Connect Mortgages
Specialist lending encompasses a diverse array of product areas and lending solutions. In this article, Connect Mortgages will provide insights into various growth areas and opportunities anticipated for 2022. Explore the exciting possibilities within the realm of specialist lending as we delve into emerging trends and opportunities that lie ahead.
Remortgages
In the coming year, we at Connect Mortgages anticipate a remortgage boom, primarily driven by a significant number of customers reaching the end of their product terms, especially 2- and 5-year fixed-rate mortgages, in both residential and buy-to-let markets. It’s a well-established fact that when customers opt for remortgages, they often choose to borrow more.
As a result, 2022 is poised to witness a notable increase in debt consolidation remortgages as individuals work towards improving their financial stability by addressing debt accumulated over the past few years. The recent uptick in the Bank of England Base Rates is expected to fuel this trend further.
However, there will be cases where certain customers may not meet traditional lenders’ affordability criteria or have the legacy of payment holidays, necessitating specialised solutions. This may involve exploring options like a remortgage from a specialist lender or a second-charge loan to meet their unique financial needs and circumstances.
Green Mortgages
The year 2022 is set to witness a notable increase in the prevalence of the green agenda and the likes of energy-efficiency mortgages, with a particular surge in the buy-to-let (BTL) market. This surge can be attributed to the impending 2025 deadline, which mandates that all properties must have a minimum C Energy Performance Certificate (EPC) rating. Forward-thinking landlords are already gearing up for these impending requirements and may be contemplating funding options to facilitate the essential improvements.
For environmentally-conscious property owners and landlords, these green mortgages represent a regulatory compliance necessity and an opportunity to invest in sustainable property improvements. This is something that Connect Mortgages also endorses. These investments may encompass measures like enhanced insulation, energy-efficient heating systems, and other eco-friendly upgrades, which can lead to reduced energy consumption and cost savings in the long run. In this context, green mortgages are pivotal in driving a more sustainable and energy-efficient housing market.
Bridging Finance
In addition to the anticipated rise in repossessions in 2022, there lies an opportunity within the property market. For landlords, these repossessed properties present a chance to purchase real estate at potentially attractive prices and transform them to meet the necessary standards. In such cases, securing a refurbishment loan or bridging finance may become essential to facilitate property improvements before obtaining a long-term mortgage. This is something that Connect Mortgages believes would be of interest to property landlords and investors.
The encouraging trend of substantial rental price growth observed in 2021 has bolstered the confidence of landlords. As we move into 2022, this confidence is expected to persist, driven by an increasing demand for rental properties. The buy-to-let (BTL) sector remains a solid investment choice, and all indications point towards 2022 as yet another robust year for property investors. With a strategic approach and the right financial tools, landlords can navigate the evolving landscape and seize opportunities in the year ahead.
Commercial
Anticipated for 2022, Connect Mortgages envisions further enhancements in the commercial markets as the economy steadily rebounds from the repercussions of the COVID-19 pandemic. Notably, there has been a noticeable resurgence in the appetite of commercial lenders across most sectors, signifying a shift away from the risk-averse approach that was prominent in areas such as the hospitality sector during the pandemic’s peak.
Nonetheless, when it comes to commercial lending, the success of a loan application can frequently hinge on the quality of the submission. Therefore, it is of paramount importance for brokers who may lack extensive experience in commercial mortgages to consider partnering with a specialist like Connect Mortgages. This collaboration can be pivotal in ensuring that businesses seeking commercial loans can access the financing they need while navigating the intricacies of commercial lending effectively. Connect Mortgages, a key player in the mortgage industry, offers invaluable expertise and support to brokers entering the commercial mortgage arena.
Development Finance
The year 2021 witnessed a substantial surge in development finance, and the momentum appears to be unabated as we enter 2022. New funding opportunities continue to pour into this market, promising increased competition that will likely keep financing costs at an all-time low. As developers strive to adapt to evolving market demands, sustainability is set to play a pivotal role in shaping the funding landscape. The more environmentally friendly and sustainable a development project is, the more appealing it becomes to potential funders.
However, amidst this growth, it’s essential to remember that construction costs are expected to rise. As a result, funders are expected to conduct a meticulous examination of the development appraisal to ensure its profitability. The era of simply relying on rising Gross Development Values (GDVs) to offset increased costs may no longer hold, emphasising the need for prudent financial planning and a keen focus on sustainability in the development sector. Connect Mortgages plays a vital role in navigating this evolving landscape. Connect Mortgages understands the importance of financial planning and sustainability in development.
Opportunities
In 2022, we see a promising landscape for brokers across various specialist product areas. Whether it’s through expanding your own expertise or collaborating with specialists, this year offers an array of avenues to explore. At Connect, we’re committed to supporting brokers in the specialist markets, and we invite you to keep an eye out for our upcoming webinars and roadshows throughout 2022. These resources will offer valuable insights and networking opportunities to help you thrive in the ever-evolving world of specialist finance.
Specialist lending covers many product areas and lending solutions, so in this article, I provide insights into various growth areas and opportunities anticipated for 2022. Explore the exciting possibilities within the realm of specialist lending as we delve into emerging trends and opportunities that lie ahead. Connect Mortgages is dedicated to being your partner in navigating this dynamic landscape.
Kevin Thomson, Sales Director
Connect for Intermediaries