Specialist Lenders left out in the cold.
Posted on February 2nd 2009
We all know that arrears levels and repossessions are unfortunately going to climb in 2009 and that the government has been trying to reduce the impact of a severe lack of credit to households and businesses. Further analysis of the situation will highlight that government intervention is ignoring millions of borrowers.
Over the last 10 years the specialist lending sector has been growing and by my estimate represented about one third of the 2007 gross lending figure. That is over £100bn of BTL, self cert and adverse mortgage loans in one year alone. These are the very borrowers that are most likely to have difficulties in maintaining their mortgage payments yet no government aid had gone to this sector. Specialist lenders are not included in any of the government’s plans so there are virtually no products available and as a result no remortgage opportunities or capital raising opportunities even if you have got a low LTV and a good payment record. Therefore, this large group of borrowers will have no choice but to sit on lenders SVR rates many of which are linked to Libor not BBR; this will very likely lead to further arrears and repossessions. Private landlords who for the last ten years have been improving the standards of rented property and providing an alternative to home ownership will be left out in the cold. The millions of self-employed people who are the very back-bone of the Great British spirit will be classed as the mortgage market’s untouchables. And finally, the rapidly growing numbers of people with a less than perfect credit history will be virtual mortgage lepers.
The government’s failure to acknowledge the existence of specialist lenders and borrowers will lead to a two tier system and a whole swathe of people being consigned to the mortgage market’s equivalent of the scrap heap.
