Today is my 7th anniversary of passing my exams and becoming a qualified Mortgage Broker!
I thought it would be interesting to write about some of the changes I have noticed over the last 7 years and thankfully, I am still young enough to remember becoming qualified unlike many of the brokers I know!
What is a high interest rate?
This is something I was talking about with a customer recently. The loan rate in question was approximately 5.5% with a lender who caters for those with quite bad credit. The customer was a little daunted by this rate.
It made me think of one of the first files I picked up as a newly qualified mortgage broker for an existing customer of the firm I then worked for. Their rate was 5.99% and that was with a high street lender.
My first observation here then, is that what people consider to be a high interest rate because they have bad credit, however only 7-8 years ago those rates were actually the norm for people with perfectly fine credit so the mortgage market has seen a lot of change, but also a lot of progress in this regard, particular for adverse credit mortgages.
The bad credit market
When I set up my own mortgage broker business in 2013, I decided to concentrate on helping those with bad credit. The reason for that was because the recession was still fresh in the mind and a lot of good people were caught up in it and as is quite often the case excellent credit can quickly become adverse through redundancy, especially in a recession. Everywhere they turned, they were told there was no chance of getting a mortgage.
At the time, there were not many lenders in the adverse credit world so there certainly was room for a suitably qualified Mortgage Broker who could hopefully get help to those that needed it the most.
My second observation is how the adverse market has changed since. We have gone from 2-3 lenders up to maybe 10 Adverse Mortgage lenders and also a couple of high street lenders also opening up their criteria a little.
One of yesterdays toughest lenders could be one of today’s most lenient lenders so it pays to keep abreast of current market conditions.
This is another big difference. Lenders application systems have, in the main improved dramatically. They are slicker, quicker and simpler to use and some lenders can now even issue mortgage offers in a matter of minutes rather than weeks or months.
There is my round up of the last 7 years since becoming a qualified mortgage broker.
Many things seem to have gone in the right direction to enable people to get a Mortgage despite what you may read in the news and the next couple of years will hopefully seem further improvements to criteria, technology and lenders innovation to help more and more people with poor or adverse credit qualify for a mortgage and own their own home.
However I suspect interest rates will probably start to creep up to the point of 3-5% becoming the norm again in the short to medium term, rather than the 1-3% rates we are currently seeing.
Despite the expected rate rises, lets hope criteria and products stay in place to help people become home owners even with bad credit.