From later life lending to HMOs, opportunities abound, but brokers must prepare for fraud risks and shifting client needs
As the UK mortgage market stabilises, specialist lending is gaining momentum. But while demand is growing, so too is the complexity of cases and the competition for clients. Matthew Arena, managing director of Brilliant Group, says brokers have a unique chance to add value, but only if they stay vigilant and client focused.
Arena sees later life lending and intergenerational support as enduring drivers of growth.
“There’s a real connect now between aging grandparents and parents supporting family by raising money to help first-time buyers,” Arena said. “Now that is a mortgage broker’s dream. You’re making a difference to people’s lives… but also you’ve got two transactions and one new life cycle for a mortgage product.”
He also highlights supply-side reform as a potential catalyst, but with caveats. “We should be seeing more properties being built… development restrictions easing… the cost of bank regulation possibly reducing,” he said. “But it just takes so long for that to really mean anything to people on the street.”
On balance, Arena is optimistic. “Rates aren’t going crazy anymore. There’s a decision-making environment which is quite positive,” he said. “We’re seeing rental yields increase as rents push through while rates fall.”
Emerging risks: fraud, falling margins, and tech competitors
Income fraud, particularly staged income involving family members, is a growing concern, and Arena warns that the consequences for brokers are real.
“We’re seeing brokers being removed from panels, and that can be incredibly disruptive to a business,” he said. “We’re seeing an awful lot of it.”
Maintaining wide lender access and strong internal checks is key. So too is managing margins in an increasingly complex market.
“There’s a marginal difference in profit, but your average advance is often lower,” Arena said. “The amount of extra work involved in a specialist case is not proportionate to the difference in profitability.”
More competition is also coming from non-advising firms. “That’s the likes of the credit firms that are going direct to consumer… and then trying to sell the mortgage services through on the back of an app,” he said. “They’re not as effective in the specialist sector at the moment, but it’s coming.”
Stronger client relationships are key
To differentiate in a crowded market, Arena believes brokers must prioritise relationship-building, even when it’s not immediately profitable.
“This is where the conflict with profitability comes in,” he said. “Investing that time is a cost… but it’s also a big opportunity.”
He encourages brokers to make those relationships more personal. “Sometimes brokers know an awful lot about their client, but does their client know anything about them? Possibly not,” he said. “Stronger relationships… require a bit of give and take.”
Communication must also be relevant. “If you know that I don’t have any property, I’m a first-time buyer… I don’t want to be receiving communications about possible buy-to-let refinance arrangements,” he said.
Focus on your actual client base, not just market trends
While short-term lets, HMOs, and refurbishments are commonly cited as growth areas, Arena urges brokers to look inward first.
“There’s a danger that people put the cart before the horse,” he said. “It’s not relevant to you if there are professional landlords converting buildings into HMOs if you’ve never dealt with one.”
Instead, he advises brokers to review cases that didn’t progress. “What are you declining? What isn’t getting pushed through? That’s business that you’re seeing that isn’t progressing,” he said.
For complex or unfamiliar cases, partnerships may unlock missed opportunity. “Start using third-party partners,” he said. “Then you can determine the value of that opportunity… and whether it’s worth your time.”
Autumn Budget adds uncertainty
But with the Autumn Budget still weeks away, the market is in a holding pattern. “It was being talked about in August, and it’s still months away,” Arena said. “We need some stability so we can start making lending and buying decisions, these are huge, long-term commitments.”
The risk, he notes, is not just in policy itself, but in the uncertainty it creates. “Could it cause a mad rush for landlords to invest before the election? Could they implement tax changes very quickly?” he said.
As Arena puts it: “It’s one of those situations where the whole industry is keen to find out a lot quicker than we’re going to.” Until then, brokers will need to balance readiness with resilience.
