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Unadvised product transfers risk masking early-stage struggling borrowers – Tough Talk

by: Mortgage Solutions
  • 02/05/2023
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Unadvised product transfers risk masking early-stage struggling borrowers – Tough Talk
In the latest edition of Tough Talk, contributing editor of Mortgage Solutions, Victoria Hartley asked Steve Seal, CEO of Bluestone Mortgages, how many borrowers might be harnessing product transfers (PTs) to avoid scrutiny of their diminished financial circumstances during the cost of living crisis.

She said: “High-street lenders are taking enormous amounts of what could have been advised remortgage business across into product transfers at the moment. The issue that that might bring is that a lot of this business would have been fully affordability checked had it gone the remortgage route but with product transfers they are being waved through with no checks at all, how many struggling borrowers are hidden in this cohort?”

Seal replied: “That’s the 64,000 dollar question. There will inevitably be some customers working their way through that process who are starting to feel the impact of the cost of living crisis and facing some financial pressure as a consequence of the economic challenges going on in the marketplace.

“What it won’t have done is materialized in mortgage arrears or have had any impact on their mortgage payments at the time of doing a product transfer.

He added: “As a general rule, lenders wouldn’t facilitate that PT journey if the customer was in arrears on the current mortgage. It’s how many customers are at that earlier stage of that financial pressure that hasn’t yet worked its way through to their mortgage payments. You could argue by going through that product transfer journey, they are strengthening their financial position and enabling the customer to manage those pressures.

“But I absolutely take your point, that if that’s not an advised sales process, the challenge is whether that’s the right outcome for the customer. It’s not a process we have running through our own business at the moment, but there is an interesting piece here, where a customer is making their own selection on an outcome but we would always suggest customers take the advice of an intermediary in those situations.”


Seal talks Shawbrook acquisition, Bluesky, and more…

In March this year, Shawbrook Bank signed an agreement to buy specialist mortgage lender Bluestone Mortgages in a cash and share deal.

Shawbrook said the specialist mortgage market was “expected to grow substantially over the long term”, adding that this was partially due to more people being self-employed or working in sectors with more complex income.

In early April, Bluestone Mortgages launched its digital platform, Bluesky, allowing the specialist lender to halve its average application to offer time for employed applicants from 17 days to eight.

For more on the Shawbrook acquisition, consumer duty, Bluestone’s new submissions platform Bluesky and the lender’s product transfer journey, watch the full video [12.02] below.


Watch all previous editions of Tough Talk here, from January, August 2022 and April last year.

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