OakNorth will target affluent and high net worth individuals (HNWIs), who they believe are under-served by the high street and private banks due to their atypical incomes, with lifetime tracker rate products.
The bank has promised to take a holistic approach when assessing HNWIs’ finances and to make quick decisions on their applications.
The plight of HNWIs has been discussed in recent months on Mortgage Solutions. Individuals with non-uniform sources of income, who may be asset-rich but regular income-poor, can find it difficult to pass banks’ tick-box lending criteria.
“Very significant role” for brokers
OakNorth got its banking licence in March 2015 and began lending to small and medium-sized enterprises (SMEs) six months later. They have lent about £3bn to UK business and property developers.
A spokesperson for OakNorth said: “The inspiration to launch mortgages came from the fact that we’ve learned over the years how to lend to entrepreneurs and business owners. They asked us to consider doing mortgages.”
The bank offers savings products – retail deposits and business products – and has a tie up with Monzo bank where it offers savings to Monzo customers. Funding for the mortgages will come from retail deposits.
The spokesperson added that brokers were “hugely important” to the lender and would play a “very significant role” in lending, as OakNorth targets £260m of lending this year.
OakNorth has 13 originators on its SME lending team and, to put its HNWIs mortgage lending plan into action, it has hired three experienced industry mortgage professionals – Kevin Appleton, Matthew McDonald and Mark Howell.
Appleton joined OakNorth from the Financial Ombudsman Service, while McDonald was previously a broker. Howell has joined OakNorth from the Bank of Ireland where he held the position of director of marketing and customer management, UK Mortgages.
Ben Barbanel, head of debt Finance at OakNorth, said: “High-street banks have limited mortgage offerings when it comes to borrowers who don’t have a regular or established source of income, such as the self-employed or business owners. Private banks, on the other hand, tend to have high entry requirements that are unfavourable to most of these individuals. Lenders are typically unwilling to offer bespoke terms to their mortgage products and as a result, more than one in ten business owners in the UK are unable to access the finance they need to purchase their first home.
“We can plug this gap and provide our growing portfolio of property investors and developers with mortgage solutions that are attractive, quick, convenient and easy to use.”