There is a growing belief that the recent spate of consolidation in the non-conforming market is only the start of a trend.
The merger of Verso with Platform Home Loans and the acquisition of sub-prime direct-to-consumer mortgage originator, The Mortgage Lender, (TML) by lender Kensington Group, has fuelled speculation that further consolidation is on the horizon.
Steve Hoare, managing director of network Homeloan Partnership, said: ‘We are going to see a lot of lenders merging with each other, or taking over the large packagers over the next 12 months. It would not surprise me if there were companies going through due diligence at the moment. Abbey National, for example, is at the level where it must either buy or be bought. I also expect to see some prime lenders take sub-prime lenders.’
Managing director of Homebank Mortgages, George Dodds, said: ‘Consolidation is inevitable when you look at the economies of scale that can be achieved by, for example, Britannia, in having only one brand to cover the sub-prime and self-certification markets. Platform/Verso will be a stronger force in the market.
‘Recent activity raises interesting points about the potential for other mergers, particularly due to the overcrowding in the market and a likely slowdown in the property market. It will not end here. As we have seen with Kensington buying The Mortgage Lender, lenders are going to be keen to become more active in locking in distribution over the next two years.’
Kensington now has a direct-to-consumer channel in TML, although in the short term, TML will lose GMAC as a business partner. TML was a major correspondent lending partner of GMAC.
Gina Collman, head of corporate communication at GMAC, said: ‘The relationship now is between Kensington and TML, which means that at some point in the near future we won’t be doing business with TML anymore. We will continue lending through our other correspondent partners.’