The pool is made up of 2,094 owner-occupied and buy-to-let mortgages secured against properties in England, Wales and Scotland. The loans were originated by Bluestone.
It is the inaugural securitisation of mortgages originated by Bluestone and Shawbrook said this would help “support the group’s growth objectives, funding strategy and capital management”.
The transaction is the fourth securitisation the firm has completed in recent years, including a £343m buy-to-let securitisation of The Mortgage Lender loans last year.
Dylan Minto, Shawbrook’s chief financial officer, said: “We are delighted to have successfully completed this transaction as it further supports our funding diversification strategy, positions Shawbrook as a solid repeat issuer into the debt capital markets and provides optionality to our Platform Lending origination channel as we widen our Originate to Distribute proposition.
“This transaction increases the contingent wholesale funding options available to us and provides further evidence of how our engagement with wholesale markets is providing valuable optionality within both our funding and income strategies.”
Niamh Downey has worked with Bluestone Mortgages since 2019 and was previously a business development team manager.
Since joining the specialist lender she helped grow and develop its London based telephony BDM team and also helped establish a second team in Sheffield.
In her new role, she manages both BDM teams, in addition to the the broker support team, heading up all telephony activity.
Downey will be responsible for delivering sales targets, coaching and training the business development team and broker support team. Bluestone said her role will include enhancing the broker experience, as well as identifying and developing new business opportunities.
Secured and unsecured loans
Bluestone Mortgages, is the residential lending arm of Bluestone Group, a European specialist lending and fintech business which has its headquarters in Cambridge and offices in London, Sheffield and Dublin.
The group employs 225 employees and specialises in secured and unsecured loan origination, portfolio servicing and cloud-based technology development.
Downey said: “I’m excited to get stuck into my new role and continue to help Bluestone better serve our intermediaries and their customers. I’m looking forward to leveraging my experience in the BDM team to build and develop relationships with our broker partners which in turn will allow us to further strengthen our proposition and support a growing number of disenfranchised customers.”
Reece Beddall, sales and marketing director at Bluestone Mortgages, said: “Niamh’s promotion is a testament to her hard work and determination. Over the last few years, Niamh has been critical in helping Bluestone provide support to our brokers and expand our proposition and I’m certain her experience will help us to continue to expand our offerings and provide greater financial assistance to a growing number of ‘non-vanilla’ customers.”
Hometrack will regularly review the lender’s back book using data on flood, ground and energy risk. It will also forecast how this risk could evolve over time.
The information will allow Bluestone to understand the impact of climate change on property valuations to determine its risk appetite and its capital calculations.
Steve Seal, CEO, Bluestone Mortgages, said: “Within the context of a changing world, thanks to the climate change risk analysis and information provided by Hometrack, we will be able to better understand risk and opportunity in the current market.”
George Robbins, VP commercial at Hometrack, added: “One of the biggest challenges facing lenders is changing regulation around climate change; and this is as pertinent to specialist lenders as it is to the main market.
“Our solutions and insight will help support Bluestone to gain control of risk exposure. This will put Bluestone in the driving seat to devise the appropriate strategies to continue lending whilst understanding and mitigating risks.”
The deal refinances portfolios of loans held in two warehouse structures and is made up of owner-occupied and buy-to-let mortgages on properties in England, Wales and Scotland.
The lender said the securitisation marked a “significant milestone” after its absence from the market due to Covid-19.
Its last securitisation was made in 2019 and raised £210m in rated term funding. At the time, it said the transaction showed a diversification of the company’s funding strategy.
The latest transaction was arranged and distributed by Macquarie Bank and National Australia Bank. Dentons acted as the adviser.
Andrew Voss, chief financial officer at Bluestone Mortgages, said: “Despite challenging economic conditions, we are pleased to have completed this milestone transaction which has been supported by core investors.
“This is our second securitisation to date and will be a significant step forward to ensure we are in a robust funding position to support the growing number of underserved customers we are seeing in the market.”
Right to Buy is a government scheme where council tenants can buy their homes at a discount.
The product was previously only available via limited distribution through selected Sapphire Partners and will come into effect from 17 May.
It added that loans will be available up to 100 per cent of the discounted purchase price, and up to 75 per cent LTV open market valuation.
Five-year fixed rate terms are available, starting at 3.9 per cent and can be accessed at all the lender’s credit tiers.
The lender added that its buy-to-let, Help to Buy and Right to Buy products rates would be reduced by up to 1.57 per cent and will start from 3.85 per cent for a 60 per cent loan to value (LTV) product. Bluestone added that it can lend up to 85 per cent LTV.
Reece Beddall (pictured), sales and marketing director at Bluestone Mortgages, said: “By reducing our rates and expanding our proposition we hope to reinforce our commitment to support the growing number of customers with complex credit who are struggling to climb up or onto the property ladder.
“We believe it is our duty as a specialist lender to help those who have been traditionally underserved, giving them the opportunity to achieve their homeownership dreams.”
Approvals for house purchases were little changed at 70,691, from 70,968 in February. This remains above the 12-month pre-pandemic average up to February 2020 of 66,700.
Approvals for remortgaging, which only account for remortgaging with a different lender, were at their highest since the 52,100 approvals made in February 2020. March approvals rose marginally to 48,764, remaining below the 12-month pre-pandemic average of 49,500.
The ‘effective’ (actual) interest rate on newly drawn mortgages in March increased by 14 basis points to 1.73 per cent. The rate on the outstanding stock of mortgages rose two basis points to 2.04 per cent since February.
March saw the highest spike in net lending, as continually increasing house prices drove up mortgage borrowing to £7bn, up from £4.6bn in February.
By comparison, in Q1 2019, before Covid hit, the value of gross mortgage advances was around £63.3bn.
Intermediaries are more vital than ever
Brokers and lenders have reacted with confidence in the continued high demand and competition for housing stock. The cost of living crisis, inflation, and seller’s housing market presents an opportunity and a need for intermediary advice.
John Phillips, national operations director at Just Mortgages said: “With the Chancellor warning that there may be seven more base rate rises before the end of the year, taking it to 2.5 per cent, borrowers will be looking for advice on how to achieve long-term security in household expenses.
“Anecdotal feedback from our network of brokers reveals a push towards fixing rates for longer in the hope that the financial landscape will be less turbulent in a few years.”
Steve Seal, CEO at Bluestone Mortgages said the March stats are “reassuring” given current inflationary pressures.
“Affordability concerns are, and will continue to be, a key challenge for consumers. We expect to see a growing cohort of customers locked out of the mainstream mortgage market,” he said.
Dave Harris, CEO at More 2 Life, said: “You could say that the outlook for the mortgage market is safe as houses. Alongside enduring demand, the sector is strengthened by growing remortgage activity triggered by a surge in lenders offering lower rates of interest on five and 10-year products than on two-year loans.
“In light of the current economic backdrop, we might expect an uptick in borrowers fixing for longer and exploring later life lending, particularly as borrowers can take advantage of strong house price growth through releasing equity to address inflationary pressures elsewhere.”
The rate cuts range from 0.25 per cent to one per cent and include a fee-free five-year fixed rate clear product at 60 per cent loan to value (LTV) had fallen from 5.96 per cent to 4.96 per cent.
Clear is one of the five credit tiers that Bluestone Mortgages uses to divide its products.
Clear means that there has been only one satisfied default and no county court judgments (CCJs) in the last three years, no secured arrears are missed payments in last two years, no bankruptcy or individual voluntary agreement (IVA) for more than six years and no pay day loans in the last year.
Its fee-free five-year fixed rate at 70 per cent LTV in its AAA range has decreased from 6.86 per cent to 5.91 per cent.
The AAA tier means the borrower has had one default or one CCJ in last three years, one secured arrear or missed payment over last 13 to 24 months, no bankruptcy or IVA in more than six years and no pay day loans in last six months.
The lender’s Help to Buy range is available at 60 per cent, 65 per cent, 70 per cent and 75 per cent LTV.
Rates start from 4.96 per cent and free upfront valuation is available on all products.
Reece Beddall (pictured), sales and marketing director at Bluestone Mortgages, said: “At a time when affordability is a key concern for many, particularly for first-time buyers, we’re making these rate changes to provide further support for customers with complex credit as they look to get on the housing ladder before the Help to Buy scheme comes to an end next year.”
He added that with the scheme ending in 2023 first-time buyers would lose the additional support and the lender was exploring replacement schemes to ensure it could continue to support customers.
“This demonstrates our commitment to offer everyone the equal opportunity to be able to climb onto the property ladder and own their dream home. Ultimately, these changes will provide our customers greater support and give them the help that they deserve but haven’t been able to find elsewhere,” Beddall said.
Data this week from the Office for National Statistics revealed that around one in five mortgage borrowers have reported having difficulties keeping up with their repayments of late. Given a host of spending increases have only just kicked in, like the rise to National Insurance and the increased energy price cap, these difficulties are only likely to get worse in the months ahead.
Brokers have told Mortgage Solutions that it’s crucial for advisers to be proactive in flagging up how they can help with new and existing clients.
No need for extreme cuts
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said his brokerage had turned to social media, running a number of campaigns around the cost-of-living crisis.
He explained this was “a way of engaging with existing clients and prospective new clients around helping them to review their finances to see if there is any area we can help them to manage costs, without putting them or their families at risk by doing something extreme like cancelling their life insurance, or home insurance”.
Taylor-Barr noted that the affordability assessments borrowers will likely have gone through suggests that the mortgage is still affordable even with increased costs, but questioned whether borrowers are willing to make the required sacrifices in other areas ‒ like ditching gym memberships or subscriptions to streaming services to do so.
Don’t overlook equity release
Samantha Bickford, mortgage and equity release specialist at Clarity Wealth Management, said it was important for brokers to be proactive in reaching out to clients to ensure they can still afford their repayments. “And if they are struggling, we are best placed to help them with this,” she added.
Bickford noted that for some clients, ditching protection premiums will seem appealing given the economic challenges, but argued that brokers should be contacting clients to help them find ways for this to remain affordable, without it being cancelled.
“Equity release is an important topic to make those in later life aware of. I have seen too many situations where elderly people are property rich and cash poor, and find themselves struggling to heat their homes or have a warm meal. Releasing equity from their property can be the answer to living more comfortably,” she added.
Keeping in contact
Dominik Lipnicki, director of Your Mortgage Decisions, said he was starting to see clients “struggling more, and in the short to medium-term it really does look bleak for many families”.
He noted that his advisers remained in regular contact with clients both by email and telephone, arguing that his philosophy was that brokers should look after clients throughout the life of the mortgage and be on hand to ensure that whatever plans that were put in place are still effective.
Graham Cox, founder and director at SEMH, suggested that the cost-of-living crisis presents brokers with an excellent opportunity to help clients remortgage.
He added: “With property prices so high, many are mortgaged up to the hilt. Suddenly, everyone’s looking to save money where they can, and saving money on their biggest monthly expense is top priority. ”
Consolidating debts
Lewis Shaw, founder of Shaw Financial Services, said his firm had seen an uptick in interest from clients looking to consolidate unsecured debt into their mortgage in order to free up more disposable income.
“That’s not to say that it’s the right course of action for everyone; however, it’s better to have a debt for longer, even if it means paying more in interest payments overall, if it means you can live affordably and sustainably than getting further into the red, which can ultimately end up in repossession,” he added.
Using specialists ‘more than ever’
Cox noted that adverse credit was becoming an increasing issue for his clients, due to “the pandemic hammering people’s finances.”
He added that this meant his firm were using specialist lenders “more than ever”.
The lender view
Paul Adams, sales director at Pepper Money, noted its own research had found the number of people with adverse credit who had missed a mortgage or secured loan payment had increased from 18 per cent to 23 per cent, and emphasised that brokers have a big role to play in helping these clients find suitable mortgage options.
Adams added: “Lenders like Pepper Money can offer a range of individually underwritten mortgages for customers with a history of missed mortgage payments, and even allow debt consolidation, which can help put customers in greater control of their finances.”
This was echoed by Steve Seal, CEO of Bluestone Mortgages, who said that the growing number of complex cases meant the specialist lending market was coming into its own.
He added: “Brokers can utilise specialist lenders’ manual approach to ensure borrowers are presented with the best solutions for their needs. For example, we are seeing strong demand for remortgaging as borrowers seek to raise capital to consolidate unsecured debt.
“Both specialist lenders and brokers have an important role to play to demonstrate to existing and potential homeowners that there are multiple flexible solutions available to meet their needs in this environment. However, it is key that specialist lenders take a prudent and responsible approach to lending and a proactive approach to affordability so that we can support our customers consistently in the long-term.”
According to a survey of 1,004 adults conducted by Bluestone Mortgages, 23 per cent of non-vanilla customers have been rejected for a mortgage.
Those who were turned down for a mortgage were most likely to be rejected by high street banks with 84 per cent citing this, followed by nearly a quarter who said they were declined by their main bank.
However, advice was still given to these rejected customers with 88 per cent saying lenders assisted them on ways to secure a mortgage.
The most popular advice was to try another lender, with 82 per cent recommended to do this. Some 13 per cent were told to speak to a mortgage broker and of those who did, 98 per cent managed to get a mortgage.
Steve Seal, chief executive of Bluestone Mortgages, said: “What is crucial, is the fact that those who have been rejected by a high street lender or their main bank have been able to secure a mortgage once directed to an alternative lender who suits their borrowing needs.
“This demonstrates the importance of signposting, and the mortgage industry as a whole has a vital role to play in this.”
Excluded from other financial services
Non-vanilla customers are also being turned down for other financial products, with a third being rejected for credit cards, and 12 per cent being declined for a loan.
Overall, 44 per cent of respondents said they had been declined a financial product or service by a high street lender.
Those who have had their credit score impacted by a missed payment were most likely to be turned down, the research suggested.
According to responses, 88 per cent of people with a missed payment were unable to get a financial product or service from mainstream lenders compared to 28 per cent for self-employed customers.
Younger customers are also more likely to be rejected, with two-thirds of those aged between 18 and 34 being turned down compared to 55 per cent of those aged 35-44 and 13 per cent of customers aged 55 and over.
Steve Seal, chief executive of Bluestone Mortgages, said it was “discouraging” to see how many people were being turned down for financial products and services.
He added: “In an environment where inflationary pressures continue to mount and the cost of living is rising, the number of customers who do not fit the ‘vanilla’ profile is only set to grow.
“Our message to borrowers is don’t give up on your dream, there are options out there to help ensure each and everyone has equal access to homeownership.”
