Which rumoured new lending propositions will actually come to fruition, asks Guy Garrard, head of business development at Tiuta.
Speculation, conjecture and hearsay have always been relatively prominent within the mortgage market after all there are some people that have even made a living out of them! Of course I jest but it’s been evident for some time that lenders, new and returning, have been circling the industry with increasing interest as a number of well-known names are consistently being bandied around the marketplace.
It’s not difficult to see just how attractive the mortgage market currently is for new entrants. The demand certainly remains but of course continued funding issues mean that most providers are unable to supply their preferred product types. And when combined with having to adhere to an increased number of regulatory requirements then it is little wonder that some firms are still looking in from the sidelines with a certain mixture of envy and frustration.
After, and often during, any recession opportunity rears its head. With a number of good, experienced and knowledgeable people suffering as a result of the credit crunch there is no doubt that a wealth of talent is lurking just around the corner with new business ideas and innovative concepts. The introduction, or reintroduction, of quality professionals can certainly help transform a market and this has been illustrated in the first couple of months of 2010 which have seen some announcements made that could inject some welcome impetuous back into the market. Aldermore has appointed Colin Snowdon to explore the viability of launching a residential mortgage arm. As an experienced player in both the prime and non-conforming arenas he has a wealth of experience which can only bode well for the intermediary sector. It was also interesting to read recently the speculation that Peter Birch, former chief executive at Abbey and ex chairman of Kensington, is tipped to become the chairman of a new retail, mortgage and savings bank The Home and Savings Bank.
Of course we also have the well reported rebranding of Checkmate Mortgages to Portillion and the entrance of Virgin into the banking arena. Virgin has made no secret of its aspiration to become a major player in the banking sector so it came as no real surprise when it acquired Church House Trust. On the surface this appears a move that offers the perfect platform for Virgin to venture into deposits and mortgages to try and grow that element of the business.
I imagine such moves will not, and must not, be rushed but anything that increases the possibility of more mortgage options and availability for clients has to be embraced as a step in the right direction. The securitisation market is showing some signs of improvement especially in light of the recent announcement by Santander subsidiary Alliance & Leicester that it has launched a £1 billion residential mortgage-backed securitisation deal, marking the first time this year Santander has entered this market. But this is not enough to suggest any immediate or sufficient impact and I believe that many of these new entrants will continue looking towards the savings/deposit market as the way to fund any potential lending. This retail market certainly appears to be a reasonably sound and understandable way to create funding but with competition remaining intense it’s fair to say that it will be tough for firms looking to tap into the savings market to generate sufficient funds to maximise operations.
It will be interesting to continue monitoring this situation to see exactly what propositions will be brought to the table especially in the more specialist sectors and also how existing lenders respond. Competition remains key to the mortgage market and for everyone’s sake let’s hope many of these propositions get off the ground to help stimulate the whole market and especially the intermediary one.