I question if this is the case. In fact, they are underserved. With appropriate and individual review you can soon establish if the risk is real or imagined.
I suspect in many cases large scale automation struggles to handle these nuances. We know from our own borrowers that those requiring transitional have good credit histories and a consistent payment record.
Often these borrowers are older (disturbingly in some cases being in your forties is classed as ‘older’), approaching retirement or in retirement or self-employed.
It’s not the fault of the regulator or the new regulation that a group of good borrowers has been left out in the cold. Limited access is damaging to not only these borrowers, but also to brokers and advisers and ultimately the lending sector as a whole. While lenders have been overly cautious in my view with their limited use of transitional, I don’t blame them for being hesitant. This was a massive regulatory change and one that especially larger lenders needed significant time to adjust to; both in IT and in sales processes.
However nine months on, the sector should now be ready to respond to the needs of mortgage misfits. It is clear that the market is not providing them with access to a competitive market place and it is only lenders that can now correct that.
We’ve taken the first step and launched our transitional lending programme as a pilot. This is a short period of time for us to check the controls and criteria we have in place operate as expected – we’re committed to ensuring we keep our lending agile and responsive whilst maintaining affordability for the borrower and protecting ourselves from credit risk. We have not increased our risk appetite with this new lending programme and our focus remains on good credit quality business only.
We are accepting applications directly and through a selected group of intermediaries under the pilot. It’s important that under the pilot we work with our closest brokers, those we know well and have confidence in the quality of the advice they provide. Furthermore, we respect loyalty and when we can, we like to give something back to our brokers.
Once the pilot successfully completes we will extend the programme to all advisers. We welcome brokers getting in touch with us now to discuss how they can join the scheme in the future.
For more information including a guide to Ipswich Building Society’s transitional plans, click HERE.
Paul Winter is CEO of Ipswich Building Society
For more of Paul’s blogs, click HERE.