"Collaboration between lenders, brokers, and regulatory bodies is essential to creating a more inclusive and accessible mortgage ecosystem."
FR: Tell us a bit about your background in financial services and your role at Nottingham Building Society.
I have more than 20 years of experience in the mortgage sector and was most recently the CEO of Home and Structured Lending Solutions at FirstRand group in South Africa. I moved to the UK in March 2023 to become Nottingham Building Society’s chief lending officer.
My role focuses on enhancing our mortgage offerings – particularly for those who struggle to meet traditional lending criteria, such as foreign nationals. As a foreign national myself, trying to get a mortgage proved far more complicated and frustrating than it should have been. The UK was able to match my aspirations to earn a good living and play my part in supporting the economy, but I was unable to comfortably settle with my family – and that is something I – and Nottingham Building Society – are actively working to change.
FR: What challenges do foreign nationals face in the UK mortgage market?
Foreign nationals encounter several hurdles when seeking a mortgage. Traditional lending criteria, such as minimum residency periods and high-income thresholds, make it difficult to assess their creditworthiness. For example, most lenders require a minimum UK residency of one to two years and a minimum income of £50,000, with loan-to-value ratios often capped at 75%. These strict criteria often exclude foreign nationals who may not meet these standards despite having stable and sufficient incomes.
FR: Why is it so important for mortgage providers to offer products specifically for underserved groups such as foreign nationals?
The UK’s demographics are evolving rapidly, and this includes an increasing number of skilled workers from abroad. These individuals are essential to our economy, particularly in sectors like healthcare and IT. However, despite their significant contributions, foreign nationals often face considerable barriers when trying to secure a mortgage in the UK.
And as a contemporary mutual, we wanted to address the issue head on by launching a proposition in May to help people coming from abroad and looking to settle in the UK own a home. We felt addressing this was crucial not only for their personal integration and stability, but also for the broader economic health of the country that skilled foreign workers support.
FR: How do these challenges affect the UK economy and the goal of attracting skilled workers?
When foreign nationals face difficulties in securing mortgages, it can deter skilled workers from relocating to the UK or incentivise them to leave. This is counterproductive to the economic goal of filling essential job vacancies, particularly in the NHS and other critical sectors. Ensuring these workers can buy homes helps integrate them more fully into society, making them more likely to stay and contribute long-term.
FR: What innovative solutions can mortgage providers explore to better serve foreign nationals?
Lenders need to rethink traditional criteria and develop tailored mortgage products that consider the unique circumstances of foreign nationals. This could include more flexible residency requirements and alternative forms of income verification that reflect the realities of skilled workers who may not fit conventional criteria. The goal should be to assess whether these individuals can afford the mortgage rather than relying on rigid standards that do not necessarily provide a clear picture of their financial stability.
FR: Can you provide an example of how criteria could be adjusted to be more inclusive?
Instead of requiring a set number of years of UK residency, lenders could look at a borrower’s overall financial history, including their earnings and employment stability in their home country. Additionally, considering joint incomes or alternative income sources like freelance work, which are common among foreign nationals, could make the process more inclusive without compromising financial stability.
FR: What broader impacts could these changes have on the mortgage market and society?
By creating a more inclusive mortgage market, we can help more people achieve the dream of homeownership, leading to a more stable and integrated society. This not only benefits individuals but also supports the housing market and the economy. More inclusive lending practices could also alleviate some of the pressures on the rental market, where high demand often drives up prices.
FR: How can collaboration between different stakeholders improve the situation for underserved groups?
Collaboration between lenders, brokers, and regulatory bodies is essential to creating a more inclusive and accessible mortgage ecosystem. By working together, we can develop innovative solutions that meet the needs of all potential borrowers, including those seen as 'non-standard' by traditional criteria, such as the self-employed and those with non-traditional income sources. This collaborative approach will help build a mortgage market that truly reflects and serves the diverse society of the UK.
