A Market Opportunity Brokers Can’t Afford to Miss

Adverse credit often evokes concerns in the mortgage industry, with its perceived challenges and complexities. However, for brokers, it signals significant opportunities.

Pepper Money’s 2024 Specialist Lending Study sheds light on this misunderstood market segment. It highlights the difficulties borrowers face, and the potential brokers have to step in and assist.

Clients with adverse credit frequently struggle to secure favourable mortgage terms. This is where brokers can provide essential support by offering tailored solutions and expert advice. With the right approach, brokers can turn these challenges into meaningful client relationships.

Importantly, the study reveals an untapped demand in the specialist lending sector. Brokers who take the time to understand this market are better positioned to deliver value and stand out. Focusing on client education and accessible mortgage solutions could also enhance trust and build long-term success.

As competition increases in traditional lending, specialising in adverse credit offers a way to differentiate. Brokers can unlock new opportunities by understanding client needs and offering tailored products.

With more borrowers facing credit issues, brokers who rise to the occasion will grow their business and help clients achieve their homeownership goals.

The Market Landscape: Shifting Consumer Behaviour

One key finding from Pepper Money’s study highlights a drop in adverse credit clients seeking advice from mortgage brokers. Previously, 58% of these clients consulted brokers, but this has now fallen to just half. The data raises important questions about what has changed in the UK mortgage market.

Interestingly, the report reveals that clients increasingly use alternative methods to find mortgage solutions. For instance, 46% now turn to online research, while 47% rely on personal recommendations. These trends suggest a growing preference for independent information sources over traditional broker advice.

This shift indicates that brokers must adapt to remain competitive. Simply expecting clients to approach them as a default option is no longer enough. Instead, brokers should demonstrate their unique value in solving complex mortgage challenges.

By establishing themselves as trusted, results-driven advisors, brokers can better capture and retain this evolving audience. Focusing on tailored advice, transparent communication, and effective problem-solving will be critical in addressing this decline.

Through proactive strategies, mortgage brokers can continue to play a vital role in supporting adverse credit clients. However, keeping pace with changing client behaviour is essential for long-term success.

Why Brokers Still Matter—And Why They Should Use This

Despite the dip in reliance, brokers remain critical for clients with adverse credit. The study found that 67% of these clients seek brokers to access exclusive lenders, while 64% turn to them to secure the best market rates. These figures underline a simple truth: clients value expertise, access, and results.

For brokers, this means there’s a real opportunity to double down on their unique value proposition:

• Access to Specialist Lenders: Not every client knows the diverse range of specialist lenders that cater to those with adverse credit. Brokers can bridge that gap and become the gateway to options many clients wouldn’t otherwise find.
• Market Knowledge and Rate Optimisation: With adverse credit often comes higher perceived risk, leading to less favourable rates. A broker’s ability to secure competitive deals can significantly impact a client’s financial outlook and build long-term trust.

Communication Matters: Meeting Clients Where They Are

The study also delves into how adverse credit clients prefer to communicate with brokers. Face-to-face advice remains the most popular method (59%), closely followed by email (58%) and telephone consultations (50%). This insight emphasises the importance of flexibility in communication.

For brokers, the takeaway is clear: offering multiple communication channels isn’t just a nice-to-have—it’s essential. Whether it’s a detailed in-person consultation or a quick response via email, brokers who adapt to their client’s preferences are more likely to build lasting relationships and secure referrals.

The importance of personal recommendations (47%) and online research (46%) in the decision-making process can’t be ignored. Brokers must be visible, credible, and trusted in both spheres.

• Utilising Client Testimonials: Positive experiences from past clients can drive referrals and reinforce trust. Encouraging satisfied clients to share their experiences can significantly enhance a broker’s reputation.
• Building an Online Presence: An informative and accessible online presence is critical. From educational blogs to easy-to-navigate websites, brokers who invest in digital marketing will be better positioned to capture the attention of prospective clients conducting online research.

Adverse Credit: The Broker’s Competitive Advantage

Adverse credit doesn’t just represent a challenge; it’s an opportunity for brokers to showcase their expertise and prove their value. By staying informed, offering personalised advice, and leveraging multiple communication channels, brokers can position themselves as the go-to solution for clients in need.

The key lies in embracing the insights from studies like Pepper Money’s and turning them into actionable strategies. Whether it’s doubling down on digital visibility, fostering relationships with specialist lenders, or simply being available in the ways clients prefer, the growth potential is there for those ready to seize it.

In an industry where trust, knowledge, and access are everything, brokers can transform what can feel like an uphill battle for clients into a pathway to financial stability. The question is: are you ready to lead the way?

For adviser use only. Please note this content has been supplied by our lender partner and as such, is their responsibility. No party shall have any right of action against Legal & General in relation to the accuracy or completeness of the information in this article.