After a study by Investec showed that high net worth individuals find obtaining a mortgage difficult, financial services group GSB Capital, which offers lending services for its HNW clients, explains why this problem exists and discusses the outlook. 

A recent study by Investec found that 90 per cent of high net worth individuals have had their mortgage applications rejected. As a result, they have had to accept lower loan-to-value (LTV) ratios than they wanted.

Explaining why this problem exists, Ryan Dixon (pictured), managing partner and co-head of GSB Private, told WealthBriefing in an exclusive interview that lenders often cannot understand HNW’s complex incomes. The most common problem is non-standard income which prevents mortgage applicants from accessing higher LTVs – such as entrepreneurs receiving income from multiple sources, executives or senior roles receiving a large part of their pay in bonuses, or being paid in foreign currency.

Added to this complexity, interest rates have risen to the highest level since before the 2008 crash, upending assumptions about pricing loans, and risks. 

However, with inflation falling and expectations that interest rates will be cut, Dixon said there is now a hunger in the market to get things moving. A lot of people are sitting on cash and he is optimistic about the outlook for the next six to 12 months.

Dixon believes that banks are more willing to lend larger amounts. He stressed how important it is to prepare applications to banks thoroughly, highlighting the true strength of a prospective client's profile. As a broker, Dixon understands and assesses his clients' needs and then decides the right bank for the right client. He also clarifies the full structure and purpose of the application to lenders.

More people are looking into the property market, he added. The Dubai-headquartered GSB business, which was founded in 2021, offers a full debt advisory operation from its London office to compliment the wider wealth management and private banking services. Dixon added that demand is increasing for UK property for overseas clients, and there are signs of more US clients buying up property in the UK. Demand has also been rising for property in France and Germany. Dixon is seeing an influx of HNW individuals and believes that there will be an upward trend in HNW individuals seeking property in the future, also due to a growth in entrepreneurs.

GSB has been ramping up its business in the Dubai International Finance Centre. The firm wants to grow the GSB brand grow internationally. It recently received approval for a licence from the Central Bank of Ireland (CBI) to open an office in Ireland, giving the firm the long-term ability to service clients across Europe.

Following the approval, GSB Capital Ireland will offer a range of advice services on pensions, investments, and insurance. The licence also gives GSB a facility for passporting across the European Union.

GSB Capital Ireland will be led by Michael Cunningham, chief executive in the firm’s Dublin office. “The licence will give the business an opportunity to expand the GSB brand across Europe and offer European clients access to a host of our dedicated advice services,” Cunningham said.

“We chose Ireland as the jurisdiction to start our European growth story as it is one of the strongest and most robust regulatory regimes in the eurozone, and due to the similar legal and regulatory structures like [those of] the UK. We are looking to expand our range of services and obtain additional licence permissions across Europe over the next few years,” he added.

See more commentary here about the study by Investec.