Specialist lenders used for more adverse credit cases than H2 2020 and receive top scores for criteria from brokers Smart Money People finds

29 June 2021

Research from Smart Money People has found that specialist mortgage lenders received the highest percentage of positive feedback from brokers about their criteria and flexibility in H1 2021. This follows a 12% increase in feedback for adverse lending cases for specialist lenders in H1 2021, making up 40% of all specialist lender feedback. However, the specialist sector received the highest percentage of negative feedback for speed in comparison to other sectors.

The findings come from the bi-annual Mortgage Lender Benchmark, run by Smart Money People, which found in H1 2021 82% of criteria feedback from brokers for the specialist sector was positive. When brokers talked about a specialist lender’s flexibility, 92% of the feedback was positive, the highest of any sector in the mortgage industry. ‘Ease’ themes increased in sentiment by 33% from H2 2020 for the specialist sector, up to 68% of feedback being considered positive. When asked what a broker likes about a lender, one broker responding about a specialist lender said:

“Flexibility and the underwriters look for a way to write the deal and work with you to get the best solutions for the clients.”

When brokers mentioned the time a lender took with the application, 72% of feedback for specialist lenders was negative, an increase of 11% compared to H2 2020. Feedback about speed was also often mentioned in line with a frustrating underwriting experience, where brokers felt lenders took too long to review documents and asked for additional unnecessary documents.

One broker said: “Their criteria is good, however their underwriting turnaround times are extremely extremely slow! 7 working days at least every time to underwriter documents or even one message.”

Jacqueline Dewey, CEO of Smart Money People, commented: “Circumstances over the last 18 months have meant specialist lenders have been in high demand especially for customers with adverse credit, and we imagine this trend for demand will continue following the pandemic. This high demand for the specialist lenders flexible criteria is likely to have caused the knock-on effect of their processing times slowing down as they struggle to cope with the demand. However, as most of these lenders adopt manual underwriting, slightly slower turnaround times can be expected, but we may start to find more banks and building societies are willing to accept these types of clients, so specialist lenders need to work on their back-office processes to make them a competitive player to win business.”

The findings come from Smart Money People’s Mortgage Lender Benchmark. The Benchmark covers feedback from 597 brokers on 44 lenders across banks, building societies, specialist lenders and lifetime providers, as well as their thoughts on the mortgage market in general.

Along with asking brokers to rate lenders on different aspects of their proposition, Smart Money People analyses the comments that brokers provide when asked what they like or what could be improved for each lender. These are mapped across 20 themes to give a rich insight into how each lender is performing.