Alternative funding would let specialist lenders resume lending – Belmont Green

Details of schemes put forward by trade bodies to HM Treasury and the Bank of England were revealed today for the first time.

They include a possible Forbearance Liquidity Funding Scheme where the government would provide eligible lenders with cash to fund loans on which forbearance, such as mortgage payment holidays, has been provided that would currently fall outside of existing funding lines.

Specialist non-bank lenders have been particularly hard hit since the coronavirus crisis began with several, including Vida, stopping all lending as capital markets closed down and government and regulators enforced mortgage payment holidays for borrowers.

However, Belmont Green chief executive officer Anth Mooney told Specialist Lending Solutions that if the schemes are put into place it could signal a fresh start for the sector.

“A scheme which provided specialist lenders like Vida with access to an alternative source of liquidity would allow the sector to resume lending activities and support important customer groups like the self-employed, whose options would otherwise be limited,” he said.

Liquidity support

Mooney emphasised that the specialist lending market had a wide customer base including the self-employed, single parents, NHS and other key workers, along with customers who’ve missed one or two payments because of an unforeseen change in their circumstances.

“Beyond the Covid-19 crisis, these customer groups will need our help more than ever, which is why specialist non-bank mortgage lenders must be offered the same liquidity support already made available to the high street banks by government – either directly under a specific scheme, or by forcing the banks themselves to take responsibility and channel government liquidity support out to the specialist mortgage sector,” he said.

“If that does not happen, these customers will be excluded from the market, unable to buy a family home or move their existing loan for a better deal.

“This is a very real risk, which ultimately will push many customers into paying far more to borrow money than they need to. These are always the customer groups who suffer first in a credit squeeze which doesn’t seem logical or ethical.”