In days of old, the word niche was a catch-all way of describing anything beyond the mainstream, either product or service wise.
The transformation of these niche lending areas, many of which now sit alongside mainstream offerings in terms of demand, reputation and perception, has been an interesting one to follow. Our excellent trade press have really been at the heart of this education process in offering a voice to firms operating in and around the more complex specialist sectors and providing the platform to extol a variety of virtues and outline some of the potential pitfalls for borrowers and intermediaries alike.
An increase in the amount of available data has also helped advisers to gain a better understanding of where demand lies for such products and how they can support the ever-shifting needs of their clients. Take a recent study by Knowledge Bank for example. This outlined that a softening of lending criteria has seen brokers challenged with a rush of newly self-employed applicants who have just one year’s worth of accounts. According to the data, the heightened demand may be as a result of lenders softening criteria for freelancers recently, with a number of lenders now accepting borrowers who have used the Self-Employed Income Support Scheme (SEISS).
This also revealed that the searches brokers are actually conducting, and the prominence of searches for ‘self-employed – one year’s accounts’ is a strong indication of the types of clients brokers are working with. When delving deeper into the residential market, an increasing number of brokers are suggested to be working with clients who have chequered financial histories. ‘Defaults’ featured twice in the five most-searched terms in September including ‘Defaults registered in the past three years’ and ‘Defaults registered over three years ago’. Financial difficulties are suggested to have been a trend for the past six months, with at least one term such as ‘missed payments’ or ‘defaults’ featuring in the most-searched terms in the residential arena since March.
Borrowers were also said to be looking to use second charge mortgages to help ease financial pressure. ‘Capital raising for debt consolidation’ was amongst the most-searched terms by brokers looking for second charge products. In the bridging market, ‘second charge loans’ appeared in the most-searched terms for the first time since February 2021. Those wanting second charge bridging loans are looking for finance for a range of activities, some of which include: business expansion, property investment, and renovating existing properties, potential looking to make them more energy-efficient.
The areas cited above may still fall into specialist lending categories, although there is a growing argument that they should no longer be considered ‘niche’ due to the demand and sheer volume of business being written across these sectors. Of course, such transactions are often more complex and do require an additional level of expertise. Thankfully, a far greater array of competitive and responsible products are emerging for advisers who know where to look, or have the right support network in place, to help such clients find the right solution for them.
Steve Swyny is commercial director at F4B Network
