GMAC-RFC has announced that Leeds & Holbeck Building Society has joined Market Harborough Building Society to become its second through lender. So far two new products derived from the partnership have hit the market.
Gina Collman, head of corporate communications at GMAC-RFC, said: ‘The list of through lenders will grow. We are in talks with several other lenders at the moment, although for obvious reasons, we cannot reveal their names yet.’
Through lending is a partnership between ‘marketing’ and ‘acquiring’ lenders. The ‘marketing lender’ brings products to the market in the normal way, underwriting them according to its normal criteria, releasing funds and paying intermediaries. The ‘acquiring lender’ has pre-agreed the products and will buy the loans from the ‘marketing lender’ after completion. Thus, the marketing lender can add products to its range that it would otherwise not be able to fund, while the acquiring lender amasses bulk-written assets to pre-agreed criteria, without incurring distribution or pre-completion costs. The cost savings of this system benefit customers and intermediaries who receive competitive products as a result.
As the only originator of through lending in this country, GMAC sees the sector growing ‘ similar to the US, where it accounts for one-third of all lending.
Collman said: ‘I think through lending will take off in this country, as it has in the US. It is a new concept in the UK, and is now just a matter of the other lenders seeing the benefits. In many ways it is similar to correspondent lending, which is part of the same family of lending. We launched correspondent lending in 1999 and it is now taking off in this country.’
The two products are a five-year buy-to-let fixed rate of 5.79% to 75% LTV or 0.99% to 85% LTV with a £395 arrangement fee, rather than competitors 1%, making it a market leader. A capped bank base rate tracker at BBR + 0.95% for three years up to 90% LTV is also available. This is capped at 5.29% during this period. Neither product has a MIG charge or redemption penalty overhang.
Intermediaries receive 0.5% of the loan for the buy-to- let product and 0.35% for the tracker.