The self-employed segment of house-buyers is driving the growth of specialist residential mortgage in the UK property market.

According to Paragon’s latest Financial Adviser Confidence Tracking (FACT) Index report, more number of self-employed house-buyers opted for specialist mortgage in 2017 compared to 2016.

Incidentally, last year, IMLA (Intermediate Mortgage Lenders’ Association) had reported that the value of specialist mortgage lenders’ annual lending grew by 19 per cent annually since 2009. The total specialist mortgage lending increased to £17bn per year in 2016 – more than a threefold increase from the low base of £5bn recorded in 2009.

Paragon report noted that self-employed customers comprised the highest proportion of specialist business at 21 per cent in 2017. This reflects the sharp rise in the number of self-employed in the UK, up 24 per cent over the last ten years from 3.9 million to almost 4.8 million in the final quarter of 2017 according to the ONS.

Specialist lenders first came to prominence in the 1980s in the wake of the financial deregulation enacted by the government. They were characterised as having no branches and relied exclusively on introductions for business and wholesale markets for funding. In the 1990s, the sector became focused on niche areas such as buy-to-let.

IMLA’s report suggests the outlook for specialist lenders is positive, with market and economic conditions meaning demand from ‘non-standard’ borrowers, is likely to remain buoyant.