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Kensington eyes white label lending and completes £425m securitisation

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  • 04/10/2019
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Kensington eyes white label lending and completes £425m securitisation
Kensington Mortgages has revealed it is likely to partner with fintech firms to form a white label mortgage lender.

 

Kensington also completed its 17th securitisation since 2015 with a £425m deal and added that it was expecting to see lending grow around 15 per cent to £1.4bn this year.

Vicki Harris, digital transformation officer at Kensington Mortgages, discussed the issues at the launch of Dock 9’s digital transformation playbook last night.

Harris was asked about the potential for new entrants into the mortgage lending market and how they could source the necessary capital.

She said that as Kensington was good at raising money it was approached “probably at least once a month” by fintech firms looking for assistance.

These organisations are able to raise £20m or £30m but if they are looking to “go big” they need £100m but have no track record of getting this level of funding, so are asking for funding, or assistance to set up funding deals, Harris explained.

“I suspect what we’re experiencing is there are companies that want to raise money and that will raise their first bit of money but they will really struggle to take it to the next stage,” Harris said.

“And at that point they will come to a lender who has got the experience and has got the regulatory authorities and they will try to do some sort of white label deal.

“And we are looking at some of them and we probably will do some of them, but we haven’t done one yet.”

She highlighted that lending and raising money was a very technical discipline and if organisations did not have the right people they needed to partner with somebody who does.

“I think you’ll probably see some of these brokers or aggregators making noises about the fact they are now a lender,” Harris continued.

“I think you’ll probably find there’s a real lender behind the scenes who might just be white labelling it.”

However, Harris took the time to single out Habito as one new entrant which had raised its own capital and not used a white label funding line.

 

Securitisation completed

Harris also told the audience about the impending securitisation deal.

“I’m not sure if it’s closed yet, but in the next few days we are hoping to complete our 17th securitisation since 2015, where we have raised around £9bn in total – so it’s all pretty positive,” she said.

She added: “We wrote £1.2bn [of mortgages] last year and we’re looking at £1.4bn this year, so we’re growing at around 15 to 20 per cent a year.”

Since this article was published Kensington has confirmed the details of its £425m securitisation.

The deal is the ninth from the lender’s Finsbury Square shelf, which it uses to securitise its owner occupied and buy-to-let originations and is priced at SONIA +101bp for the senior tranche.

It said there was significant demand from investors, leading to the transaction being upsized from an initial size of £285m with all tranches oversubscribed even after the increase.

“The transaction allows Kensington to secure more funding to support growing demand from its mortgage customers,” the lender said.

“The residential mortgage backed securitisation (RMBS) market continues to be active despite prevailing Brexit uncertainty. Seven transactions were publicly placed with investors since the beginning of September this year.

“Despite the increased supply of bonds in the primary market, Kensington’s transaction was able to attract a wide range of investors and achieved excellent pricing terms,” it added.

Alex Maddox, capital markets and digital director said Kensington was the most active issuer in the UK RMBS market at present.

“The continued strong investor demand for Kensington’s transactions demonstrates the market’s confidence in the high-quality business we originate,” he added.

 

 

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