There are 880,000 potential customers currently experiencing adverse credit across the UK, who intend to purchase a property in the next 12 months who may need the support of a broker and specialist lender.

This is one of many significant findings in Pepper Money’s Spring 2021 Adverse Credit Study, conducted with YouGov to shape how specialist lenders and brokers approach business and respective customers experiencing adverse credit.

This Study is a unique opportunity to provide a holistic analysis of how the COVID-19 pandemic has had a significant financial impact on customers with adverse credit, as we’re now in a position to reflect on the path to national economic recovery.

Despite the clear financial impact of COVID-19, for me, one key finding of the study is that the UK population’s financial circumstances are divided when it comes to how people have been affected by the pandemic. There is a share of people who are better off and have been able to clear their debt, as illustrated by an increase in respondents reporting they now have no debt in the study. On the other hand, confidence has decreased in customers with adverse credit as many are concerned that their future mortgage application will be declined with their credit history.

From a lender’s perspective, 2020 was a significant year to offer payment deferrals and hands-on support directly to those in need, providing relief at a time when rising missed/late payments were out of our customers’ control. We must ensure this doesn’t lead to those customers becoming disenfranchised from financial products in the future.

At Pepper Money, we live and breathe helping customers with complex mortgage applications. In the last year, we’ve seen irregular and complex income become more common with furlough and businesses opening and closing due to lockdowns, so this will be an area to look out for, particularly when government support is removed.

In this blog, I’ll be taking you through our key learnings from our Adverse Credit Study Spring 2021 that you can apply with your own customers. You can offer this guide as a resource to customers who may be seeking to understand their mortgage prospects in these tough financial times.

It all starts with education

Where lighter adverse credit is registered, reassurance is crucial. Customers need to understand that there is more to mortgages than just the high street banks.

This starts with education. A key result from the Study reveals that only 44% of customers with adverse credit would approach a mortgage broker to secure a mortgage when buying a property. This has decreased from 66%, as reported in our Adverse Credit Study conducted in Autumn 2020.

Using your digital presence as a store-front to generate interest in your services can illustrate your ability to help customers with small credit blips obtain a mortgage. Online research is now leading the way by some distance (56% would use this) to find a mortgage broker.

With such drastic increases in digital connectivity, it’s essential to use these platforms to establish your services as a go-to, trusted choice. So, it’s time to sharpen up your digital presence to ensure that when a customer is looking for a broker, they find you.

Engage in new business with a human approach

Conversations and education from brokers (and lenders for that matter) are also crucial to dispel any misconceptions customers have. Specialist lenders, in particular, aren’t looking for a specific profile of customer. It’s quite the opposite. We help brokers and their customers to achieve their homeownership potential despite their previous financial history. We want to understand the story behind each customer to give them the best opportunity for a successful application.

Many of us have difficulties talking about money or money worries, so offering customers a safe space to communicate without fear of judgement is very important. Only when you know the whole story are you able to help them get a mortgage.

Where brokers can help, the chances of securing a mortgage are good. Our Adverse Credit Study shows that more than four in 10 adults who had experienced adverse credit before purchasing the home they currently live in said it did not affect their ability to get a mortgage, which is great news. Better still, only 6% of those surveyed said their application was declined.

Education is a big part of Pepper Money’s mission. It’s clear from the Study that there will be brokers who do large volumes of business that have never needed specialist lenders before.

Opening up the housing market

It’s important for us to show our broker community that we are more than just an adverse credit lender, especially post-pandemic where the high street’s credit scoring model and criteria is likely to tighten up further.

Our study reveals that 629,000 individuals who’ve had adverse credit in the last 3 years want to buy a property to live in, in the next 12 months. Additionally, 251,000 customers are seeking to purchase a Buy to Let property in the next 12 months.

Financial inclusion is a key value we strive for to help many buyers overcome previously high barriers to entry into the housing market. Our regional development team and additional service support are built to open up conversations within the first charge mortgage sector to help intermediaries understand the benefits of choosing a specialist lender for their application.

On the customer side, we will continue to do what we’ve always done: provide a product range designed for customers with adverse credit that continually improves in response to market and customer needs.

Our bi-annual research into the effects of adverse credit amongst customers across the UK always proves beneficial to brokers, lenders, our governing bodies, and financial institutions across the specialist lending sector and the broader mortgage market.

To dive deeper into the results and insights uncovered, read and download Pepper Money’s Spring 2021 Adverse Credit Study here.

To find out more about how Pepper Money can help you and your customers, contact Ryan Brailsford on LinkedIn.