News Review: Packaging


Buy-to-let provides some lending relief


by Ian Balfour, CEO, Solent Mortgage Services


the news that metro Bank has announced its intention to enter the buy-to-let market is welcome to the intermediary market, even if they are still not confirm- ing whether they are interested in the broker channel as a means of distribution. it is easy to get carried


away by projecting the idea that a trend of new lending is on the horizon, particularly


as there has been such a shortage of good news stories but i think we all agree that it is a step in the right direction. taken with the moves in


recent months by Santander and Yorkshire Building Society to get involved in the buy-to-let market later in the year, there seems to be a clear demonstration of growing confidence among lenders. existing providers, such as Bank of china which has been lending in this area for the past two years, have capitalised while other lenders have waited to see which way the wind was blowing.


Building societies


come out fighting We have been seeing some interesting developments in terms of products from building societies in recent months and I am the first to applaud the innovative spirit that is clearly evident in many of the offerings. There is no doubt that the building society


movement remains an important part of the lending infrastructure in the UK. In the main they survived the downturn which decimated many other lenders and although some of their number succumbed to the siren call of sub-prime lending and paid the price with their independence, the majority weathered the storm and have arrived on the other side in good condition. However, while the fundamentals are in


good shape there is an underlying problem which could not have been foreseen and centres round the state of interest rates. Having passed the meltdown stage we are still in an environment of ultra low interest rates which although great news for borrowers has been nothing short of catastrophic for savers. And there is the nub of the problem facing today’s building society movement.


20 mortgage introducer MAY 2011 to be fair the restrictions


on funding have meant that many have not had the capacity but the knock-on effect of the overall shortage of new funding along with limited criteria and the effect of capitalisation rules from the Financial Services authority, have all had the effect of cutting off the lifeblood of a healthy housing market. We will have to hope that


the upcoming northern rock securitisation will provide further evidence that the securitisation market is beginning to function again and that we will see more activity to diversify


Attracting savings in a recession is hard


enough but to do so at a time when savings rates are so low is not a recipe for attracting the kind of deposits needed to compete effectively with bank funding. Margins are thin enough but bank funding


being not so reliant on deposit taking, product pricing in that sector will be broadly cheaper than the equivalent building society offering. This brings us back to the marketing angle that we are now seeing being employed. How much of the niche product activity is a result of the pressure brought about because building societies find themselves at a disadvantage in their core markets as it is by proactive planning to open up new markets? My personal view is that building societies


are demonstrating resilience and are loo- king to adapt their game plans to suit the changed marketplace in which they find themselves. Moves into the shared equity, buy-to-let and offset sectors might represent an increase in risk but promise greater margins. Building societies which are proving to


be innovative can bring great benefits to brokers and their clients by opening up niches that currently are still not popular in the mainstream.


and therefore strengthen funding options for lenders.


RIP: the passing of a pioneer


It would be shame to let the occasion pass without a passing nod to the recent loss of the Cheltenham & Gloucester brand to the broker market. C&G in its past incarnation as a building society was a brand synonymous with an ethic that welcomed and encouraged intermediary business.


While never involved in lending via packagers, with its extensive branch network, its hard working BDMs and internal support staff, it was able to engage a generation of intermediaries and provide a hugely important service to brokers and their clients. C&G was a highly successful lender and in the early 90s was often the building society of choice to act as host for those building societies that had overextended themselves in the last big dip and needed a big brother to absorb them. As part of the Lloyds Group, there was always going to be a danger that its individuality would suffer and eventually be lost. So here we are three years after the crash and the C&G brand is finally to join those other household names to go to that great lenders’ graveyard in the sky. The only difference in my mind is that unlike so many others, it can go to its rest with its honour intact. RIP.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60