‘We’ve got headroom to grow and we’ve got the ambition’, Together CCO says

Speaking to this publication as Together celebrated its 50^th anniversary, Etchells said that in the lender’s 50-year history, it had made a “continuous profit”, but the changing rate environment in the last few years had been a challenge for all lenders.

“We’re not hiding from the fact that the whole industry had to figure out what [rising rates] meant, and we had to reassess what that rate environment meant. I think we now, since last summer time, as an industry and as a lender, we’ve understood what that now means.

“We’re now looking at how we reduce our rates… because you can see a little bit more the horizon now,” he said.

Etchells said that, over the last 18 months, it felt like walking up the side of the mountain, and all you can see is the slope in front, whereas now it felt like, proverbially, the sector was at the “top of the mountain”.

“I’m not saying that rates are going to come crashing down, but at least we’ve got a good view of what’s going on, rather than just looking at the mountain in front,” he noted.

He added that, regarding becoming a bank or being acquired, there were “never options closed to us”, but it was in a very good position currently.

Etchells said that the lender had a “really strong funding base”, noting that its latest securitisation was six times oversubscribed.

“We’ve got headroom to grow, and we’ve got the ambition. We went from a billion-pound loan book in 2013 to £6.8bn in 2023, so that is significant growth. The ambition is to do that again, and there’s no reason why we can’t do that with our current funding structure,” he said.

Etchells said that its strategy currently, and in the short-to-medium term, was to “continue that growth, continue meeting customers’ needs and continue serving the customers that we’ve got experience in doing so”.

He said that high-street lenders won’t necessarily eye the specialist lending sector to enter themselves, as they are “always trying to find the least point of friction”.

“All the things that they want to be simple, the high street will always try and find the quickest way of doing those. Whereas, what we’re doing is putting the effort into actually understanding customers and understanding those complexities,” he said.

Bridging is ‘hero product’

Etchells said that bridging, both regulated and unregulated, was its “hero product” at the moment, which he attributed to the market being very “active”.

He said that, two years ago, Together would have celebrated doing £100m of bridging business per month, whereas now it would be an oddity if it didn’t, adding that it had done above £100m of bridging each month for the last six months.

“That’s where we’re seeing a lot of opportunity and that’s where customers are spending a lot of time and have been taking advantage of a challenging economic landscape to seize opportunities,” Etchells said.

He noted that it also expected there to be a rebound in BTL activity, noting that there had been a “perfect storm” of headwinds in the last few years.

“We’re seeing a lot of ambition with the customers we’re supporting. We’re seeing a lot of returning to that market,” Etchells said.

He continued that residential mortgages would also be another focus for the firm, especially with more people coming off lower fixed rates.

Etchells said that, every year, “customer needs become more and more complex in our eyes” and “become more and more demanding of a lender that’s willing to take the time and understand their circumstances”.

Together to launch discount variable rate to help customers coming off fixed rates

Etchells said that a challenge that is already “crystallising” and could become more “challenging” in the coming months was customers rolling off cheaper fixed rates.

He noted that the stamp duty holiday had led to a massive uptick in mortgages, and those had started to expire in Q4 last year, which was expected to ramp up in Q1 and Q2 of this year.

Etchells said that Together was planning on launching a discounted variable rate product in March to “make sure that we’ve got the opportunities to meet customers’ needs to stretch rates”.

“If customers want to retain an element of variability, they’ll go on to a discount variable if that’s what they want, or if they want to be fixed, we can do that as well, but helping customers through challenging periods is a big one,” he said.

He noted that some customers coming off lower fixed rates from high-street lenders may become more specialist.

“We’re not kidding ourselves – if they’ve been with the high street on a one a per cent or more deal, and now the high-street lender is offering them five per cent, no one can deal with that just willy nilly. It’s a big consideration for customers. It is definitely a challenge, but also we’ll need to make sure we support customers with that change in the wider market.”

On the BTL side, he said there was a “structural shift going on in that market” and so it needed to make sure it was supporting customers in identifying high-yield opportunities, supporting portfolio customers with incorporation if needed.

Brokers are the ‘lifeblood’ of Together

Etchells said that brokers were the “lifeblood of what we do” and that their importance to the market had grown over the past 10 to 15 years.

“Over the course of 50 years, the relationships we’ve built with [brokers] have been absolutely vital. The way we’ve built our proposition is through feedback with brokers. The way that we go to market is by making sure we’ve got the right relationships with the right brokers.

“I guess the thing that we want them to know is that this is the second half of our 100-year plan. So, we intend to be around and continue to grow and continue to work with our brokers for the next 50 years,” he said.

Etchells pointed to its wide product set and broad criteria as factors that set Together apart, adding that it was “always looking for feedback from the frontline brokers as to how we can develop the proposition and how we can support their customers more.”

“We want to work with every broker that deals with specialist customers, we want to have a relationship with them, and so if there are brokers out there that have customers with special requirements and they don’t deal with us, please get in touch, because we are looking to deal with every broker,” he said.