A demand for specialist residential mortgages is being “driven by a diverse set of customer needs”, primarily from those that are self-employed, according to Paragon’s Q4 2017 FACT index report, involving 198 mortgage intermediaries.

During the interviews, the intermediaries stated that one-in-five (21%) of all customers requiring a more complex mortgage solution were self-employed. This figure correlates with the sharp incline of those that are self-employed in the UK rising to 4.8 million in Q4 2017, a 24% growth in the last ten years, the ONS reported.

Following self-employed customers, those looking for an interest-only mortgage ranked second in the specialist mortgage market, accounting for 15% of the population, and complex income customers came in third at 14%.

In contrast, low income businesses accounted for just 7% of the customer base, whilst credit adverse credit businesses represented 6%. The adverse credit market has consistently been the least dominant customer category in the requirement for a specialist mortgage since the introduction of the FACT index report in 2015.

Paragon mortgage managing director John Heron commented: “It seems clear from this latest research that complexity around employment and income are the most significant reasons that intermediaries review the options available from specialist residential lenders. Customers with these characteristics are more likely to benefit from the detailed individual approach to underwriting that lenders in this segment of the mortgage market can deliver. With employment patterns continuing to become increasingly diverse and complex, we may well see this area of the market expanding going forward.”

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