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hero Demand for specialist

Demand for residential specialist mortgages increasing

  • Demand for specialist mortgages increased in Q1 2017
  • On average, 24% of specialist business is self-employed related, 17% complex income
  • Intermediaries predict increase in overall business in next three months

Demand for specialist mortgages increased in Q1 2017, according to Paragon Mortgages’ latest Financial Advisors Confidence Tracking (FACT) Index report, based on interviews with 200 mortgage intermediaries.

There was an increase in demand from both self-employed (24%) and complex income (17%) customers, indicating an increased requirement for specialist mortgage products and wider availability of products that meet the demands of underserved segments of the mortgage market.

Other customer types were largely unchanged in Q1 2017, with high loan-to-value lending at 15%, interest only at 13%, lending into retirement 11%, low income 9%, and adverse credit 7%.

The average number of mortgages introduced per intermediary office in Q1 2017 was 20, down from 21 in the previous quarter and the third successive fall. Despite this more recent decline, the number of mortgages introduced has held between 20-25 for almost four years, maintaining a slow recovery tracked from 2009, when the number reached a record low of 14.

The report also revealed a positive forecast from intermediaries, with the expected change in overall business over the next three months up for the first time since Q1 2015, reversing consecutive reductions in each of the previous seven quarters.

Meanwhile, mortgage advisors expect to do 2% less buy-to-let mortgage business in the coming year. This, however, is an increase on the previous quarter and, following the largest ever decline seen in Q1 2016, the average now appears to be on a modest upward trend.

Asked about the importance of the Prudential Regulation Authority’s (PRA) new affordability rules in estimating the expected change in their level of buy-to-let mortgage business in the next 12 months, more advisors (85%) said that the changes had been at least quite important, up from 80% in the previous quarter, whilst just 10% said they were not important.

John Heron, Managing Director, Paragon Mortgages, said:

John Heron
It’s encouraging to see increased demand and greater availability of specialist mortgages. Customers with complex incomes deserve access to a wider choice of mortgage products and to specialist underwriting that recognises their unique circumstances.

Click here to see the full Paragon Mortgages Q1 2017 FACT Index.

Paragon Mortgages is a trading style of Paragon Mortgages (2010) Limited (Registered in England No:6595834) and Paragon Bank PLC (Registered in England No:05390593). Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Paragon Bank PLC is registered on the Financial Services Register under the Firm Reference No:604551. Registered office: 51 Homer Road, Solihull, West Midlands B91 3QJ.