Speaking to this publication after their interim results, Sue Hayes (pictured), chief executive of The Nottingham, said: “What we mean by that is with the changing world of work, people’s contracts and the way in which they earn income is very different to what it used to be.”
Hayes said that it would look at borrowers with “lumpy income” or “bumps in the road where people who have solidly earned money and solidly paid bills have one issue that has happened [to them].
“It’s not full-blown credit impaired, it’s more around where circumstances happen and we’re looking to support people earlier,” she said.
Hayes added that it would also be looking at borrowers with “thin credit files” as this was an “increasing area”.
“Within that then, there’s some other areas which are going to be launching later on this year, like ‘new to country’. It’s all those types of segments where it’s difficult for people because they don’t just fit the sausage machine,” she explained.
‘We’re growing in a declining market’
Regarding the mutual’s results, which showed gross mortgage lending more than doubling to £457.1m compared to the same period last year, Hayes said that it had increased lending at higher loan to value tiers as well as buy-to-let lending.
“We’ve also increased lending in some of the slightly more traditional areas by changing some of the criteria in an effort to really start to play hard into the purpose of lending to the extraordinary,” she noted.
Hayes pointed to removing the need for bank statements and broadening its contractor criteria as two examples.
“We are very pleased that we’re growing in a declining market when we haven’t even really started putting our foot down on the accelerator with the strategy and that really starts in earnest in the next half of the year,” she said.
Hayes continued that she expected the latest set of criteria changes to have a “bigger impact playing into next year’s results and in the second half of this year”.
Mortgage Charter has led to hundreds of enquiries
Hayes said that The Nottingham “absolutely support” what the Mortgage Charter is aiming to do.
She continued that changes in timelines, supporting people in realigning their payments and ensuring credit files were not marked were some of the “biggest changes” the mutual had to make
“As a mutual, you really want to make sure that in times of hardship that people have the options,” Hayes added.
She noted that it had had “early hundreds” in terms of enquiries around Mortgage Charter measures but only a small number of people opting for the different repayment structures.
Hayes said that there was a reticence from customers to extend their mortgage further as “once you’ve got a mortgage, the only thing you want to do is pay it off”.
When asked if the Mortgage Charter should be mandatory, she said that if the government imposed more regulation and put mandatory practices in place, “it would be hard to actually play through in terms of the competition law”.
“I think, given the fact that they’ve covered 90 per cent of the market, and it was in place so quickly, that most people there will be covered by it.
“I also think it’s quite helpful, because then those who haven’t signed up to it will stand out in a negative way and it will force them to make sure that they are doing the right thing by customers, particularly in the new regulation around Consumer Duty, and how they demonstrate that good outcomes are happening,” she explained.
‘Confident’ on technology transformation
In in their latest report, The Nottingham said that it would be investing over the next two to three years in its “core technology systems and data capabilities”.
Hayes reiterated this, noting that it was “doing a huge amount of work” on the technology and data side.
She said that it would be working with three different companies on its technology and data, but was still in the “discovery phase”.
“We plan to have some significant enhancements in the early part of next year delivered. We’re really looking at some alternative credit models, so using the best of the traditional providers like Experian, and the most up-to-date methods that they have come up with, but then also to append that with alternative data,” Hayes explained.
Hayes added that it had three technology projects that it had delivered in the first half of the year, which improved confidence that it can “deliver this transformation”.
“The most important thing about transformation journey is that you don’t just digitise the process today, you really reinvent the process. We’re starting with the app, along with improvements to the decision in process and product selection” she added.
Hayes said that it was also working on the application to offer part of the journey and it was working with Pexa on the offer to completion aspect of its technology, so that “we can look end-to-end into that journey and really make it special”.
Hayes noted that undergoing technological transformation during volatile market conditions was like “trying to repair the car while you are driving it”.
“It is going to be one of the biggest challenges for anybody. I feel confident in terms of we have a fabulous team of very experienced people, and they’re really motivated towards both delivering and transforming.
“That’s the reason that you can see that starting to come through in terms of the results that we’ve seen, even though it is in the early days,” she said.
