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the data that we can begin to expand, then we will obviously be looking at that,” Alan tells me. “As to how long that’s going to take, nobody knows.” When we last sat down with Alan, he was working on improving processes and the broker journey, capitalising on what works well with each brand under OSB. Even during the pandemic, this was ongoing. “In fact, Covid-19 probably sped that up because we’ve got less people available in the office ... so you’ve got to try and be as efficient as you possibly can,” he divulges. Alan says that leading the culture alignment in the group during lockdown has actually accelerated the cohesion. “I’ve seen loads of examples of people working together in a way that I thought would take longer to achieve,” he admits, owing it to each brand leveraging their respective resources to get the best possible outcomes. Is there anything Alan knows now that he wishes he knew 10 years ago, at the start of Precise’s journey? “I wish I knew Covid-19 was coming,” he answers, predictably. “Apart from that!” I say, rolling my eyes. There’s silence as he thinks for a moment. “…This isn’t something that I would do differently, but there are a number of people, those who were around back in the last crisis, who have done exactly the same stuff they did before, and crashed into the same brick wall this time around … I do find that rather perplexing. I don’t really look back and say, ‘I wish I’d done that differently’, because that’s not in my gift; you can’t go back in time, you can’t change stuff, so you’ve just got to say, ‘What have I got now, and how do I plough forward with it?’” He adds that learning from your experiences so that you can change what you do going forward is simply more important than having a crystal ball. So, what is planned for the next decade? Fortunately for brokers who are loyal fans of the business, Alan now thinks bigger than Precise. “I’m in the executive team of a combined group that has multiple mortgage and savings brands … it is not just about Precise Mortgages anymore.” This could mean more success for the brands that were previously competing— and better outcomes for intermediaries. He explains that they now treat it as if OSB is the parent and they have three children and, like typical parents, they want all of them to do equally well, but also to be better than other people’s kids. “We’re quite competitive, but in a good way … I want all the brands to do well, not just Precise. I’m equally as focused on Kent Reliance for Intermediaries and InterBay Commercial.” As a result, he thinks there is a lot more opportunity due to the different markets they have access to and the potentially reduced competitive dynamic going forward. Considering the group had attracted a staggering £16.3bn of retail deposits by the end of 2019, it is an indicator of a powerhouse equipped to really challenge the incumbents in the years to come—making its next milestone a party nobody will want to miss.
group, along with its brands Kent Reliance for Intermediaries and InterBay Commercial) decided to temporarily suspend new loan applications from the 30th, due to unprecedented demand for payment holidays from their borrowers, and valuers no longer being able to visit properties. Instead, they diverted their resources to support their existing customers. “…As a bank, you build up capital reserves for a downturn, you stress test your business for lots of different scenarios and lots of those are prescribed by the Bank of England but, of course, it doesn’t happen exactly in the way your stress tests were modelled.” Alan clarifies that, when a crisis hits, you stress test based on what you currently know and what you think may occur, and avoid digging a hole by writing new lending. “You basically slow down so that you can assess what you think the risks are now going to be.” He reiterates that, in 2008, the banks were part of the problem. “In this downturn, the banks are part of the solution … all banks are lending to customers and some of them are lending through government schemes to keep the economy ticking over.” After a hiatus of 12 business days, Precise emerged with new products in order to accept desktop valuations on BTL and residential firstcharge mortgages. By early May, it had resumed activity in the bridging market, supported by AVMs. However, Alan warns that bridging is presently subdued—and he believes it should be. “If you’re an investor or a developer, you really shouldn’t be taking bridging loans on right now, because you don’t know what house prices are going to do,” he urges. “You don’t know whether you’re going to be able to exit the loan onto a long-term deal, so you need to be super cautious.” Therefore, the lender is currently keeping its bridging LTVs capped at 50%. “High LTV loans would be risky right now,” he declares. “However, the frost will thaw, and we will be able to see what damage has been done to house prices, and we will be able to see how the banks react from a financing point of view—but that’s going to take a few months.” He expects that most bridging lenders that have been run properly should be able to survive, but the trick is not to issue a lot of loans right now, because they might bite you later down the line. “I do anticipate quite a lot of re-bridges occurring in six- to 12-months’ time, where loans that can’t exit are still floating around.” Considering that house prices and the rate of unemployment once the furlough scheme ends are all up in the air, it makes sense. For example, there were substantially lower property transactions in April and May, producing a significant hole in the records. With house price statistics a lagging indicator (the figures normally reflect activity a couple of months in arrears), you may have to wait that long from when the industry reopened in May before you can start analysing any of it. Therefore, it might be nearer the end of the year by the time lenders can consider what their response is to the crisis and its impact. “… When the market starts to show us some signs in 13
Jul/Aug 2020