Specialist Lending in 2022

Specialist lending covers a multitude of product areas and lending solutions, so in this article I give some examples of where I believe there will be growth areas and opportunities in 2022.

Remortgages

We are expecting a remortgage boom in 2022 given the amount of customers coming to the end of their product term, particularly 2 & 5 year fixed rates, in both residential and BTL markets. It is a fact that when customers remortgage they generally borrow more and as a result 2022 will see an increase in debt consolidation remortgages, as customers get their finances in shape from other debt taken out during the last few years. The rise in the Bank of England Base Rates will only
stimulate this activity.

However, there will be customers who may not meet lenders’ affordability calculations or have the legacy of payment holidays which will mean they will need specialist solutions, whether that is a remortgage from a specialist lender or a 2nd charge loan.

Green Mortgages

The number of energy efficiency mortgages will continue to rise in 2022 ,particularly in the BTL market, as landlords have to prepare their properties for 2025 and the requirement for properties to be at least C EPC rated. The discerning landlord will be planning for these requirements and may have funding requirements in order to carry out the necessary improvements.

Bridging Finance

It is also expected that, sadly, the number of repossessions will increase substantially in 2022, however this does give opportunity to landlords to purchase such properties and improve them to the required standards. This may lead to the requirement of a refurbishment loan or bridging finance before the term mortgage can be obtained. Rental price growth was substantial in 2021, giving confidence to the landlord and it is expected to continue to grow as demand increases during 2022. BTL remains a good investment and all the factors suggest that 2022 will be another strong year.

Commercial

There will be further improvements in commercial markets in 2022 as the economy continues to recover from the Covid-19 pandemic. We are already seeing the appetite of commercial lenders increase in most sectors following a risk adverse approach to the likes of the hospitality sector.

However, with commercial lending it is often the quality of the submission that can determine its success, so it is important for a broker with little commercial mortgage expertise to partner with a specialist.

Development Finance

2021 saw a big growth in development finance and there is no sign of that slowing in 2022.New funding lines continue to come into this market which will, in turn, increase competition and keep pricing low. Developers will go “green” to attract the best funding terms as the more sustainable the project is then the more attractive it will be to the funder.

However, construction costs will rise and funders will forensically examine the development appraisal to ensure that it is profitable. The increased costs may no longer be outweighed by rising GDVs.

Opportunities

I believe that 2022 presents an exciting opportunity for brokers in all the specialist product areas, whether by diversifying themselves or by partnering with a specialist to work with them. Connect believe in assisting all brokers in the specialist markets so why not watch out for our webinars and road shows in 2022?

Kevin Thomson, Sales Director
Connect for Intermediaries