The UK residential mortgage market is set to grow by 56% to reach £400bn by 2030, according to new research from Together.
It also predicts that due to the rise, almost 500,000 mortgage applications will depend on specialist lenders who will double their market share to 4% of the overall UK mortgage market.
The study, which covered over 7,000 consumers, was conducted for Together by Opinium and carried out in partnership with economist Dr John Glen, the study covered over 7,000 consumers.
Glen suggests that there are two key factors underpinning the projected growth of the specialty residential market.
These include an increase in the number of potential homeowners who do not meet traditional mortgage screening criteria in the coming years with structural changes such as the rise of the gig economy and the growing trend of working flexibility and the emergence of the non-nuclear family are changing our housing needs. .
Glen notes that the second is the short-term risk appetite of traditional lenders as they continue to tighten lending criteria at the same time potential homeowners grapple with the current cost of living crisis.
The impact of rising inflation will also reduce potential borrowers’ ability to access consumer credit, he adds.
In the UK, 53% of the adult population who took part in the study fall into one or more criteria categories classified as “non-standard”.
However, looking at just those who have applied for mortgages, that figure jumps to 62%, suggesting that there is strong demand out there for an even more flexible lending landscape.
Having non-standard incomes (including multiple and complex incomes or being self-employed) was cited as a top reason for rejecting a mortgage by 22% of respondents.
Having meager or compromised credit or being over 55 or being divorced and considered an atypical profile (21% in both cases) also played against applicants, as did being being in an atypical purchase situation (26%), such as co-ownership or wanting to buy an exceptional property (12%).
The study found that greater loan flexibility could help the 19% of potential homeowners who have been rejected from the mortgage process over the past five years.
It also highlights the excessive emotional and mental stress that can lead to fear when applying for a mortgage or apathy about the process.
Glen says the research highlights the clear limitations inherent in traditional lending criteria that must be addressed if the government housing project is to proceed.
If the expected growth in the specialty residential mortgage market materializes, there should be a halo effect in terms of home ownership.
Glen predicts that one-fifth of new specialty mortgages (about 100,000 applications) would come from borrowers who have never had a mortgage before.
The Together study confirms this, with 13% of respondents who have never applied for a mortgage saying it was because they expected to be rejected or deemed ineligible from the start.
Together Group Chief Executive Designate, Gerald Grimes, says: “Our research into the residential mortgage market highlights the growing need for specialist lenders and the problems faced by borrowers who are classified as ‘non-standard’ in achieving of their ambitions to own their own home.
“The UK’s traditional mortgage system is simply not adapting quickly enough to our way of life. Each year, a growing group of potential homeowners must navigate an unnecessarily complex, intrusive and time-consuming mortgage journey, many of which are rejected outright in the end.
“While our goal is to support ambition and make home ownership more inclusive and achievable, it is time for the industry, supported by government, to rethink how borrowers can access finance to achieve their goals. home ownership dreams.”