Helping UK singles to find their mortgage match


specialist lending

It might not get the same attention of Valentine’s Day, but February 15th is Singles Day. And it’s not a day all about commiseration for those who didn’t get roses or a romantic meal the night before either.

Instead, Singles day is focused on celebrating the other important relationships in our lives: the love of friends, family – and even learning to love ourselves.

Nevertheless, there are downsides to being single and some of these are financial. For example, singles often can’t benefit from the “economies of scale” that are available to couples.

Back before lockdown, this included things like splitting accommodation costs on holiday or taking a two-for-one trip to the cinema, but it also includes getting a mortgage and stepping onto the ladder.

Brokers generally won’t be able to help these individuals with the first two, but they can reassure clients that they don’t need to wait for their soulmate to get a mortgage.

The right option for them is probably out there already, they just might not be aware it exists.

Looking past the flaws

When it comes to the mortgage market, being “single” actually covers a wide range of circumstances.

A single buyer could be someone who has lost their partner or who’s been through a divorce – but it could also be a group of friends looking to buy together.

According to the ONS, singles are more likely to live in rented accommodation. This is unsurprising given their income has to stretch far to cover rental payments and other expenses such as energy bills.

As a result, homeownership is unfortunately looking increasingly unlikely for a growing number of renters.

Vida’s latest research on ‘Generation Rent’ found that while two-thirds (66%) of renters have ambitions to own their own home, rising house prices, stagnant incomes and the increasing costs of living have pushed these individuals plans to buy even further out of reach. And Covid-19 has made this even more difficult.

Just like many singles, Generation Rent is not confined to young people either. Vida’s research found over half (53%) of 35 to 54 year olds do not have a large enough deposit to buy a home, with almost a third (29%) citing the tightening of lending criteria as a barrier in the way of homeownership.

A singular solution

Even in more normal times, meeting the loan-to-income ratio requirements or saving for a deposit can seem like an impossible task for single applicants with their single income.

In fact, renters who want to buy say that the biggest barrier to owning a home is being able to save a large enough deposit. The impact of COVID-19 has only aggravated this problem, with 27% of these individuals having had to dip into funds that could have been used to help them buy a property.

It’s not just issues around having a substantial enough deposit that prevents aspiring homeowners from buying a property, though.

Societal shifts have resulted in customers with more complex circumstances, including the infrequent income streams of the self-employed or gig economy workers – both of which are mainly made up of younger workers, who are perhaps more likely to be single.

Data from the ONS shows more than 36% of zero-hour contracts go to those aged 16-24, while 60% of those working for the gig economy are aged between 16-34.

Pre-pandemic, there was an increasing need for specialist solutions to support these individuals with more complex circumstances.

Now with up to 9.9m people furloughed last year and millions more having faced shorter working hours and in some cases, job loss, many of these borrowers will need a strong specialist sector which recognises that their circumstances shouldn’t bar them from stepping onto or up the housing ladder.

For singles in particular, the specialist mortgage market understands that it’s no longer realistic to expect every house purchase to involve a young couple or family starting up.

Modern borrowers’ circumstances are varied and complex – there’s no such thing as a “typical borrower” anymore.

A long-term solution

The challenges posed by COVID-19 have muddied the waters for many struggling to achieve homeownership, but we cannot let this crisis act as an excuse to leave thousands of people locked out of homeownership for the foreseeable future.

The specialist lending market has the perfect opportunity to step up and provide innovative solutions to support underserved borrowers, including singles and those who otherwise might have been stuck in Generation Rent.

However, this also creates a great opportunity for mortgage intermediaries to demonstrate the value of independent advice to help these individuals find the right solution to whatever their circumstances might be in helping to find a safe place to call home.