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minor credit blips in their pasts that have been resolved. “Many of these new players make an
impact by targeting niche needs in the market, offering clients with minor financial hiccups an opportunity to borrow,” he says. “The past three years have seen a
severe tightening of the criteria for borrowing - so much so that consumers who would have received a warm welcome anywhere on the high street before are now left out in the cold by everyone. Many brokers have a tendency to stick to what they know and are slow to start using new lenders. They get used to application processes and criteria whereas new lenders can take them out of their comfort zone. “However some new lenders have
themselves to blame as they fail to understand the intermediary market. Bank of China’s impractical pre-requisite of face-to-face interviews with clients before making a decision to lend is just one example.” Matthew Fleming-Duffy, director of
Bournemouth-based broker Abacus Financial, is on the same page as Lipnicki. “The large lenders do appear to be stuck in rigid process currently which
by Charles Haresnape, managing director, Aldermore Residential
Research published by Moneyfacts in February this year confirmed that the UK’s seven biggest mortgage lenders including Lloyds banking Group, Santander and HSBC, have a 75% market share but account for only 29% of the top 500 mortgage deals. More recently L&G and the Association of Mortgage Intermediares published research confirming that, of the 3.4 million borrowers who plan to apply for a mortgage over the next 12 months, only a third are confident that they would actually be able to get a mortgage.
36 mortgage introducer JULY 2011
means that some can be extremely difficult to deal with, particularly when presented with first-time buyer cases,” he says. “But I have used Leeds from time to
time with no problems and found them easy to deal with. Our local BDM is knowledgeable and knows lending policy inside out. Also, they will lend to age 85 which is handy in some cases and they have underwriters you can actually speak to.” He also notes Bank of China’s “very
strange application process” but does acknowledge they are in the market to lend.
mutuals matter Most brokers agree however, that it’s the building societies which are performing an increasingly vital role in the mortgage market. Accord, Buckingham, Harpenden, Hanley Economic, Coventry, Leeds and Skipton are all making efforts to help borrowers get a mortgage when the high street brands turn them away. Though many mutuals will assess a deal
and price for risk if they know the broker, it’s not always about finding a home for non-standard borrowers. Skipton’s head of products, Kris
Taken together, these two pieces of research create a picture of dominant lenders who are cherry-picking the business they’re willing to accept, but are not adequately addressing the needs of tens of thousands of borrowers who may be creditworthy but don’t match their rigid lending criteria. This was exactly why Aldermore decided to launched a residential mortgage business in May last year: to satisfy borrower needs being ignored by high street lenders. We’ve started by addressing the most obvious market gap: creditworthy borrowers being declined by inflexible and automated credit scoring systems. For example, we discovered that high street lenders were declining perfectly creditworthy applications because borrowers had recently moved home and were not yet on the voters roll; or
Brewster, says there’s a balance to be struck. Underwriting deals sensibly doesn’t mean he’s looking for deals that aren’t prime. “As a mutual, we are working hard to
offer people great value mortgages,” he says. “But it’s fair to say that in doing so we are in competition with bigger lenders for prime residential business. After all, this is our bread and butter and we play an important role in driving the competitiveness of the market. “But, importantly, we also aim to be as
innovative as possible as demonstrated by our 95% mortgage at 5.99% and our return to buy-to-let lending. Our responsible approach to lending allows us to compete in this space and we believe that smaller players such as ourselves are in a good position to support customers in these niche markets not currently being utilised by larger lenders.” Dale Jannels, managing director of All
Types of Mortgages, says mutuals have been the mainstay for their business in recent years. “Some companies already had a great
rapport with local mutuals, which tended to service their local areas assisting with unusual cases normally for the elderly, cross collateral charges, guarantors, or
because they had changed jobs; or were self-employed and generating income from multiple sources; or because they had minor credit issues which had been satisfactorily resolved many years ago. Unlike most other lenders, Aldermore’s decision-making is not dependent on credit scoring, but is based on sensible underwriting rules and criteria applied by experienced people. We encourage brokers to talk to us about their clients circumstances and we use our experience to help deserving borrowers obtain a mortgage. We’re happy to keep on developing mortgage solutions for borrowers whose needs are not being adequately addressed by the big lenders. The evidence of our first years trading shows we’ve only just scratched the surface. So watch this space for further new initiatives!
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