Speaking to Mortgage Solutions, new business director Craig McKinlay (pictured) said he was “not a fan” of going in and out of the market for limited periods as the lender preferred to take a measured approach and avoid spikes in service levels.
McKinlay added: “We’re thinking about how we can introduce it [90 per cent LTV] in a sensitive way that protects brokers and gives them some certainty.
“We’ve always written a lot of business at 90 per cent LTV, it’s always been our bestselling product but there’s so much demand and so few lenders that we can’t go back to 90 everywhere. We’ll just get overwhelmed, service would get bad then we’d have to pull out or change things,” McKinlay said.
Instead, the lender could potentially release low deposit mortgages on a smaller scale, rather than opening it up to the whole of market.
McKinlay said: “What we might do is launch it very selectively or on a tranche basis or some kind of limited distribution then open it up over time.”
Government 95 per cent mortgage scheme
McKinlay suggested the government’s plans to introduce 95 per cent mortgages could go further to encourage lenders back into the high LTV market.
He said: “It looks quite similar to the first version of Help to Buy we had in 2013. That worked well because at that time lenders weren’t doing high LTV lending similar to today.
“Then what happened is because the scheme was quite expensive for lenders, they decided to do it themselves which was great because that scheme stepped back and lenders stepped in. I think that was the government’s aim.”
However, McKinlay said he had concerns about the success of the scheme as it was not apparent there was any collaboration from the mortgage market.
He also suggested the best time for the initiative to be introduced would be before incentives like the stamp duty holiday close, so lenders have confidence knowing there is “another scheme on the horizon”.
Underwriting boost
As the lender navigates the current busy market, McKinlay said its staff were back to carrying out normal duties after being reassigned to handle payment holidays.
Additionally, an expansion of its team has brought application to offer time down to 20 days, nearer to what it was before the pandemic.
No employees were furloughed during the property market’s shutdown and the lender has recruited 30 new underwriting and sales employees. As well as this, in-person meetings with brokers have resumed.
“Our sales team are out doing physical visits where brokers are happy to do it and offices are Covid-compliant. We’re looking to get back to business as quickly as possible,” he added.
Adapting to new realities
Looking forward, the lender is hoping to expand into new markets but wants to be innovative in how it does so especially since it adopted a new platform which has given it the capacity to do so.
“Our new IT platform gives us capability to enter new markets. One of the reasons we moved to it is it’s much faster to launch new things,” McKinlay said.
He added: “There’s a whole list of things we don’t do currently, like shared ownership, expat buy-to-let and holiday let. So, we’re reviewing all those segments to look at which ones we want to enter.
“Our whole thing is we want to innovate like we did with our Eco and Heroes mortgages, we don’t want to have the same proposition as everybody else we want to come up with something different.”
He also said the lender was having conversations about what new markets might emerge following the pandemic as existing schemes end and people’s living habits change.
McKinlay said: “There are conversations about private shared equity to replace Help to Buy, mortgage indemnity guarantees, different things like that and we’re keen to be at the forefront.
“Now is the time to innovate. The market has been stuck in two- and five-year fixes since the last crisis. Covid has brought a lot of changes to people’s lives and circumstances so it’s our duty to look at how we respond to that and how our proposition fits the new reality.”
