"The profile of borrowers is changing because of their personal circumstances, whether it is the kind work they do or their finances."
FR: Afin Bank is a new entrant into the specialist lending market, so what kind of borrowers will you look to help?
We will help those customers that are not supported by mainstream banks or who do not meet the borrowing criteria of other specialist lenders. This includes African nationals living and working in the UK, as well as other people struggling to get a mortgage, such as high net worth borrowers, the self-employed, or professionals who have non-standard incomes.
The inspiration for Afin Bank came from the 1.5 million Africans living and working in the UK, many of whom struggle to get a mortgage because of their circumstances, such as their visa status or lack of credit footprint in this country. These are people working in professions like health, law and finance, or running their own businesses.
There was a 54% increase in mortgage searches for non-UK resident criteria over the course of 2023, so we know there is a growing interest. Yet the market has not kept up with this demand because many mainstream lenders use automated underwriting, which is not geared towards the circumstances of foreign national borrowers.
There are similar challenges for other non-standard borrowers, like the self-employed, who make up a growing chunk of the working population. Despite an immediate dip following Covid, there are currently around 4.3 million self-employed workers in the UK, up from 3 million in 2000. But because they do not receive a regular monthly wage in the way that permanent employees do, many banks struggle to determine a useable income and therefore cannot lend to them.
It’s people like this that Afin Bank has been created to help.
FR: Give us an example of the kind challenges those borrowers currently face?
Many lenders have very restrictive criteria for foreign nationals, such as requiring borrowers to have indefinite right to reside in the UK, while others require a minimum residency period of at least 12 or 24 months. Add that to the fact they are unlikely to have much of a credit history in the UK, significantly impacting credit score results, then you can start to see the barriers.
Afin Bank will have a pragmatic approach to support these clients, many of whom have well-paying jobs or are on track to see their income increase steadily. This will include looking at future income potential based on their qualifications and employment, along with robust creditworthiness and affordability assessments.
FR: How will Afin Bank help those borrowers?
There’s a huge amount of experience at Afin Bank, from our CEO Jason Oakley, who built Metro Bank’s mortgage book from scratch, through to Alan Davison, our chief commercial officer, who has long experience in specialist lending, and of course me!
We are using all that experience to create a set of mortgage propositions that put the needs of the borrower first by understanding their challenges and how can we address them. This will mean common sense underwriting by an experienced team, not automatically scored by computer, and personal relationships with brokers to give them clarity and certainty when they bring their clients to us.
Afin Bank will be using the latest in financial technology, but this will be an enabler to our expert teams rather than a replacement. It will mean quick and efficient ways of initially submitting a deal request and tracking its progress, but it won’t replace customer service from a real person when brokers need it.
FR: How important will brokers be to Afin Bank?
As is always the case in specialist lending, and I would say it is true for most mortgage lending, brokers and mortgage packagers will be vital to Afin Bank when we launch our mortgage proposition next year.
That was one of the big draws for me in joining Afin Bank, the opportunity to work with brokers to help them provide the right lending solutions to more of their clients, no matter how non-standard they are.
After a few years of clients acclimatising to higher interest rates, coupled with cost-of-living challenges, many mainstream banks have become more cautious with their lending criteria. I think we are starting to see a period where interest rates will stabilise and client confidence is starting to return, although we will need to see the impact of higher stamp duty levels next March.
However, the profile of borrowers is changing because of their personal circumstances, whether it is the kind work they do or their finances. People are changing jobs, becoming self-employed, moving to lucrative contract work or juggling multiple income streams. And as we know, people from overseas are looking to put down roots in the UK.
All of this means that if you aren’t a vanilla status borrower, you might not get the support you need from the high street banks. Those customers will be looking to intermediaries and lenders for expert support and market knowledge.
Afin Bank wants to help brokers help their customers.
FR: Why did you decide to join Afin Bank?
You don’t often get the opportunity to be at the very start of a new lender, let alone a new bank, and get to work with such a talented bunch of people.
Building a proposition for such an under-served sector as the African diaspora was a great opportunity, and when you extend that philosophy and approach to other poorly supported borrowers, it’s a really exciting – and much needed – business proposition.
We are also in the great position of having a parent company in WAICA Re that is fully supportive of our plans. So many other start-ups, even those with a banking license, struggle to get fully off the ground because they can’t attract the capital they need. WAICA Re has committed £60million to Afin Bank.
Over the next few months I will be building relationships with brokers and other introducer networks, listening to their feedback and what they need for their customers, to help shape our proposition ahead of our planned launch next year.
