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News Review: Specialist prime
a new era in mortgage lending beckons
ing those borrowers to whom to dealing with in the past: prime lender. But those days
they want to lend. prime, niche, near prime and are now gone for ever.
i have no doubt that most sub-prime, no longer have any Brokers are therefore going
by
Colin Snowdon
brokers have at some stage real meaning in the mortgage to have to work considerably
chief
encountered the problem of market today. all borrowers harder at placing such cases.
executive, submitting an application on have to be creditworthy, so this means putting less em-
Aldermore
behalf of an apparently good there is little point referring phasis on sourcing systems,
over the past two years the client only to have it reject- to ‘prime’ or ‘near prime’ which have never been terri-
uK residential mortgage mar- ed because the client didn’t and there is only one ‘niche’ bly good at handling anything
ket has been comprehensively pass credit score. in many which really matters, which is other than rate-led products,
reshaped as the result of one instances the reason for the and investing more time
critical factor: an undersupply rejection was not an adverse as we all look forward to the building relationships with
of funding. credit record but simply the housing and mortgage markets those lenders who are willing
Sub-prime and special- client’s inability, from a credit recovering, it’s imnullrtant to to consider prime, creditwor-
ist lenders who were reliant perspective, to clear a pass/ recognise that life will not be thy applications which have
upon wholesale and capital fail bar which has been raised the same as it has been in the been rejected on credit score.
market funding are now all considerably higher during nullstnullnullokers cannot enullect do such lenders exist? Yes
but extinct. this has left the the course of the past year lenders to adonull the same they do and i have no doubt
market to traditional prime and which is now all too often anullroach to the market as more lenders will enter this
lenders but many, and build- a moving target. thenulldid in the nullars nullior to sector in the future, because
ing societies in particular, today, if a borrower has a the credit crunch, because it it represents a prudent and
have funding problems of blip on their credit record, simnullnullisn’t going to hanullennull yet profitable market oppor-
their own. such as a ccJ or history of nullnders will be selective about tunity. i suspect the same will
the price of wholesale arrears from some years ago, those brokers thenullchoose hold true for other sectors of
money remains too expensive they are unlikely to be grant- to work with and thenullwill the mortgage market which
for it to play a significant part ed a mortgage. this leaves a inevitablnullfavour brokers who have been abandoned by tra-
in any lenders strategy and pool of borrowers with clean can add value bnullidentifnullng ditional lenders, but which
although the securitisation credit records all competing and delivering the tnulle of nonetheless remain good
market is starting to show for a limited pool of fund- borrowers to whom banks and credit risks. take the self-em-
flickers of life once again, it is ing. unfortunately, a grow- building societies want to lendnull ployed mortgage market for
unlikely to make a big impact ing number of borrowers example. the demise of self-
on mortgage funding in the have started to believe that the pool of high credit score cert lending has been a ham-
near future. although their credit status borrowers who are capable of mer blow for many perfectly
all of which means that would once have been seen clearing the raised credit bar. creditworthy self-employed
lenders have a heavy de- as prime, they are now in re- So what is likely to happen borrowers and this market is
pendency on retail funding, ality ‘unmortgageable’ and, as to those creditworthy but now screaming out for some in-
which is under intense pres- a result, they have effectively excluded borrowers? in the novative thinking from new
sure. unfortunately, however, thrown in the towel until the recent past, brokers typically lenders who are contemplat-
there simply isn’t sufficient market recovers. all of which would have tried submitting ing entering the uK market.
retail funding to meet de- creates real problems for bro- their mortgage application to all of which bodes well
mand, which means that kers, because not only is there a couple of mainstream lend- for brokers, because these
those lenders who are active a scarcity of funding, but also ers and, if they were rejected, sectors are ideally suited to
in the market are effectively a diminishing pool of appli- they would have passed the intermediaries. as brokers
rationing supply. How are cants. application to a packager who know only too well, lenders
they doing that? By limiting if the truth be told, the would have then placed the are quite happy to sell attrac-
distribution and cherry pick- credit ‘silos’ we were all used deal with a specialist or sub- tively priced fixed rate and
‘best buy’ deals directly via
The type of products which are being introduced Not only are these products ideally suited to their own distribution chan-
by new lenders – and Kensington is a good the skills which brokers have to offer, but they nels. it’s going to be an in-
example – need brokers to identify prospective also enable brokers to build a new and strong teresting year ahead but one
borrowers and then fulfill a proper advisory role to relationship with lenders for the future. in which i believe the mort-
take the deal through to successful completion. These are positive steps. gage market will start to take
some positive steps forward.
6
mortgage introducer march 2010
MI p6-10.indd 2 23/02/2010 10:56
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