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we seek to find the most cost effective solution for our customers,” he says. “In practice, that has to mean approaching the mainstream market and exhausting that route first on the basis of cost. “However once we know the case has


to move out of the mainstream it’s a case of finding the most appropriate deal from a lender prepared to lend. A good example of this was a customer who wished to purchase a property but had a default registered by a mobile phone network five years ago for £120 - affordability was well within limits, the LTV was just 40%, and track record on all other credit was spot on (including the existing mortgage but because of this default the existing lender didn’t want to do the new deal!). “It failed score elsewhere, however both


Kensington and Aldermore were prepared to do the case on the basis of the whole case not just an arbitrary credit score.” Alan Lakey gives several examples of


what he calls “foolish underwriting practices” he’s seen his clients endure. “One lender refused to consider any


income generated by a tax-efficient employee benefit trust,” he says. “Another ignored a salary of £75,000 because this resulted in my client’s company making a smaller loss; another ignored the £120,000 net profit of a limited company because the sole director had not taken a salary or dividends.” All are good examples of a reason to take clients to the smaller players.


Competition welComed So what does Goliath think about all of


these Davids in the market? Jeremy Duncombe, head of sales at


Abbey for Intermediaries, says competition is to be welcomed. “As the biggest intermediary lender


supporting the market, we believe in a strong mortgage market and we welcome competition that will support intermediaries and borrowers.” David Finlay, Barclays intermediary


managing director, agrees. “It is great to see that activity in the mortgage market is increasing,” he says. “We welcome the move towards a more competitive landscape with more players, even smaller


38 mortgage introducer JULY 2011


lenders, looking to offer lending solutions to borrowers that we, as a provider, do not wish to pursue at the moment. “In my view, the market needs to be


made up of a mix of big providers and smaller lenders and between us we should be offering a spectrum of lending solutions to the market which meets both customers’ and lenders’ needs within the current financial and regulatory framework.” Start’s Tom Cleary agrees that diversity


is vital for brokers. “As intermediaries we want to see as diverse a mortgage market as possible as this will present us with the edge over our direct competition,” he explains. “We have access to ING which has proved invaluable as our foil to HSBC. “We want as many lenders as possible


to give us the widest possible spread to offer our clients. The benefit to our clients is our advice, so the more complex their situation, the more valuable we become.”


by Alan Cleary, managing director, Precise Mortgages


My intelligence tells me that many of the high street banks are starting to fall behind on their mortgage lending targets and this may well have a positive effect on the intermediary market. The last three years have seen the high street banks fill their boots with sub 60% LTV prime business at margins approximately 10 times greater than pre-credit crunch levels. Some of the high street lenders could comfortably meet their lending aspirations through their direct operations and as such we started to see dual pricing and dual criteria become more prevalent as they sought to reduce their reliance on brokers. As the high street banks begin to struggle with volumes they will inevitably start to put products out that move higher up the LTV curve and


Mutuals and smaller intermediary


lenders are moving in the right direction but Lipnicki identifies some areas of the market that are still underserved. “We would welcome a more sensible


approach to LTV that includes more 95% schemes - especially in the remortgage market,” he says. “While areas in the south are recovering, many others are going through a property price double dip with clients languishing on Standard Variable Rates without any hope of securing a better deal. New lenders also need to be serious about the intermediary sector and employ BDMs to spread knowledge about their products. We can’t use them if we don’t know what they have to offer.” It would be ludicrous to suggest


regional building societies and smaller lenders are winning the battle against the high street’s Goliaths just yet, but they are fighting their corner and creating competition in a market desperately in need of it. n


they will conveniently become more intermediary friendly. Even as this occurs there will be parts of the market that will not be served by the high street either because the volumes are too small or because the credit risk is outside of their appetite.


Precise Mortgages focuses on the near prime market and short-term lending, our strategy is to identify markets that have the right risk reward profile for our business. There are literally millions of customers who can’t get a mortgage on the high street due to some form of issue in their credit history and we have the most comprehensive set of products of any lender for this type of customer.


Our near prime range has rates from as low as 4.87% which seems pretty reasonable given that these customers would otherwise be locked out of the mortgage market. This unlocks a significant group of customers that can only be dealt with by intermediaries as there is no chance of a branch based mortgage adviser being able to do such a deal.


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