Highclere’s Lakey agrees. “It is certainly
true that mutuals are offering far more flexibility than the big five,” he says. “The larger lenders trade on name and rate but have shown themselves to be unwilling to consider anything that doesn’t fit within their preferred template. “Building societies such as the
Buckingham and the Harpenden are prepared to give individual consideration to cases and not take a rigid computer- driven approach to income, affordability and other matters.” Tom Cleary, financial services director at
London-based adviser Start Financial Services, is keen on the range of products offered by intermediary lenders. “Precise’s product range is opening up
all the time and they are certainly filling a niche area that other lenders are unable or unwilling to operate in at the moment,” he says. “Its near prime range will definitely be invaluable for those clients that have experienced some difficulties during the last three years but still represent good quality lending opportunities at sensible margins. I’ve also used Kensington recently for buy-to-let business.”
where there may be a property in trust,” he explains. “But no one really knew or understood the vast appetite other building societies would shortly bring to the table. Without doubt, many in our sector owe their survival to these now very close friends. “Most mutuals tend not to credit score,
allowing those customers that fail the high street ‘tick box’ mentality to be considered. Just because they have a low score, or are not on the voter’s role, does not make them un-mortgageable.” Mortgage Intelligence’s Laker says
building societies are offering a level of choice and competition that should mean brokers don’t overlook them. “Accord has very attractive products
and has shown that it can compete with the big five,” she says. “That is very welcome. Leeds has also been consistent in its approach and supported the intermediary throughout.”
intermediary players Some brokers are clearly engaging with these smaller niche players then but others complain that the reason they head for the big banks is that there’s simply no comparison on rate competitiveness. But Chris Gardner, director at Essex-
based broker Obligo, says that’s changing. “When Kensington, Aldermore and more recently Precise first came to market the products were pricey and the additional risk that was accepted was marginal,” he says. “In recent months the products have improved dramatically and we have had several occasions to use them. We have found the service good and the promise of individual underwriting a true statement. At this point in the recovery of the market you cannot ask for any more.” Ben Thompson, managing director of
Legal & General’s mortgage club, explains that because these lenders are offering mortgages to borrowers turned down by the high street lenders, they are right to be charging slightly more.
“These deals are more expensive but
the additional cost reflects the perceived increased risk that the lender is taking on by lending a mortgage to an individual with a less than perfect credit record,” he explains. “However to put this in perspective, at
time of writing, a 2-year fixed product for a squeaky clean credit record would be circa 3.24% whereas a borrower with minor blemishes would be able to borrow at 4.98% . The difference is 1.74% however the actual charge rate is still only 4.98 % which is very cheap indeed by historical standards. “Even though mortgage underwriting
and lending terms have tightened significantly over the last three years, good advisers are still able to occasionally present a case so well that although it might appear to be near prime it can actually be secured on more standard or cheaper terms.”
Customer profile So what sort of clients should brokers be thinking about recommending these lenders to? Is it near prime? Or prime when the computer says no? It’s both. The need these lenders are
trying to cater for is wider than a label but essentially the thing all of these borrowers will have in common is that for whatever reason, they don’t fit into lenders’ boxes. Uniformity is the name of the high street
game now but brokers know that every customer is individual. That’s what the smaller lenders are trying to recognise. “Anything more complicated in terms of
income or the property we would tend to take to the smaller players, mutuals or private banks,” says Melanie Bien. “If the borrower is wealthy, then the private banks are often the best solution and are much easier for brokers to deal with as they get to know the client so problems tend to be rarer. “If the client has any issues with their
credit file, even if these are now resolved, then some of the smaller lenders who have a human face to their underwriting, tend to be a better option.’ Chris Gardner says brokers should be
pragmatic. “It’s vital that on every application that
mortgage introducer JULY 2011 37
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