(upbeat music) - Hello and welcome to the mortgage strategy podcast and in today's special episode, I'm joined by Tanya Almas, director of intermediary relations at Together. Thank you for joining me today, Tanya. Thanks for having me, Kimberle. So before we start with the main part for this podcast, I thought it would be nice to get to know you a little bit. So if you could let us know about yourself and how you got started in the industry. - Yeah, certainly. I've been in the industry for nearly 25 years. I started way back working for Mortgage Express, which was part of Bradford and Bingley. I started off in the call center at Mortgage Express. Worked there for nine years. Cut my teeth, I suppose, on specialist lending. And then moved on to a regulated bridging lender where I worked for a short time before moving across two together, which was nearly 10 years ago. I've always been in specialist lending. It's been a passion of mine. I like helping people with problems and so specialist lending fits the bill. But I've always been in the mortgage industry and in the specialist lending industry as well. - Okay, fantastic. And today we're excited to kind of delve more into together's new residential property market report. So could you tell us about some of the key findings from that report? - Yeah, it's a really interesting report. It's the third report that we have done of this nature, but it's the first report on the residential market. And it looks at the past, the present and the future of the residential property market. Specifically focusing on home ownership ambitions. And we talk to lots of industry experts, economists, together experts, together opinion and commentary and also lots of research from consumers. But there are a lot of interesting key findings. The first one is that the residential property market is set for a revival, maybe a long awaited revival. And over the next five years, the forecast is that they will be growth there of around 15%. So that's really good news. But another really interesting fact is that the growth in the specialist market, again, in residential is set to be at 70% growth over the next five years. And I saw you looking surprised there. It's a seismic figure, isn't it? So that's actually a forecast to take specialist lending in residential from $32 billion in 2023, right up to $54 billion in 2029. So that's pretty seismic. The report also talks about one in three residential mortgages are actually falling into the specialist space. So those facts there set the scene really about what the report actually talks about. And like you've said a couple of times, the report does highlight the importance or the growth of specialist lending. So in your review, why are non-standard mortgages applications becoming more prevalent in today's market? - Yeah, they certainly are becoming more prevalent. And we see that every time there is economic turbulence or disruption, we see specialist lenders come into their own. But I think it's to do with changing working patterns. It's to do with lifestyle relationships. It's to do with work-life balance. Those types of things have really changed society in the way people want to operate and the way they want to earn a living as well. And I think that if you look at just employment patterns, just on their own, I think we all know somebody who's a contract worker or a part-time worker or even have a part-time business online. So we are earning our living in lots of different ways. And of course, you can't ignore self-employment. That's a huge segment in the market that is significantly growing. And then of course, if you throw into that mix as well, the cost of living crisis and the impact that that's had on people's credit and on affordability, if you throw that all into the mix, that sort of answers the reason as to why people are moving out of the mainstream bracket and more into the specialist lending bracket. - Yeah. And you've mentioned the individuals that might lean more on the specialist lending side, the high net worth individuals or the self-employed individuals and other people who might have difficulties in gaining mortgage in other ways. So can you elaborate a bit more on the unique challenges that they face? - Yeah, certainly. And they are unique challenges. With self-employed applicants, their income is unpredictable. - Yeah. - And so there's lots of different types of businesses and they can't really evidence income in the same way that somebody with a pay slip who's earning the same every month would. So that presents some issues for them. With high net worth borrowers, by the nature of being high net worth, their income is complex. So they may have, they may be entrepreneurs, they may have income from different streams, they may have complicated incorporated businesses. So again, these are not tick box scenarios. These are not scenarios where if you are being fed into an automated system from Main Street, these are not boxes you're going to easily be able to tick. And so really I think what these groups have in common is they struggle to get access to finance in the same way that a standard applicant would. And that's where lenders like together come into their own with the wide flexibility of criteria, different policies, different products that really satisfy these types of clients. - Yeah, for sure. I feel like those people maybe have felt forgotten in the past and having a lender that takes care of you that way. - Yeah, yeah, absolutely. I mean, let's not forget together have been lending for 50 years. So we have some serious experience in this market. And also, I think something to remember is that what specialist lenders do is we seek out segments that high street or mainstream are not lending or not sort of underserved in their respects. And we seek to serve that segment. So if you look at regulated bridging, that's an example of a segment that's underserved that we serve. And if you look at second charges, again, that's an area that's underserved. So that's exactly what specialist lenders like together do. And we've been realising people's property ambitions for 50 years in this specialist market. And in fact, specialist market to us is actually business as usual. So it's not specialist to us. But I think there needs to be a recognition of the growth in specialist. And even with what we're talking about here, we've used the phrase, I don't know if you've used it or I have or we both have, but non-standard. I think even that we want to be moving away from because just because you earn your income in a different way, it doesn't necessarily mean that there's any negativity towards it or specialist in towards it. It's just a new way, a new norm. Exactly. And beyond the financial complexities, the report also kind of leaned more into the emotional aspect of going through a mortgage journey. So how is together addressing the fears and anxieties some borrowers experience, especially with the rise of costs of living? Yeah, it is, it can induce fear and anxiety. And I think we, if you've ever applied for a mortgage, there is that moment when you are first thinking that fear of rejection, I suppose, when you're thinking, will I get this mortgage? And then the anxiety, I suppose, is around how much will I be able to afford? What's the affordability aspect? And then the cost of living now is will I be able to continue to afford my mortgage? I think in 10 years or in past, you didn't have to think as carefully with the type of mortgage that you might be getting, subject to the advice you get from your broker, because interest rates were quite low. Whereas now there is a lot more to thinking about, a lot more options to present. So the way that together actually support borrowers in this area is in the way that we approach our products, in the way we approach our applications. We look at things on a case-by-case basis. The criteria is really, really wide. I'll give you an example. With credit, for example, we don't look at credit score. We look at credit behavior. So that's a really different way of looking at credit. So whereas credit profile for mainstream may look negative, for a lender like Together, that would just be business as usual. The same with the full ability. We look at lots of different types of income to take into the mix. We don't just take income and then add a multiple to the income. We actually look at all of the income and we have a very flexible calculation for the way that we look at it. So that's the way we're supporting with those fears and anxieties. And I think brokers play a part in this as well, because the more brokers can be in tune with specialists lending and understand it, the more they can support their customers in being able to provide the right type of solutions. And you mentioned before, people not knowing or being able to access. I think that's really important, because if you are not in a position to know that there are different types of lenders, you may not be able to realise your property ambitions or your homeownership ambitions, which is not what we want to be. Yeah, exactly. And the report does have notes of optimism and which is nice to see. And especially pointing to specialist lending as a key enabler of homeownership deals and dreams. So how does Together's wide criteria and quick decision-making process empower brokers and to their clients? Well, again, those products are very flexible. So for example, with self-employed, you might go to a mainstream and require three years accounts. When you come to Together, you need a lot less. You're just looking for one year's accounts. So the criteria that we've got is very flexible, but you speak of quick decisions as well. The way that we work enables us to actually review cases very concisely, and we have an automated valuation model as well. So to look at any case, any residential inquiry, you need to look at the applicant, you need to look at the credit, you need to look at affordability, and you need to look at property. So when you work with a desktop valuation model, that speeds things up, and that enables us to look at things really quickly and make straightforward decisions. The broker too plays a role in that because they're very experienced at understanding the types of products that we have, the type of criteria that we have and the evidence that we need, and we rely on our brokers to put together a really good package so that we can review that information as quickly and easily as possible. - Right. And the market is always evolving rapidly. - Yes. - So what are the crucial insights brokers need to grasp to best serve their clients in the current climate? - That's an interesting one. There's lots of things that brokers can grasp. I think the first thing to grasp is that specialist lending is growing, and if you want to be a broker that serves your customers, you need to understand what they're thinking, what they're feeling and what they need. And they are needing different types of products now to serve their needs. So that's the first thing that brokers need to grasp that the specialist lending market is growing, and if you want to be able to service your customers as best as possible, you need to understand how that's growing and how you can support your customers, be it yourself, of opening doors to a packager or a network or club who can help you support in that way. I think another area that brokers need to grasp is just the way that specialist lending works. So for some brokers who are not in specialist lending, they might not quite understand it. It can be quite straightforward. Granted, some of us have 20, 30 years experience, so we might feel like it's straightforward, but I'm going to demonstrate this with a very quick story of a lady called Vicki Lee Kane. It's a great name, it's a story that's in the report as well, and it's a lady who was self-employed. And she was struggling to get a mainstream mortgage because of her irregular income patterns. She wanted to live in the area, she wanted to buy a house, sorry, in the area that she lived, but couldn't quite afford it, and struggled to get a mainstream mortgage. She didn't give up at that point, she decided to take herself along to an auction, and she found a two-bedroom bungalow that she wanted to buy, and she found a fixer-upper. So she couldn't get a mortgage for that fixer-upper in any event, not just because she was self-employed, but also because I think it didn't have a bathroom, I think it had some damp as well, but she didn't give up. She got a regulated bridge from together, a bridge loan, to purchase that property and then to use her own money to do the refurb. And that's the typical type of story that maybe a broker who's not in specialists needs to understand how specialist lending can support. It's not just for credit impairment, although it works fantastically for credit impaired customers, it's not just for second mortgages, for home improvements, it can be for individuals wanting to realise their own home ownership ambitions, and I think that's a really good demonstration of a very normal situation where an individual is challenged just because she was self-employed, and just because the properties in the area she wanted to live weren't necessarily in reach. So I think that's a great example. - Yeah, I can definitely relate to that one, living in an area where property costs a lot, even though I grew up there in my whole life, but yeah, thinking outside of the box, I think is always a positive. But again, you need a broker that's willing to also think outside the box with you. - Absolutely, absolutely. And I think what brokers need to understand is that if they don't open that door to specialist lending, customers are becoming much more educated. - Yeah. - Look, that story I just told you, that customer didn't give up and say, well, I'm not going to buy a property now, that customer wanted to access the finance. So customers are becoming more educated, so brokers need to make sure that they're there to support them. - Yeah, you can't have your client coming to you and being like, how do you not know about them? - Yeah, absolutely, it's a little bit of an art. - Absolutely, yeah, yeah, yeah. But what are the top concerns you're hearing from borrowers right now, and how can brokers proactively address them? - Yeah, I think the top concerns are about rejection of mortgage, just getting outright rejected from the high streets, concerns are affordability. Concern is also what mortgage to choose now, because there's so much choice, and there's so much conversation about and promise and assumption that interest rates will be going down, fingers crossed. And so there's more to think about getting a mortgage and maintaining that mortgage. So I think concerns-wise, access to finance for a lot of people is still a challenge, and I think those type of people need to know that there are lenders out there that can take a different approach, take a bespoke approach, a flexible approach and have a more relationship type of approach with customers and with brokers, so that they can understand how to get over those concerns. - Yeah, definitely. - And for brokers who might be less familiar with specialist lending, what opportunities might they be missing out on? - Well, lots of opportunities. The first opportunity they need to grasp is the residential report, so they need to read that because they are highlighting lots of different opportunities. But I suppose the first one is maybe a bit of an obvious one, and that is that specialist lending is growing, so that's an opportunity in itself to get into those specialist markets. Another opportunity is actually that people are moving. All the research shows that people have not going to stop moving, and I think a bit of that is to do with... Supply has never quite met demand. We've always been on catch-up, haven't we, with that. But people do still want to buy homes. That is still a love affair that the UK has with property, so we still want to do that. And if you drill down specifically in that area, actually the top areas of growth, which might be surprising in the residential market from this report, are shared ownership, and also lending to those that are retiring, or up to retirement years. And actually the report speaks of that growth in the next five years, being at 126%. So those are significant opportunities. I think other opportunities are self-employment. If you look at specialist lending as a whole, 66% of all specialist lending are self-employed people. So as a broker, if this is not your area of expertise, or if this is not your knowledge, this is something that you're missing out on, because more and more people are moving into self-employment. And I think in the year 2000, we have 3.2 million self-employed people, and that's moved up to something like the 4.2 million mark as well. So that is significantly growing. I think there's opportunities for home improvements as well, because we always like to keep improving our homes, be it for our own lifestyle, or even for energy efficiency, those types of things. So there's always that trend and that opportunity to support customers to borrow, and that might be on a second charge, on their residence, in order to improve their property. So there is lots of opportunity, lots of optimism in this report and in the residential market, which is really great news. And I think what brokers need to do is understand where those pockets of opportunities lie, and make sure that they are equipped, aware of what products are available, or aware of what lenders are out there to support, and really understand how they can continue to support their customers with solutions. - Yeah, I think I've definitely seen in my area again, an uptick of people at retirement also looking to buy smaller homes. Obviously, they've had the bigger homes, their families have gone on to create their own families, and now they have this massive house that is too much for them. And then in turn, the people who are buying those houses, once those people have retired, people have downsized. If it was a house that was built in the '80s or '70s, it's no longer necessarily fit for purpose for a modern family. - Absolutely, yeah. - One thing is only one bathroom, crazy. (laughs) - Only for the few more. - Doesn't make sense. So yeah, you want to go and do your improvements. So I can see a lot of those opportunities out there, for sure. - Yeah, yeah, absolutely. - And what trends do you see shaping the residential mortgage market in the coming months and potentially years, and how should brokers prepare? - Yeah, again, those trends are just to recognize exactly where the property market is moving, and it's his optimistic, the trend is upwards, so people will still keep buying properties. People will need to renovate those properties, as we said previously. People would need second charges as well, because sometimes you want to renovate your home, but you don't want to move in that home, so you get a second charge not to disrupt the first charge mortgage. Again, I think customers are becoming more sophisticated and educated as well. I think what brokers need to do is prepare. So I think 20 years ago, if you were a mortgage broker in the residential market, you might not involve yourself with specialists. You might think it's something a little bit different, but I think there needs to be that recognition that it is on your doorstep. And if you want to be a broker that is whole of market, you need to equip yourself with the right education, it doesn't mean that you have to take it all on yourself, because there's so many different packages and networks and clubs where that can support you with specialist lending. But I think awareness and education of different lenders, lenders like Together that can support with specialist lending, I think it's really important that brokers are on the journey. And finally, Tanya, are there any words of wisdom you can share with our brokers, our broker audience, as they navigate the dynamic market and help their clients achieve their home ownership goals? - Well, I think words of wisdom would be to keep educating yourself, keep making sure you're diverse in your offering as well, it's really important. Honestly, keep thinking outside of the box because lenders like Together for 50 years we've been lending, for 50 years we've been helping people achieve their property ambitions. And we've done that specifically in the specialist lending market. It is a big market already and it is a growing market. So brokers need to get behind, understand specialists so they can continue to support borrowers with their specialist needs. And hopefully we'll be around for another 50 years to help them do that. - Yeah, fantastic. Well, thank you for joining me today. - Thanks for having me. - And yeah, please check out the residential property market report from Together for more information and we will see you next time. (upbeat music) (upbeat music) (upbeat music) [BLANK_AUDIO]
