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The complex credit lending market must adapt to support FTBs

Steve Seal

June 17, 2021

steve seal bluestone mortgages

Steve Seal is managing director of Bluestone Mortgages

Getting on the property ladder is one of life’s biggest milestones, but in the last decade – and even more so over the last 12 months – it has proven even more difficult for young people to achieve this.

The average age of a first time buyer is steadily rising, but that comes as no surprise when you consider how the market has changed over the years.

Back in the 1990s, a typical couple would have needed to put away 5% of their annual income for four years to save for a house deposit, but in today’s climate it would take over five times that long.

This has only been exacerbated by the coronavirus pandemic, which has significantly impacted thousands – if not millions – of people, including this younger demographic.

While the pandemic posed the biggest health risk to the older generation, it was young people who suffered the most financially.

At its peak in May 2020, 8.9 million people were on furlough. One of the industries impacted most by the virus was hospitality, and with an average employee age of 34, it is the youngest workforce in the country.

As pubs, bars and cafes began to close their doors, income for younger people slowed down. Upon reopening in April, it was the first paycheque for some households since before Christmas.

However, a lot of people didn’t have a place of work to return to at all, as almost a fifth of 18-24 year olds furloughed in the first national lockdown found themselves unemployed by September 2020.

Given how these factors impacted young people’s ability to meet regular payments, and subsequently their credit scores, many will now be in need of tailored lending – and this is set to be a lasting trend.

It’s likely that, over the long-term, a growing number of young people could find themselves disenfranchised by the mainstream lenders due to the financial impact of the crisis.

This is where lenders and advisers serving the complex credit mortgage market can provide these borrowers with a financial lifeline.

In order to adequately support young borrowers, however, complex credit mortgage lenders must react to consumer needs and adapt their policies accordingly.

For instance, before the crisis, some lenders in this market may have only been able to accept a borrower who had been financially stable for at least 12 months, even if they had experienced a setback in the past.

Going forwards, lenders should consider shortening their periods of assessment for applicants who have experienced more recent financial glitches but have since recovered, given the growing number of young borrowers who will have encountered a setback closer to the time of their application.

Advisers can also play a vital role in supporting young people with poor or complex credit in search of their first home post-COVID by signposting the lending that’s available to them.

A large cohort of young borrowers will be unaware that the complex credit mortgage market even exists, so if they have been turned away from the high street, they may think they are out of options.

Typically, people turn to their broker for advice, so it is the adviser’s role to put clients on the path to tailored lending.

While the complex credit mortgage market may be unknown territory for some advisers, broker support teams and dedicated business development managers are on hand to provide assistance and support.

The coronavirus crisis has had an unprecedented impact on the entire nation, particularly young people looking to buy their first home.

As we look ahead to the future, the complex credit mortgage market must do what it can to help these borrowers secure the financing they need to get on the property ladder.


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