Interview Cover
“We see a lot of people who have the latest mobile phone and have forgotten to pay the last bill and have a £50 CCJ – that’s not habitual it’s clearly somebody being forgetful,” says Craig Calder, director of mortgage products at Barclays. Mike Jones, Halifax managing director, intermediaries and specialist brands, goes further. “Mortgage lenders are more sympathetic to the treatment of ‘light adverse’ issues,” he says. “Customers may have inadvertently had their credit rating impacted due to mobile phone contracts, and this is being factored into the lending decision. Applications with CCJs are also considered on a case-by-case basis.” While ‘light adverse’ is the key phrase here, this shift in appetite from the high street is something everyone’s noticing. “One or two lenders are doing CCJs that never did – when that’s the case specialists are going to struggle,” Bournemouth-based broker Rob Ashley-Roche of Rest Assured Mortgages says. Aaron Strutt, product and communications manager at London broker Trinity Financial Group, agrees. “Some of the bigger lenders are helping out people with missed credit card payments,” he says. “That’s been gradually eating into the specialist sector and taking the business away from them. A lot of lenders have set up specialist teams to get cases agreed that doesn’t fit criteria.” And Dilpreet Bhagrath, mortgage expert and spokeswoman for online mortgage broker Trussle, add that high street lenders understand that adverse credit can happen to anyone. “They are stepping more into the territory of adverse credit,” she says.
Self-employed
The high street are also doing more for the self-employed and contractors, an area specialist lenders like Kensington traditionally relied upon.
www.mortgageintroducer.com
Barclays is currently targeting more contractor business after changing criteria on a pilot basis. Meanwhile Halifax has been known for its flexible attitude towards the self-employed since it started treating all self-employed IT contractors as if they were salaried workers in 2001. “In recent years, there has been a shift in the mortgage market and a greater willingness to lend to self-employed customers versus those on regular monthly incomes,” says Halifax’s Mike Jones. “In the past, mortgage lenders could demonstrate that customers with regular monthly incomes were ‘safer’ to lend to than those who were selfemployed or on irregular monthly incomes. “However with the rise of the gig economy 13% of the UK workforce is made up selfemployed or contract workers – much has now changed. Lenders have adjusted their approach to different employment types.”
The big six
An area of concern for the chasing pack is the oligopoly of the ‘top six’ mortgage lenders: Lloyds Banking Group, Nationwide Building Society, Santander, Royal Bank of Scotland, Barclays and HSBC. As of 2017 they had a 71% share of outstanding mortgage balances, UK Finance data shows, leaving the rest to chase a fraction of the overall market. “They do have quite a stranglehold on the market,” says Lynda Blackwell, the Financial Conduct Authority’s former mortgage manager, who works with lenders and brokers as a consultant at Thistle Dhu. “The new thing is how competitive the market is – we’ve got a super prime market with rates we’ve never seen in the past. That’s having a knock-on effect with the specialists who do not have the same funding power the deposit takers have. The margins are squeezed. It’s tough going I would imagine.” Moneyfacts figures show that APRIL 2019
as of March 2019 the average 2-year fixed rate was just 3.30% to 95% LTV and 2.65% to 90% LTV, down considerably from 5.43% and 4.80% in February 2013. With rock bottom rates, it’s no wonder specialist lenders have found it tough competing. The only way challengers are finding a means of breaking into this oligopoly is through consolidation, as the Virgin Money/ Yorkshire Bank deal makes the combined brands the sixth largest UK bank. The group is currently moving the Clydesdale and Yorkshire Bank retail branches under the Virgin Money umbrella, a process that should be completed by 2021.
Popular lenders
Brokers who place complex residential business seem to be using a combination of the high street and specialist lenders. While Kensington and Precise are often spoken about as specialist lenders with significant brand power, different brokers have their favourites. Clayton Shipton, managing director of specialist brokerage CLS Money, says the top lender it currently uses is Nationwide, followed by Bluestone Mortgages, Vida Homeloans and Masthaven Bank. Meanwhile Dilpreet Bhagrath at Trussle says Leeds Building Society, Metro Bank and Accord Mortgages are excellent when it comes to light adverse. Shipton says there’s a lot more automation from high street banks, which can help quicken up the process. Indeed, while the terms ‘bespoke’, ‘tailored’ and ‘manual’ are typically used by credit impaired lenders as a selling point, some brokers prefer the approach from the high street. Broker Rob Ashley-Roche went as far as saying “personally I think specialist lenders aren’t specialist”, as he views the likes of Kensington and Precise as too fussy in terms of their attitude towards assessing criteria. MORTGAGE INTRODUCER
55