Specialist market not under threat but lenders need to be visible to survive – brokers

However, they noted that if lenders wanted to be competitive in the market they needed to be visible to brokers about their proposition.

Secure Trust Bank (STB) announced yesterday that it could not see any end to the competition and pressure within the mortgage market and so was considering ceasing new lending “until conditions become more favourable”.

In its last interim report, published in August, Secure Trust said it had completed £37.3m total lending from its launch in 2017 to the end of June 2018, with £21.3m in first six months of 2018.

Chief executive officer Paul Lynam was pleased with the results at the time, but warned about the highly competitive market although he did expect it to ease.

“The mortgage market is exhibiting significant competitive pressures, with lenders increasingly competing on price and risk appetite to drive new business volumes,” he said.

“We are being careful to avoid being sucked into a race to the bottom and are tempering the growth of this part of the business at this time.”

He added: “I continue to expect that following the closure of the Term Funding Scheme in February 2018 we will see pricing pressures ease which will allow us to compete more effectively.”

Secure Trust Bank confirmed to Specialist Lending Solutions that the consultation was impacting 27 members of staff, although it hoped to mitigate the number of compulsory redundancies with internal positions.

Following the news of business development manager Fran Green joining Shawbrook Bank the lender also noted that staff were free to move if they felt it was best for them.

Pro-active and visible

City Mortgage Solutions managing director Paul Clark agreed that the complex market was competitive at the moment but much of this was around the criteria on offer, rather than rate.

Clark admitted that although his firm had used more than 40 lenders in the last year, they had not used Secure Trust Bank.

He noted that most challenger banks were being very pro-active in contacting brokers about their proposition and criteria.

“It’s gone way past rate or price, most rates in this complex sector are sub 2.5% anyway, it’s criteria and awareness of criteria,” he said.

“The biggest hurdle is making themselves heard enough, but some lenders are very much out there.

“I don’t think STB were making themselves very obvious and if you can’t engage with enough people it doesn’t matter how good your rate is because no-one knows.

“So they have to weigh up being out there and being vocal,” he added.

New lenders still coming

Brightstar chief executive officer Rob Jupp added that it seemed apparent Secure Trust Bank did not have the appetite to get caught up in the competitive market.

And while he admitted it was not good news, he was largely calm about concerns other lenders may follow in closing operations.

“We have to be careful that there’s not a sense of contagion here and it gets a bit out of control,” he said.

“STB was all about lack of appetite to continue the mortgage part of their business because they just felt they couldn’t make the margin.”

He added: “The number of new lenders coming into this space, particularly buy to let, far outweighs those who are stopping lending permanently or temporarily.

“So the net effect is still a positive move in terms of new lenders and that’s really key because if we saw something more deep-rooted and structural that wouldn’t happen.

“In 2008-09 that didn’t happen – we didn’t have any new lenders coming through, while there are a number of them now.”