It has been a year of opportunities, challenges and growth throughout the mortgage market during this time and these are the key lessons we have learnt in the 12 months since our launch.
Launching as a three-month pilot last year allowed Vida to test the market before rolling out to wider distribution partners in January. For new start-ups in the specialist lending market, being able to pilot with key partners like this is a great way to gain an understanding of how your products and brand are perceived in the sector.
Limiting distribution also makes it easier to gather feedback from brokers and ultimately, their clients, as to whether a lender’s products are meeting their needs. New lenders should take this opportunity to continue developing and innovating their current offerings to ensure a greater number of people seeking a mortgage have options available to them.
Distribution is key
As a new entrant to the market, with a relatively unknown brand, ensuring that brokers and other partners are willing to suggest and advise on your products can be challenge. However, having a highly-regarded team at the helm of the operation is key to ensuring that your brand is perceived as strong enough to consider from the outset.
For those wishing to enter this industry, having the confidence of well-known brokers and mortgage clubs will go a long way in helping you to establish yourself as a business to take seriously.
The specialist lending market has seen significant growth in recent years, driven by an increase in the supply of funding, a raft of new lenders and more and more people turning towards specialists as they fail to meet the criteria of high-street banks.
In fact, recent research by the Intermediary Mortgage Lenders Association revealed that the specialist mortgage lenders’ gross annual lending has grown by 19% each year since 2009.
This growth brings both opportunities and challenges. Ensuring you can match market competitive rates and criteria is essential.
The past year has seen several lenders launching innovative propositions as they look to differentiate themselves from the competition. These innovations have meant that intermediaries now have access to several tools to help provide a more comprehensive advice service for clients, as well as the ability to offer further flexibility to borrowers through their product offerings.
No such thing as a perfect borrower
Perhaps the most notable characteristic of the specialist lending market is the profile of the borrowers.
Societal changes have meant that the lifestyles and circumstances of modern day borrowers do not necessarily meet the strict criteria of high-street lenders.
In addition, buy to let portfolio landlords have found that the recent PRA changes have reduced their choice of lender and are turning to specialists as a result,
Therefore, as a specialist lender, being competitive in the market is not so much about the rates offered, but more about offering flexible criteria to suit these neglected customer segments. Researching the needs of borrowers and developing bespoke criteria-driven propositions is critical, and it’s also vital to ensure brokers are aware of the customer profiles which you cater for, so they can appropriately advise their clients.
Taking advantage of these new types of borrowers with so-called complex cases offers a vast number of opportunities.
With the housing market looking like it will continue to be a difficult environment for certain borrowers to navigate, this will only offer further opportunities to specialist lenders.
However, with more new entrants and further challenges arising from economic and lifestyle changes likely, driving innovation will need to be at the forefront of lenders’ agendas.