may not.

Affordability challenges

As the impact of the cost-of-living crisis continues to be felt, affordability will remain a key challenge for many consumers. Rising mortgage repayments are a top concern for 14% of consumers, while 8% are anxious about saving for a deposit in the current climate.

According to the Registry Trust, the total number of judgments registered against consumers with unpaid debts rose 6%, from Q1 2023 to Q1 2024, and the value of debt against consumers also increased by 11%. The spike in these figures indicates the impact of the current economic environment on people’s ability to keep up with their financial obligations.

As a result of this, brokers will likely see a growing number of customers with adverse credit. This is where the specialist lending industry has a vital role to play in supporting these customers achieve their homeownership goals.

The value of advice

Amid this climate, there is an opportunity for brokers to educate their customers about the different types of products available in the market that fit the unique needs of their clients. Apart from the traditional mortgage products available in the market, innovative schemes are also coming to the fore to help first-time buyers climb onto the property ladder, such as Deposit Unlock.

This scheme provides first-time buyers the opportunity to climb onto the property ladder with only a 5% deposit. And, with a new government, we hope to see further support schemes introduced to help this cohort.

In addition to new schemes, product transfers (PTs) have also grown in popularity as market conditions have impacted borrowers’ lending capabilities. Unlike remortgaging – which requires customers to undergo comprehensive affordability assessments and incur additional fees – PTs offer a more streamlined alternative.

Since the existing lender has already established that their customers can manage their monthly payments, they often do not require going through the full affordability process for PTs, facilitating a smoother transition from one product to another.

Support from the wider industry

Although helping customers find the right products will be a crucial part of supporting them, our research has shown that people are often too afraid to ask for support. Concerningly, nearly three in 10 either don’t seek support because they don’t know where to begin (29%); or are too embarrassed to ask for help (29%).

It’s our responsibility as an industry to do all that we can to support these customers, going beyond pointing them towards a mortgage product that fits their financial situation, but also help improve and maintain their financial stability in the long run.

Looking ahead, both brokers and lenders have a clear role to play. Whether that be educating customers on the options available, or coming up with new innovative schemes, we must work collaboratively as an industry to ensure that people, no matter whether they have struggled financially in the past, can achieve their homeownership dreams.

Ryan Davies is strategy director, Bluestone Mortgages