“The cost of living crisis represents an opportunity for brokers to reconnect with clients and understand the challenges they may be facing in their finances.”
As this unprecedented price inflation begins to bite deeper, there are fears that soaring energy, fuel and food prices will push more and more people into a spiral of debt as the global crisis continues. cost of living is getting worse.
We may have some rays of sunshine to enjoy over the summer, but as the UK economy struggles to find post-Covid footing and alienated workers vote for sector strikes, it is not surprising that there are echoes of the winter of discontent of 1978-79. ‘ in the air.
This has led many to wonder how the loan market will react.
In 2014, the Financial Conduct Authority introduced stricter lending criteria following the financial crisis. This led to increased spending control in loan applications, in addition to a stress test which meant that borrowers had to be able to repay their mortgages in the event of a 3% increase in interest rates. interest.
This meticulous analysis of an individual’s financial expenditure seems to be changing, however, with the Bank of England recently announcing the removal of this affordability guideline.
This relaxation of mortgage underwriting criteria will undoubtedly provide some relief to borrowers whose affordability has been negatively affected by the cost of living crisis. Lenders too are doing their part to understand a consumer’s changing priorities and to help ease the pressure on the pockets of overstretched consumers.
This shift in priorities is brutal.
Previously, what we saw in the remortgage space was interest in accessing vacation home financing or home improvements to increase space. Now we are seeing an increase in remortgage requests for debt consolidation or tax bills.
The importance of being a proactive broker
The cost of living crisis represents an opportunity for brokers to reconnect with clients and understand the challenges they may be facing in their finances.
With household budgets tighter than ever, many people will look to remortgage if they are struggling to repay. It is therefore crucial that advisors be proactive in signaling how they can support new and existing clients.
For those nearing the end of a fixed rate agreement, it’s a good idea to conduct a home finance review to see if there are ways to better manage costs in the five months leading up to the end of your term. OK.
By securing a good product, struggling borrowers are offered a vital lifeline to consolidate debt and raise capital, while reducing their monthly interest payments and gaining greater budgetary control over their monthly finances.
How specialists can help you
It’s clear to see why 2022 has been coined the year of the mortgage.
In cases where borrowers have been hit by adverse credit during the pandemic, working with a specialist can pay dividends.
For example, if household income or circumstances have changed, a client may find it difficult to remortgage with another traditional lender.
Moreover, the market is a sea of changing criteria, often shifting like the tides, making it difficult for brokers to keep up and get the best rates.
A specialist has broad product visibility and will scan the entire market for you, helping you navigate sometimes complex criteria, and giving you access to exclusive or semi-exclusive products with the UK’s top specialist lenders.
It’s that expert advice and leverage in the marketplace that makes working with a specialist a game-changer – and who wouldn’t want the extra driving force behind a case’s completion.