I have been having a chat with some of the Adverse lenders over the last week or so to see what their plans are in 2024. I suppose I am trying to find out if we can expect them to withdraw or if they still plan on being active next year.
Lending amounts
All of the lenders I spoke to want to carry on lending. Some expect targets to be similar to this year (which generally were missed) others expect an increased target.
This is good news as one of the effects of the recession in 2007/08 was that lenders had less money to lend and then had a knock on effect of making it harder to get a mortgage and so house prices coming down which then worried lenders and it was like a little spiral.
Thankfully however that does not appear to be the case and lenders are here to stay – or at least that is what they are telling us. They still plan to maintain LTVs at around 85% and maybe 90% for some niche products, which again is really positive. When covid hit, we found lenders pulling back to 75% which is not currently being mentioned. It is all coming across very positive no this front.
What about adverse Interest Rates?
This is the big one isnt it? After this year with rates yo-yoing up who knows?! The general consensus seems to be to remain competitive. Clearly their rates are never going to compete with the high street. But with them still wanting to lend large amounts they are not going to be doing that with rates of 8-10%. I expect that we will see rates starting at around 6% (maybe a touch under if we get lucky).
That is around where the market is at the moment and nobody is expecting that to change other than in line with any base rate changes. Again, still quite positive!
Will there still be as many lenders?
This is the bit where I am unsure. There are currently quite a few lenders in the specialist market. I can think of 7 lenders who predominantly specialise in that part of the market. Then there are another 5-6 who play an active role in that part of the market. That seems a lot when times are good. With the market as it is at the moment I sort of feel like there needs to be a couple who pull out or possibly merge.
However, if you listen to the lenders they are all quite bullish about their future. I am sure they know more than I do.
What will the future hold for adverse mortgages?
I suppose if we take what the lenders are telling us as gospel then it is business as usual. I do believe that unless there are changes in the base rate that will be the case. However I do also believe that come the end of the year there will be some consolidation/mergers or closures by a couple of these lenders. Either that or they will relax criteria in order to open up to more customers. I feel like that is less likely though. I hope I am wrong as there are obviously jobs and real people involved when that happens.
If you have bad credit however I think you can take from it that the adverse market will still be around, active and looking to lend. If you have bad credit and would like to look at your options, do please get in touch.