Pete Thomson is sales and marketing director of The Mortgage Lender
Every month we host an online poll on The Mortgage Lender website asking the industry to share its thoughts with us. Our latest question asks whether specialist is now considered as the norm? It’s a hot topic, but luckily, it’s one I also have an opinion on.
The lending landscape has changed so much in recent years. Previously, the majority of the market could be labelled as ‘vanilla’ borrowers. They had straightforward financial situations, little risk and unsurprisingly they turned to the high street to fulfil their borrowing needs. Everyone else or, should I say, ‘the minority’, were labelled as ‘specialist’. They had complex situations, some high risk and as such often struggled to get a decent deal in comparison to their vanilla counterparts.
Today, however, these lines have become blurred and the labels we previously used in the industry, and felt comfortable with, are in my view, starting to look out of date.
The reality is, today, there are more borrowers than ever before whose circumstances could be considered as ‘specialist’ and the deals they can take advantage of are far more competitive. They’re the new norm.
We’re all living much longer and considering lending into retirement. In the UK self-employment is rising rapidly, as is contract work. And the way we choose to manage our money has changed dramatically.
On the one hand labels like vanilla and specialist help us, as an industry, to differentiate. But on the other, they’ve become restrictive and perhaps even helped gain negative connotations over time in the mind of both the market and that of the consumer.
For me, I think the industry has created a perception of ‘specialist’ lending that’s now out of date. We talk a lot about specialist lending in terms of how much it has helped certain clients to obtain decent finance options. But there is a risk that, by discussing the difference between high street and specialist lending, we could make the latter sound like an inferior choice when in fact, and considering the products and rates available, that couldn’t be further from the truth.
Lending successfully in the current climate is about being pragmatic. Understanding the profile of the borrower, the risk and also that each borrower needs to be treated based on their individual circumstances. It’s a common-sense approach, plain and simple.
Few people are now vanilla borrowers. Our financial situations now have a bit more colour and complexity – and that doesn’t have to be perceived negatively. Therefore, for me, specialist is becoming the new norm and I’m comfortable with that.