How can brokers adapt to changing borrowers' needs?

The complexity of the mortgage market, with rising rates and fewer government support schemes, has placed new pressures on borrowers.

Rising living costs and interest rates are stretching household finances; the number of UK households who could struggle to afford mortgage payments is likely to increase over 2023, according to the Bank of England.

So, how are specialist lenders and brokers adapting to their clients’ needs?

What’s changing for mortgage clients?

Vicki Harris (pictured), chief commercial officer at Kensington Mortgages, said the current market is causing a host of challenges.

“Despite the Bank of England recently holding interest rates, which followed a period of 14 consecutive rate raises, there is huge pressure on consumers when it comes to mortgage repayments and borrowing,” she said. As such, making sure customers who are worried about making their monthly mortgage payments get the support they need from their lender is increasingly important. 

With rates now starting to fall, she said, customers coming to the end of their fixed rate period have a new challenge.

“The greatest challenge facing borrowers at present is running the risk of locking into a new rate through a product transfer too early, which may mean that by the time the transfer happens, a cheaper rate is available,” she said. As a result, Harris said it is essential borrowers nearing the end of their fixed products make sure they work with their broker to access the best rate for their specific circumstances.

Harris said that brokers must keep abreast of changes in pricing both for the lender that currently holds the loan and across the broader market, right up until the point that the product is switched to ensure the customer gets the best rate possible.

It is also important, she added, for the broker to convey this to their client in order to keep them happy and avoid them making any rash decisions.

How are specialist lenders adapting their services to meet these new requirements?

Many people are expressing considerable worry regarding mortgage repayments, Harris said, with some fearing they will struggle to pay their mortgage given the higher interest rate environment.

“In response to this, specialist lenders have put extra resources into their servicing teams,” she said.

By reallocating staff, Harris said, Kensington has been able to ensure that it can provide timely support to any customers concerned about their financial position.

The importance of customers being able to speak to someone amid these current conditions, Harris said, is essential, and the additional staffing the lender has put in place, she added, has meant it is able to connect with a higher number of people than ever before.

Harris said that the specialist lender has a range of options to support struggling customers, including extending their loan term or temporarily switching to an interest-only loan, which she believes will assist the vast number of those struggling at present.

How have brokers had to adapt their services?

“Real concerns are being felt by borrowers looking for a new loan, rising rates, and the cost-of-living crisis has made it harder for people to borrow as much as they could previously,” she said.

Securing a new mortgage deal following the conclusion of the current deal, Harris said, could become more of a challenge as lending criteria may have changed since the borrower was accepted initially.

Therefore, Harris added that the relationship customers have with their brokers has only grown more important.

With lenders frequently changing products and pricing, Harris said it can be difficult for brokers to remain on top of all the offerings in the market.

For brokers who have customers that are worried about their financial situation and their ability to make their monthly mortgage payments, Harris said, they should always advise those customers to call their lenders and explain their situation to see if there are ways that the lender can help them through this difficult period.

How have you seen borrowers needs evolving in recent times and what is your approach to these developments? Let us know in the comment section below.