‘We’re already seeing more clients with adverse credit and need more options’ – Dale Jannels

  • 25/06/2020
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‘We’re already seeing more clients with adverse credit and need more options’ – Dale Jannels
The past few weeks have seen something of a loan to value (LTV) hokey cokey after the reintroduction of physical valuations offered a huge lift to the mortgage market.


This was swiftly followed by a flood of lenders welcoming new business.

After a cautious initial approach, LTV levels initially crept up, but the question is – did some lenders open the higher LTV door a little too soon?

Were they surprised by the amount of pent-up demand or were they not quite in the right position to make such moves from a logistical and operational sense?


Focus on service levels

Only the lenders in question can answer this question, although a recent comment from Jeremy Duncombe, director of intermediary distribution at Accord Mortgages was telling after the lender temporarily withdrew all products at 90 per cent LTV level.

He said: “We have seen a significant increase in applications since re-launching last month. Our service levels are something brokers know they can rely on, so to ensure we can maintain the standards expected of us, we have taken the difficult decision to temporarily withdraw the range.”

In a similar vein, Virgin Money has also temporarily withdrawn its 90 per cent LTV products to “protect the service for existing applications” following a strong increase in demand and Clydesdale Bank has made a similar move.

Similar moves have been made by TSB, plus a few regional building societies, and I’m sure more will have followed suit by the time you read this.


No criticism of lenders

Highlighting these products being pulled from the market is certainly no criticism of these lenders.

If service levels can’t be maintained, then this is clearly a sensible move to make.

Managing risk and operational capacity has always been a challenge for lenders, and this is proving increasingly difficult in the midst of some uncertain economic conditions.

And we have seen lenders re-entering the space with limited editions such as Coventry Building Society, Saffron Building Society and Monmouthshire Building Society.

The higher LTV lending battle will be an ongoing theme throughout the rest of 2020, and this will be dictated by a number of issues from an internal and external perspective – there’s no getting away from the fact that borrowers are crying out for higher LTVs.

However, there remain question marks over house prices, unemployment figures, not to mention if and when a recession may hit.

From a lending perspective, issues remain over attitudes to risk, operational capacity and servicing the valuation backlog and pipeline cases.


More adverse credit clients

We also have to consider how this period is affecting new and existing borrowers.

We’re seeing greater numbers of clients coming through our doors with some form of adverse credit, and this number is only likely to grow.

When it comes to servicing these needs, fewer options are currently available.

Many specialist lenders are tightening criteria and it’s difficult to know if, and when, the near prime product market will experience any major improvement.

Especially in the middle of lingering uncertainty around exactly how payment holidays will affect credit assessments.

These trends will prove interesting stories to follow as lenders continue to get to grips with demand and how best to service ever-changing borrowing circumstances amid a variety of Covid-19 and wider economic repercussions.

What we do know is that specialist distributors will prove invaluable in quickly determining whether a case is viable or not. And the intermediary market in general will remain in prime position to support lenders and borrowers on this journey.




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