LTR, John Nixon, Seb Maloney, Alan Cleary, Ian Lonergan
to investors. Ultimately, we need the investors to want to buy the product and I think there’s still a lot of mistrust in ratings. There’s a lot of confidence building that could be done.”
SuSTainablE
Cleary is confident that Precise Mortgages is in the right market with buy-to-let, but he and the board are “always reviewing their business model” and seem open to diversifying their product range in the future if the timing is right. For the time being though, Cleary is reserved on the state of the wider mortgage market.
“I think we can forget normal in the mortgage market. What is normal? What I think we should be looking at is sustainable. What is sustainable?” he asks. “This year we’re probably looking at £150bn gross lending - that is a market that is undersupplied and underperforming. A number that feels more sustainable is in the £200 billion to £250 billion gross bracket. It’s housing transactions at levels more like 700,000, not the current 500 to 600,000 per year. “For the market to become sustainable again, I think it needs to move about another 50% from where it is today. And I don’t think that’s going to happen for three to five years.”
He is similarly inclement on the
government’s lack of commitment to kick-start the process of lending. Neither the Conservative party nor the Liberal Democrats made specific manifesto
promises on the housing market in relation to funding in the run up to the general election.
“Housing on the political agenda is nowhere. It’s so far down the pecking order that it was never even debated in the election that’s just gone by. It needs to play a bigger role because it’s one of the cornerstones of our economy - where somebody lives and what their tenure is. “Importantly, I think they need to understand funding more than they have done. The big black hole in the housing market is funding. Unless there is sufficient funding to make that market move, everything stops. Builders stop building houses because nobody can get a mortgage to buy the properties. It’s a vicious circle.”
The mortgage industry as a whole is acutely aware of the £300 billion plus owed to the government in repayments to both the Special Liquidity Scheme and the Credit Guarantee Scheme. As yet, the Bank of England has stood firm on its intention that lenders which transacted with the schemes repay the outstanding debt by 2011. “If the government really wanted to kick-start mortgage funding, the first thing they should do is extend the Special Liquidity Scheme repayment date.
“The 2011 date is unrealistic. There’s no way that the lenders that have transacted with the SLS are going to find £300 billion in the next 12 months. “Lenders at the moment are not
lending today because they’re worrying about paying back the SLS in 2011. Let’s get rid of that for a start, that’s a really easy way of tackling at least part of the funding problem.
“That decision could be made
tomorrow and would allow lenders to lend more today, which fundamentally will help the market, and the taxpayer will get their money back in spades I believe.” So what will the future hold for Cleary and the board at Precise Mortgages? Cleary is hopeful but humbled: “The two biggest things I learned at edeus, was don’t have all your eggs in one basket and that the impossible might just happen.
“The critical thing about Precise Mortgages and the team in place there is that we’ve learned from that experience. So if you look at our business now, what are the lessons?
“First of all we have a number of
different business lines – the third party servicing business called Exact, Precise Mortgages, a lender, and a credit analytics business that analyses mortgages for various other parties, so we’re constantly looking out for what could go wrong. “Even if we think it’s impossible, we have a plan for it.” So far, so good, thinks Mortgage
Introducer. The plane is most definitely in the air and on course for a pleasant flight. But only time will tell if the Precise Mortgages board will bring it in to land
smoothly. n
mortgage introducer JUNE 2010 27
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