Gross annual lending from specialist lenders has increased by 19% a year since 2009, according to a report by the Intermediary Mortgage Lenders Association (IMLA).
An October 2017 BridgingAndCommercial.co.uk article explains that in 2016, the value of loans from specialist lenders was £17bn. In 2009, the total was £5bn. This means that there has been more than a threefold increase in the total of loans by the specialist lender sector in just seven years.
Peter Williams, Executive Director of the IMLA, said:
“Specialist lenders have enjoyed strong growth since the end of the recession, largely through their focus on classically niche, less well-served areas of the market.”
Specialist lenders serve niche markets such as buy-to-let commercial mortgages, specialist residential mortgages, bridging loans and second charge mortgages. Following the financial crisis and the resultant tightening of regulations, many mainstream large lenders became reluctant to lend in specialist areas they regarded as high risk. The alternative specialist lending sector has risen because they are prepared to lend for deals in areas where mainstream lenders are sometimes reluctant to do business.
Specialist lenders have a flexible approach to lending and are not bound by inflexible underwriting rules that many mainstream lenders have to follow.
Many specialists use mortgage and bridging finance brokers who act on behalf of borrowers to find lending deals for borrowers who operate in niche lending areas.
“Through innovation and flexibility, combined with strong underwriting standards, specialist lenders have capitalised on the growing demand for products like specialist residential and lifetime mortgages.”