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Directing complex borrowers to specialist lenders

Steve Seal

February 26, 2020

Steve Seal is managing director of Bluestone Mortgages

It is not news that the specialist lending market has seen a boom over recent years.

We can in part attribute this growth to the swathe of lenders continuing to support increasing numbers of “non-vanilla” borrowers with the tailored lending solutions they need – products which they might not have been eligible for elsewhere.

What’s concerning, though, is that large numbers of consumers are still unaware of what the specialist lending market can offer them. As part of Bluestone’s recent Specialist Lending Tracker, only two in 10 customers who have had their mortgage application declined by a high-street lender felt a specialist lender would be their next best option.

The specialist market is geared specifically towards borrowers who are struggling to unlock lending on the high street – but this is no good if customers are unaware of this.

The intermediary market is already doing a good job in helping customers who have been denied lending. Referrals, for example, are an effective way of ensuring more customers can access specialist lending, and intermediaries play a major role in this.

A promising outcome of Bluestone’s 2019 Specialist Lending Tracker was that 94% of brokers said they were likely to refer their client to a specialist lender if they had been rejected by a high-street lender. By referring complex borrowers to specialist lenders that are able help them, intermediaries will continue contributing to the increasing number of positive customer outcomes.

However, there’s more the industry can be doing. If we don’t do more to help customers who have lost confidence in their eligibility to re-apply for a mortgage, then this will not only make room for further uncertainty amongst consumers, but also hurt business in the long-run.

The high-street banks have a duty to alert the customers they are unable to help to the other avenues that are available to them. Again, referrals will go a long way in achieving this.

If more high-street lenders start referring complex borrowers to an intermediary that can help them find a specialist solution, this will reassure customers that one rejection does not automatically mean the end of their homeownership dreams.

This will help improve consumer education around specialist lending and ensure that fewer people are disheartened by a ‘computer says no’ response. Furthermore, by guiding customers to a better lending option early on in the application process, it becomes less likely that this community is left disheartened as a result of a rejected application.

Last year, the Trade Union Congress revealed that the average value of household debt reached a new peak of £15,400 . Therefore, the need for specialist lending is greater than ever.

However, only with industry-wide action will consumer knowledge of the specialist market improve to ensure that greater numbers of underserved borrowers are aware of how they can fund financial milestones. There are lending routes available for most customers – it’s just that lenders can be doing more to highlight these to customers they are unable to help.

By resolving this, we will be able to raise the hopes of underserved borrowers up and down the country, all the while ensuring that more can secure the financial solutions they deserve.


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