News Review: Near Prime
Low demand for high LTV by
Alan Cleary, managing director, Precise
Mortgages
recent weeks have seen a number of lenders increase their loan to value limits, this includes prime lenders as well as near prime lenders. there are many reasons why this might be the case and no
doubt the need to achieve volume targets by year end and get a healthy pipeline going for 2012 may be behind some of these moves. But another reason is that the last four years have seen
a quantum shift in people’s buying habits as we have all realised that the party is over and we now have to clear up the mess. For many borrowers the chance of getting a prime mortgage from a high street lender will be slim and in order to get a mortgage they will need to speak to a mortgage broker. From a lender’s perspective, and i will use my direct experience for this, borrowers are now much more cautious and new business LtV is significantly lower than before. in fact, new business LtVs are low enough for us to have increased our maximum to 85% on our near prime range as we have room to take additional risk and this may be the case for other lenders as well. Borrowers’ primary reason for buying today has
shifted to fear which has created a much more cautious consumer. they no longer are remortgaging to pay for the latest plasma tV or luxury cars and they are not rushing out to buy houses either which for many of us in the mortgage industry has forced us to look at our business models. For many brokers this will prove to be a difficult market
to sell in but in my opinion it is easier to sell to fear than it is to sell to greed. When i first started selling way back in early 90s the country was dogged by all sorts of problems: house prices had taken a tumble, interest rates were at record highs, unemployment was increasing and people were uncertain about their futures. this didn’t stop me selling because what people needed was sound financial advice from someone who understood their issues. i passionately believe that people need advice and mortgage brokers are perfectly placed to give that advice. elsewhere in mi* we debate the issue about how the high street banks are dealing with this market and i have to say that i think the banks are doing a woefully inadequate job for their customers. that is one of the reasons why i am running a series of
road shows this month so that we can start to fight back against the banks who at the moment are taking market share away from mortgage brokers.
(*See page 32)
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Aldermore Bank PLC is authorised and regulated by the Financial Services Authority for deposit taking and regulated mortgages. Registered Office: 1st Floor, Block B, Western House, Lynch Wood, Peterborough PE2 6FZ. Registered in England no. 947662 ARM29-0911-300044
mortgage introducer NOVEMBER 2011 11
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