lender to be, but the mortgage market has woken up to the fact that it was working on an unsustainable model, and now reality has come home to roost. “Everyone has had to rethink the way that they operate going forward. We need to behave differently now from how we have in the past.” The Precise Mortgages board plans to limit distribution to a select panel of brokers including L&G Mortgage Club, Mortgage Intelligence and Mortgage Next in the first instance, though Cleary says they are flexible on distribution in the future. “We’ve chosen to use limited distribution at the moment. Based on the fact that we have limited volume appetite, spreading our capital across the whole of the mortgage market right now is not the right thing to do.”

The new lender is backed by US- based equity house Elliott Associates, which Cleary describes as a “large, established, long-term investor”. The backers have provided Precise Mortgages with capital “to the tune of hundreds of millions, not billions,” to fund new buy-to-let lending in the UK, meaning that unlike some of its competitors, the lender is not reliant on wholesale funding or retail deposits to be active in the market. Though there is a finite amount of money agreed for the venture at present, Cleary and the board are confident that Elliott Associates will back them further if the lender proves successful. Lonergan, also 41 and chief executive and the man behind the money at Exact, said the team plans to grow the business in line with demand. “If demand is there, Precise Mortgages will be writing quality business, we would be keen to discuss further funding with our current backers, or indeed other investors.”

Cleary says distribution development will follow. “As we get access to more funding, we will look at spreading our distribution. We’ve had to make some assumptions about the number of distributers we will be doing business with, but until we’re lending, we won’t know if it’s 100% appropriate. “The reason we’ve chosen the brokers we have is to do with historical quality of

business they’ve introduced. We don’t have a preference on ARs or DAs but we are having to be restrictive while we’re tight on volume. “If we’ve undercooked it we’ll look

at it relatively quickly and widen our distribution to match our volume requirements.”

criTEria

Those volume requirements will be partly controlled by lending criteria, which are set rigorously by the credit management committee working within Precise Mortgages. The maximum LTV is set at 75% and affordability is strict, with 125% rental cover required over and above the pay rate or the revert rate, whichever is the higher. Rates are “competitive” Cleary says, “for our target market. We’re not competing with The Mortgage Works or BM Solutions on price, both of which are looking for volume of business.” Precise Mortgages is looking for high quality credit risk and plans to lend to professionals with one or two properties let out to provide an income over the medium to long term, says Cleary, stressing that speculative investors in the UK’s rental sector are not the calibre of borrower Precise Mortgages will consider. “We believe that professionals will offer a very good credit risk. The business is not at the right size to take on large

portfolios. That market matches our credit risk appetite and our volume aspirations.” he said. It’s no surprise Precise Mortgages is focusing on buy-to-let. The sector has begun to pick up in the past month, having been one of the hardest hit sectors of the mortgage market when the credit crunch struck in 2007. At its lowest point in September 2009 a staggering 95% of all deals available at the market’s peak in August 2007 had been withdrawn. The number of buy-to-let products available in May 2010 was up 70% from the trough of the market, and currently stands at 304 mortgages. Both Saffron and Melton Mowbray building societies returned to the market during the past month and Precise Mortgages is the latest in a line of specialist intermediary lenders launching buy-to-let products. Kensington started lending again in May with a range of buy-to-let products on offer to meet the demand which all of these lenders say is there, and growing. Intermediary lender Aldermore, which

was already lending in the commercial sector, launched its residential offering on the same day as Precise Mortgages and it can only be a matter of time before Paragon rejoins the fray – there have already been positive noises from the lender and the broker market is confident.

Cleary says the pitch with Precise

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