Embracing the diverse needs of customers

The housing market is regaining buoyancy despite ongoing uncertainty over mortgage rates. According to Zoopla, the number of sales agreed, one of the most reliable indicators of housing market health, is 15% higher than a year ago. And with the Bank of England recently reducing the base rate, consumers’ confidence to buy, move and refinance is growing.

However, as buyers return to the market, we must remember that many will have circumstances and requirements that become more complex and diverse. Advisers and lenders will have to adapt to meet their changing needs.

How are they becoming more complex?

Over the last few years, the mortgage landscape has changed quite dramatically. The cost-of-living crisis, interest rate fluctuations, and shifts in how people earn their money have all reshaped borrower needs and circumstances. The traditional ‘one size fits all’ approach to mortgage lending is becoming increasingly irrelevant for many borrowers, with complex lending – which grew by 328% between 2009 and 2021 – growing into a much more active part of the market.

As part of the broader shift to more flexible working practices, over 20 million people in the UK are now considered multi-income individuals. It’s a group which encompasses a wide range of professionals including business owners, sophisticated investors, and freelancers. More fluid incomes such as these add another level of complexity to product sourcing and affordability testing, and brokers and borrowers are increasingly leaning on adaptable lenders like Saffron who can create bespoke financing solutions. 

Product availability increases alongside customer complexity

One element which adds to the complexity in the mortgage market is the ever-increasing range of products available. Borrowers had 6,629 mortgage deals to choose from at the start of June 2024, the largest number available since February 2008, according to data from Moneyfacts UK’s Mortgage Trends Treasury Report.

As a result, it remains vital that advisers prepare themselves for an influx of mortgage enquiries from consumers as confidence returns to the market. Their advice will be invaluable to borrowers searching for a product that suits their increasingly diverse needs.  

Criteria changes

In order to best support customers and provide mortgages that meet a new, wider range of circumstances, Saffron recently announced major criteria changes across its entire product suite.

We have changed the way we consider pension and investment pots when assessing affordability, which has led to a big improvement in the amount we can consider. Other changes we’ve made include an increase in the LTV limit for applicants on visas to 90%, up from 75%. We also now accept spousal visa’s and pre-settled status, and no longer require a minimum remaining term on the current visa.

These changes are the first in a series designed to help us say 'yes' to more  complex cases. Our adaptable approach means that brokers can take elements from all our criteria to put together the right solution for their client’s circumstances, much like choosing their own toppings for the perfect pizza.

For example, they could combine criteria such as a couple where one is self-employed and the other is on a visa and they need interest-only. Saffron will work with the broker to find bespoke solutions designed to meet the differing needs of their clients.

Despite many borrowers’ circumstances becoming more complex, lenders are adapting to changes in the market and are creating flexible and adaptable solutions to best serve client needs. Brokers must tap into the new developments in the mortgage market to provide good outcomes for their customers, whether they are first-time buyers, looking to remortgage, or move home.    

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.