On occasions it feels a bit like that being one of the UK’s new lenders. Most new government initiatives are aimed at the big banks and it’s the big banks who dominate the market and the media.
So, what have new lenders ever done for us?
The big banks may dominate in terms of lending volume, but they’re rarely amongst the first to address market issues and innovate new ideas. In fact, big banks can be quite conservative in their approach. Products tend to be designed for ‘standard’ borrowers who pass though automated credit approval processes without encountering any problems.
This is not a criticism of big lenders; it’s simply an observation. If I were in their shoes I too would probably address the easy, trouble-free mass market and leave the rest for others to sort out.
Which is all well and good, but it doesn’t help inject any new momentum into a moribund housing market or encourage those borrowers who are anything other than ‘standard’ to consider getting on or taking a step up the housing ladder.
It also creates a problem for intermediaries. Squeaky-clean low LTV standard borrowers are precisely the type who are most likely to approach a lender direct (which is why big lenders design products for them) or where they have an existing broker relationship.
The type of borrowers who often approach a broker are those whose application is non-standard in some way, be they first-time buyers, the self-employed or professional landlords or property investors.
These are the types of borrowers new lenders have been able to help. At Aldermore, for example, we’ve innovated with our Family Guarantee Mortgage, we were one of the first lenders to join the NewBuy scheme.
We support landords with buy-to-let products that go beyond the basics and offer features such as higher maximum age limits and which accommodate larger portfolios and limited companies. Aldermore is not the only new lender helping to take the market forward.
It’s also good to see that the new regulator, the FCA, is making it easier for new lenders to enter the market because it will benefit from greater competition.
To go back to the John Cleese sketch, the question shouldn’t be ‘what have new lenders ever done for us’, but ‘what have the big banks ever done for us’?
The answer is not as much as you may think.
Charles Haresnape is managing director of residential mortgages at Aldermore
