‘Profitability of the specialist non-bank lenders is going to be a continuing challenge’, says TML CEO

Speaking to this publication ahead of Deal Catalyst’s Annual Investor’s Conference on UK Mortgage Finance in September, Beaumont talked about the specialist lending landscape, funding, technology, product transfers and Consumer Duty.

Beaumont will be speaking on the panel: “The Changing Buy-to-Let Landscape Amid EPC Deadlines, Small Operator Departures and Funding Challenges” at the Investor’s Conference on UK Mortgage Finance on the 12 September at the London Hilton on Park Lane. Mortgage Solutions has secured a 20 per cent discount on tickets for its readers, follow the link to secure the offer.

Q: The past few months have been very chaotic in the mortgage market, do you think this volatility will continue and what needs to happen for stability to return to the market?

A: External factors, such as the war in Ukraine, cost of living, elevated inflation have all had an effect and while these persist, we will continue to see volatility in the market. However, that said, for the large part, the market has already priced these factors in.

Q: What are the biggest opportunities and challenges for specialist lenders in the coming months?

A: The biggest opportunity and challenge, in my opinion, is the same thing. How do we provide the right products at the right price for customers in such a challenging market?

Commercially, considerations like cost of funds is going to be a challenge for lenders in the coming months and the ensuing impact on profitability.

For bank retail funded specialist lenders, the cost of servicing deposits in this high interest rate environment means that they will need to strike a balance to ensure they can maintain margins.

Profitability of the specialist non-bank lenders is going to be a continuing challenge.

Q: What is the funding landscape like for specialist lenders at the moment and do you think more will be bought by banks in the same way that The Mortgage Lender was bought by Shawbrook?

A: The funding landscape varies depending on how you are funded, and who or what those funders are if you are a non-bank lender. It will also vary for those lenders that have consumer and business accounts and those that don’t. There is no denying it’s a challenging time especially if you must balance the expectations of borrowers and savers.

Overall, all types of lenders are experiencing constraints. There are funders out there who have access to funds, but there is a much higher cost of funding given the current environment.

Q: Earlier this year, The Mortgage Lender made a number of technological improvements to its platform to streamline the application process, what has the impact and reception to those changes been and are there more changes coming?

A: The changes we made were to improve the experience and outcome for our broker partners and ultimately our customers. And I believe we have delivered that. As a result, the changes we made have been very well received by the market. The impact has been very noticeable with our flight times and all the main metrics by which we measure success have improved dramatically and we are working on more automation changes going forward that will further improve efficiencies.

At TML, we strive to eliminate, automate, and simplify all our processes, in order to get more cases straight through using clever decisioning, which allows our underwriters to deal with the more complex cases. This means quicker decisions for our broker partners, and subsequently their clients.

Q: The Mortgage Lender launched a product transfer pilot in July. What were the hurdles as a specialist lender to launch that pilot, what has the reception been and will other specialist lenders create their own PT propositions?

A: Our product transfer pilot has been met with a fantastic reception by intermediaries, clubs and networks and is already helping a large number of existing customers, with more to come.

Some of the other specialist lenders already offer product transfers and affordability concerns have been a factor in the rise of this. The reality is that the world has changed for the residential market and it’s increasingly important for the lender to provide existing customers with options. The simplest way to do that is product transfer. At TML, our primary concern has always been the customer and whether they can afford to make payments and give them the best chance to be able to do this.

Q: How do you think Consumer Duty will impact the specialist lending sector?

A: It is an incredibly positive move for consumers. It is already, and will continue to, drive increased transparency in the specialist lending sector. It will make every lender look carefully at their product offerings and drill into how they price and lend based on the individual needs of new and existing customers.

Here at TML, we will be speaking directly to customers to hear and understand their views and needs. When we marry this with internal and external management information and insight, we will ensure that our products and services, and that the communications around these, are appropriate to our customers’ needs.

Q:What is the current head count for The Mortgage Lender and what are the recruitment plans?

A: Our headcount has grown significantly within the last two years or so, largely driven by both the challenges of the pandemic and the opportunities created since our acquisition by Shawbrook.

We have an exceptional team in place that are leaders within our industry and align with our culture of ensuring we are focused on customer experience and outcome. As you can imagine we are also open to, and on the lookout for, talented and experienced individuals whose ambitions and beliefs align with ours.

Q: Looking ahead, what are the strategic priorities for The Mortgage Lender for the next year?

A: Looking forward to the next year, we will continue to focus on how best we can support our brokers and customers with a strong product set and relevant and engaging communications, as Consumer Duty remains a major strategic priority for us.

We will continue our digitalisation journey in our unrelenting pursuit of efficiency through automation and how we can make the customer outcome and customer journey, throughout the lifetime of the product, better. This also allows our people to focus their efforts on the more complex cases that come to us.

As a specialist lender, extending our market for brokers is also a key priority to ensure we are in every niche as we look to maximise value for all stakeholders.