Blog post
November 29, 2023

More second jobs and more arrears: how can lenders meet the new needs of homeowners?

By Paula Mercer, Head of Sales at LendInvest

We dream of the days where we will no longer need to discuss the impact of the cost-of-living crisis, coronavirus and inflation. However, for now – these issues are changing the way homeowners mortgage. 

In Q3 2023, the Guardian reported that 87,930 homeowner mortgages entered arrears, a 7% increase from the previous quarter. In reality, this portrays the changing landscape of residential mortgages across the UK. Lenders and mortgage brokers alike are required to adapt to this shift, and understand why this has occurred. 

The Resolution Foundation suggests that the crisis should ease in 2024, and wages are required to catch up to all households before we can pull the curtains closed on this issue. 

Goods and services.

We are all feeling the impact of the increasing cost of goods and services in the UK. 

The rising price of gas, energy, and food has likely contributed to the increase in homeowner mortgage arrears in recent months. As household wages are stretched to afford necessities, consumers may enter arrears as money tightens. 

We all know, a simple mortgage arrear, CCJ or default could reduce the chance of homeowners remortgaging through high-street banks. The growing specialist lender market could be the right home for these customers, providing solutions where the highstreet may be unable to. 

Jobs, wages and income streams

Some UK homeowners are looking for an alternative way of earning to best position themselves in the current economic climate, fighting the cost-of-living crisis head on. 

In July, the Office of National Statistics reported that the UK hit a peak of higher workers with second jobs. A 18.5% increase since the start of the pandemic. Qualtrics’ recent survey finds a third (34%) of UK workers have looked for a second job to fight the rising cost-of-living. 

The current problems the UK economy is facing, has caused some of the general public to work longer hours, find additional jobs and take less time off. Resulting in more ‘complex’ income structures, the expertise of a specialist lender. 

Solutions

So how do lenders continue to support more and more people into the dream of homeownership, despite the challenges of the past few years? 

Our residential mortgage range is designed for people who may not get a mortgage elsewhere; mixed incomes, a history of credit arrears, etc. 

Designing products that meet the challenges of the moment are essential for delivering for brokers and their customers. 

For example, as second jobs become more popular, we’ve designed affordability calculations to support that: 

  • Lending to 1-year self employed
  • Using the value of their last contract to calculate income
  • Earned income from two sources can be taken at 100%, when the roles are in the same sector.

Similarly for people with credit arrears, our flexible credit tiers and on-hand underwriting works close to put would-be homeowners on the most appropriate tier, such as in this recent case where an applicant had a history of arrears but we still worked them onto our Tier 0 mortgage.

Up to 90% LTV, with interest only up to 70% LTV, our range also fits in neatly for people remortgaging in a new environment where they may be discounted from mortgage lenders’ acceptable criteria; with our stretched LTIs across different professions and histories of credit.

To register or apply for our residential mortgage products, please visit our residential mortgages page. 

LendInvest Mortgages and LI Mortgages are registered trading names of LendInvest Loans Limited. LendInvest Loans Limited is authorised and regulated by the Financial Conduct Authority (FRN:737073). 

LendInvest Loans Limited is a company registered in England & Wales (Company No. 09971600) and is a wholly owned subsidiary of LendInvest plc. LendInvest plc is a limited company registered in England No. 08146929. Registered office at: 8 Mortimer Street, London, W1T 3JJ.

Regulated lending is provided via LendInvest Loans Limited. Borrowing through LendInvest Loans Limited involves entering into a regulated mortgage contract secured against property. Your property may be repossessed if you do not repay your mortgage in full.