Rising to the challenge and supporting borrowers
Simon Furnell is chief operating officer at Masthaven
November brought with it a month-long lockdown and the extension of the furlough scheme and mortgage payment deferrals.
While the extension of payment deferrals will be a source of relief for those who are still struggling financially, many others will need further guidance and support from lenders and brokers, particularly those who may have already applied for payment deferrals and have reached the six-month limit.
As the coronavirus crisis persists, albeit with a vaccine in the early stages of being rolled out, the impact on jobs and the personal finances of people across the country can be acutely felt.
Figures from UK Finance show that 2.6 million mortgage payment deferrals have been granted since the crisis began. With continuing financial strain on borrowers, lenders need to be on hand to offer support.
However, they might have to consider using a variety of forbearance options and support as borrower circumstances and needs will vary widely.
A difficult winter for many
The return of restrictions and move into post-lockdown tiers has meant that borrowers’ finances are still under heavy strain.
Specialist lenders could provide these individuals with a financial lifeline in the long-term. With more people falling into the category of borrowers with complex incomes or potentially adverse credit, the specialist lending market will be key in helping these borrowers find the solutions they need, and as such, lenders need to be preparing for greater demand in the months to come.
Banks have already proven to be a critical during this time of hardship, putting customers front and centre. Many have continued business as usual, often working overtime to deal with an influx of demand from concerned customers.
Masthaven, for example, has been proactively contacting vulnerable customers and the bank has created a simple and quick mortgage payment deferral request form, meaning getting support isn’t a long-winded process. Simplicity is key for lenders offering a service to weary borrowers.
Spotting the trends
As we continue to find our way through this crisis, lenders will need to continue to respond quickly to trends in the market.
This agility in responding to emerging challenges will enable banks to continue supporting their customers.
For instance, the pandemic has prompted customers to look for short-term solutions, such as bridging loans.
Masthaven noticed an uptick in bridging loans at the height of the pandemic and was able to respond to demand through its Broker Portal for short-term lending, allowing brokers to get quotes within seconds.
Social distancing guidelines have also proved challenging. In response, some lenders have made use of automated valuation models (AVM), which allow transactions to continue in cases where physical valuations were off limits.
Tech and innovation are paramount
Technology and innovation continue to be vital for the market.
Lenders should be looking at their current processes and considering where technology can create efficiencies and work with technology developers to achieve the tailored solutions required by their customers in this intensely challenging environment.
Unique circumstances also call for unique products. The ability to rapidly design and introduce new products will be key to success for specialist lenders, as borrowers’ needs change.
In order to innovate, it will be essential to work closely with brokers, who will be able to keep lenders informed about the evolving needs of customers as they navigate their way through the challenging months to come.
Although cutting-edge technology and products are vital right now, the personal touch will always reign supreme. Now more than ever, lenders will need to approach conversations with customers in a sensitive and personal manner.
Having a customer support team that can understand the unique needs and circumstances of each customer will be hugely important in helping people through the uncertainty that lies ahead.
As such, lenders should use this time to ensure their teams are prepared and trained to deal with complex or challenging enquiries.
What do the forbearance rules say?
The final element of how lenders can rise to the challenge of supporting those in need lies in reinforced FCA guidance.
The regulator has strengthened existing measures, which lenders should consider for those struggling to keep up with their mortgage repayments or those who have already taken six months of payment deferrals.
These include extending the repayment term, reducing payments, lowering interest rates or restructuring a mortgage, for example switching to an interest-only mortgage.
It will be down to each individual lender to evaluate what measures should be put in place, but it’s important for lenders to work with brokers and customers to ensure the support they provide is appropriate for all involved.
Post-lockdown tiers and economic uncertainty have meant that many are still walking a tightrope of financial insecurity.
The specialist lending sector has an important role to play in supporting these individuals both now and in the future.
To do this, lenders need to embrace innovation and technology development, while making sure they stay attuned to the changing trends and needs of customers across the country.