The specialist lending market is forecast to grow from £32 billion in 2023 to £54 billion in 2029, an increase of 70%.
Shared ownership, retirees, and self build homes are set to drive the biggest mortgage demand.
This is according to the 2024 Residential Mortgage Market report from specialist lender Together.
Ryan Etchells, chief commercial officer at Together, said: “Our research highlights the true challenges faced by home buyers in the residential property market today.
“We can clearly see that in response to the wider economy and people’s changing lives and financial needs, the proportion of ‘non-standard’ mortgage applicants will only continue to rise.
“At a time when mainstream lenders are not adapting their lending criteria fast enough – the case for specialist lenders has never been clearer.
“Borrowers are turning to lenders that are willing to take time to build a relationship with them, understand their situations and use common sense to make lending decisions.
“With the five-year specialist market forecast looking so strong, it’s high time the industry, backed by the new government, reassess how to best support homeowners in realising their property ambitions.”
Shared ownership is expected to grow from £2.3 billion currently to £5.2 billion, a 126% increase; lending to customers that are retired should rise from £600 million to £1.4 billion, also by 126%; and the demand for mortgages on self-build properties should increase from £57 million to £116 million, up by 103%.
Inflationary cost challenges and the fall-out from the cost-of-living crisis, are also predicted to continue to harm potential borrowers’ ability to access credit – fuelling an increasing need for support from specialist lenders.
Analysis by economist Rob Thomas, the principal researcher at the Intermediary Mortgage Lenders Association (IMLA), carried out in partnership with Together, estimated that more than one sixth of regulated mortgage lending in 2023 fell into one or more specialist categories – with the next five years forecast to grow by a further £22 billion.
Thomas said: “Given the substantial social and financial benefits that homeownership has demonstrated over many decades it’s obvious that there is a need to improve awareness of the specialist options that might assist them in achieving their ambitions of homeownership.”
