Speaking to Mortgage Solutions, Secure Trust Bank Mortgages managing director Esther Morley explained the focus on customer and broker service had served it well so far.
Although it has been a challenging entrance in some respects for Morley and her team given the macro economic and political conditions, she is largely satisfied with where the lender finds itself.
“We put our business plan together in Jan 2016 and clearly a lot has changed since then,” Morley says.
“Not least since we came into market we paired back our distribution and product range, so we’re not necessarily at where we said we would be on that plan, but we are where we need to be.
“Our strength is around our service proposition – we want to ensure we can protect and deliver on that proposition to brokers so we’ve only expanded at the rate to maintain service expectations.
“But we’re doing what we need to be doing against our revised plan and we’ve got big ambitions in 2018 for widening out our proposition, providing more for our intermediary market and being ever more present out there,” she adds.
More reason to do business
The business is currently in the middle of its pre-results period, with the figures due to be released around the end of the month.
So while Morley is limited in some of the detail she can give, its clear there are intentions to reach out with new products likely to focus mainly on the residential first-charge sector.
Earlier this month the lender opened-up into the interest-only sector and repriced its products, a flavour of what may be to come.
“We’re looking at more niche segments in the market that will give brokers more reasons to do business with us,” Morley continues.
“If you look at the specialist market its quite broad and there’s lots of different niches within that. We want to ensure we can serve our customers in each one of those segments where it makes sense to us.
“We’ve got a big plan of change activity going through the year we’re hoping to get additional board investment so we can accelerate some of that activity and bring it to market quicker,” she adds.
Where could this be headed?
Morley doesn’t explicitly say which sectors are being prepped, but she does highlight some of the more interesting ones in the market at present, including Help to Buy and buy to let.
Buy to let is particularly noteworthy as many new lenders make this a key element of their entry strategy due to the less demanding regulatory environment.
But Secure Trust decided against this route.
“One reason was because of the noise around capital rules for banks so it didn’t look as attractive for us as it possibly could be, while with all the regulation and tax changes we also didn’t know what that market would look like coming out from that,” Morley explains.
“All those changes have bedded-down now, with the capital requirements not quite what was being proposed and the whole tax regime settling in, so it’s an area we will look at again and have interest in because it’s a reasonable market and there are sizeable segments of customers out there.
“But the caution is there are a lot of buy-to-let lenders out there and if we don’t do it right we’re just going to fall over,” she adds.
Are there enough lenders?
In contrast, despite some recent moves, the Help to Buy remortgage sector is crying out for more entrants – something Morley highlights.
She agrees this could be quite a key area as the first maturity date arrives with so many homebuyers taking advantage of it.
“Whether there’s enough lenders out there to accommodate that demand is a question,” she notes.
“There are some difficulties in making sure you’ve got the right data and in understanding the governance, but if that can be solved then that’s a market lenders really should be looking at.”
Although the bank does have internal goals for lending volumes, Morley explains it is not set to go riding up the risk curve if the market does not turn in its direction.
“We’re going to lend responsibly and what that means in terms of volume will be driven by that,” she says.
“We’re very lucky we don’t have an historic portfolio so don’t have some of the issues other lenders may be having to work through. We’re starting with clean originations in a heavily regulated environment and doing things in the right way.
“Our team includes experienced people who’ve seen what happens when things go wrong, we don’t want to make those mistakes,” she adds.
Growing self-employed population
One of the bigger surprises over this past year has been how the bank’s mortgage customer balance has shaken out.
Secure Trust was expecting a fairly balanced customer base between complex income cases and credit blip type clients.
However, the scales have swung far more in the direction of the complex income cases, such as those who are self-employed with multiple income sources.
“The demand is there on the credit repair side and that’s going to be growing over the next 12 to 18 months, but I think the self-employed population is just a lot bigger and it needs a specialist lender to deal with them,” Morley says.
“The volume of more complex cases surprised me somewhat, but it’s becoming a lot more evident that there is a big market out there of customers that need that kind of lender.”
Not in a price war
Finally, Morley notes that the most satisfying element of the first year of lending has been the positive broker interaction.
Technology is expected to be a leveller, bringing specialist lenders on par with the high street in terms of understanding clients, but the personal touch will always remain at Secure Trust Bank she pledges.
“We found that with the business we’re dealing in, brokers need to speak to underwriters because they aren’t straightforward clients, they are complex cases.
“So they need to explain what’s gone on, where the income comes from, what the situation has been, and so giving direct access to underwriters has been very valuable,” she concludes.