Lending is available in all credit categories but only up to 75 per cent loan to value (LTV) across all products, with a maximum loan size of £500,000 applying.
Qualifying applications on its clear credit category will continue to be processed using Automated Valuation Models (AVMs).
The move is the next step in re-opening its offering up to the market. Last month it resumed accepting applications in its clear credit category as part of a gradual return to business as usual.
In April, Bluestone was forced to temporarily pause new applications due to restrictions across the housing market caused by the coronavirus pandemic.
Pipeline progressing as normal
On the subject of pipeline applications Bluestone Mortgages managing director Steve Seal (pictured) said: “All pipeline applications are progressing as normal.
“We’ve made great progress in working through the pipeline following the return of physical valuations and will continue to focus on these cases over the coming weeks.”
He continued: “We have been working hard over recent weeks to ensure we can continue to support as many customers as possible in what is evidently a more challenging market.
“It is testament to the whole team at Bluestone, and the support shown from our funders, that we are now able to offer our full product range again.
“As ever, our focus remains on delivering an efficient, flexible and reliable service to both customers and brokers, as we go about processing new and existing applications,” he added.
This news follows Bluestone’s decision in April to temporarily pause new applications due to restrictions across the housing market caused by the coronavirus pandemic.
To process new applications up to 75 per cent loan to value (LTV) the lender will make use of automated valuation models (AVMs) and desktop valuations.
Bluestone’s support services will remain open for existing customers and ongoing applications will continue to be underwritten and assessed during this period.
Steve Seal (pictured), managing director at Bluestone Mortgages, said: “We are really pleased to be back and open for business and have had strong support from our funders and the valuation industry in adapting to the current market.
“As we kickstart activity over the coming weeks, our focus will be on supporting brokers who have existing pipeline applications that can now progress, and on delivering strong service levels to brokers submitting new customer applications.”
This restriction in business comes days after the lender capped lending at 75 per cent loan to value and began declining applications from borrowers working in the leisure, hospitality and retail industries.
The lender said the decision to halt new applications has been made as a result of restrictions that have been put on physical property valuations due to the Covid-19 pandemic.
Bluestone will prioritise existing applications where the valuation has already been completed. All other applications will be processed and underwritten as normal, while they wait for the availability of an acceptable valuation.
All offered mortgage loans will continue to completion as normal.
Bluestone said its existing customers will not be affected by the suspension and the lender’s support services will remain open for these borrowers.
During this time, the lender will reallocate employees to other customer support teams so they can offer more help to existing borrowers.
Steve Seal, managing director at Bluestone Mortgages, said the staff moves were necessary in supporting customers through the crisis and the overall decision to stop accepting applications was not taken lightly.
He added: “Overall, our main priority is supporting brokers in every way we can so that they can continue to deliver strong outcomes for customers and to reassure them they are in safe hands.
“Bluestone will continue to follow the government guidelines and hope to re-open to new business as soon as possible and will update the market on news of this in due course.”
Now working as its sales and marketing director, Hollingworth’s 14 years of mortgage distribution experience has given her an insight into how the lender-broker relationship should be working. With this knowledge, Bluestone is taking measures to further support its broker network.
This includes the lender’s plans to lean more on client data rather than relying on official sources such as the Office for National Statistics (ONS).
It intends to build client profiles through its own technology which Hollingworth says will be used to help its broker network understand clients better and further product development.
Bluestone also plans to set up a forum to hold discussions with brokers and it will also form a separate group of brokers who they will consult with regularly.
Although feedback gained through meetings with business development managers (BDMs) is a great source for Bluestone, Hollingworth says hearing comments directly from brokers is “invaluable”.
“Even if we think we’ve got something right, we haven’t until the broker agrees we have,” she says.
Other side of the market
With her most recent position being at Mortgage Advice Bureau, Hollingworth believes she can bring an understanding of what brokers go through on a daily basis to strengthen Bluestone’s relationship with intermediaries – the primary function of her current role.
“What I really want to do is bring that learning from my distribution days to help streamline and make the front-end journey more efficient.
“This effectively says: ‘how can we help the broker to help their customer? And once they have that customer, how can we help them look after their client and also do business with us in an easy way?’”
Speaking about the specialist lending Bluestone does to help customers who are rejected from the high street, Hollingworth says supporting advisers serve this market is very important. This is because once they have helped such customers get onto the mortgage ladder, they are likely to have a loyal client for the lifespan of their financial journey.
As a result, Hollingworth has embarked on a project looking at the end-to-end journey of a customer and broker.
She adds: “The project looks at all the processes, understanding what they have to do in the first place to give the advice and make the recommendation.
“Then I’ll look at the point in which they decide they want to deal with Bluestone, if it’s the right thing for the customer, and see how we can make that painless, seamless and frictionless.”
Technology focus
No matter how well a lender makes its technological operations, Hollingworth says advisers will always have their favourites but anything Bluestone can do to make the journey easier and remove hassle is always beneficial.
“Not that I’m suggesting it effects their recommendations. But because there are 100-odd lenders out there, that’s 100-odd systems brokers have got to work with.”
Hollingworth says while there will never be commonality across lender systems, the most the industry can do is be “better joined up” about what the future looks like for technology.
Increasing need for advice
Hollingworth has no concerns that the threat of execution-only will impact the lender’s business as the clients Bluestone targets will require advice.
She says: “The huge majority of people want advice because they just want somebody to tell them, somebody to talk to and somebody to help.”
Overall, she does not think the advice market will see a decline as the complexities of borrowers will push the need for adviser assistance.
“Could I see a time where a customer goes online because they’re squeaky clean, it’s a good loan to value and their income is right? I can see that happening,” she adds.
“However, who is normal? Who fits a little box? There’s not many people.”
Budget aspirations
Hollingworth says in the upcoming spring Budget, she wants to see the government focus on what will happen after the Help to Buy scheme is no longer available to help second-time buyers.
Because first-time buyers can bypass the starter home stage with government assistance, this has resulted in a strain in housing supply for those looking to upsize.
“If we’re looking at a world without Help to Buy for the second time buyer, there will be no properties,” she says.
If this is not addressed it could create a larger under-served market, Hollingworth adds, and it will take an industry-wide effort to plug the gap.
Speaking to Mortgage Solutions, Steve Seal (pictured), managing director of the lender, said it was “terrible” that consumers who had been declined by mainstream providers were unaware that there were other options potentially available to them.
“We need to get greater awareness from a consumer point of view or a proactive referral process from high street lenders into the specialist lending community,” he added.
Supporting complex borrowers
He said he felt the industry had a “moral obligation” to support customers with a complex or adverse credit history.
Seal said: “All we’re doing is supporting customers who should not be disenfranchised. As long as it’s done in a responsible and appropriate way, understanding the circumstances, I think it will be a great thing for the market.”
He also disputed a prediction made by Moody’s, which suggested the loan credit quality of new deals made by specialist lenders and challenger banks would be weaker than the mainstream as they targeted borrowers who required bespoke underwriting.
“You won’t see any of that at Bluestone. We’re very focused on credit policy, very focused on credit performance. Every conversation I have with one of my peers is a reflection of that ethos.
“It is about growing the market sustainably and responsibly underpinned by those responsible lending practices,” he added.
He said: “We are not a lender who would lend to someone who wouldn’t pay a debt, we lend to people who couldn’t pay their debts. We can attribute the circumstances they present to us to an identifiable life event.”
Jack Warner, previously head of product and development analytics, has been appointed lending operations director. He will be responsible for all new business.
Mortgage servicing will be led by Lyndon Betteley as he has been promoted to mortgage operations director from business process manager.
Andy Voss, chief financial officer, will head up funding strategy and treasury operations, while Andrew Davies will continue as risk and compliance director.
The senior team will be under the leadership of Steve Seal who was appointed managing director in August and Emma Hollingworth, who started as sales and marketing director in January.
Seal (pictured) said: “We are lucky to have a strong and diverse senior management team to lead Bluestone Mortgages as we continue the next stage of company growth.
“Having a strong executive team focusing on improving products, service, technology, infrastructure and compliance, will enable us to further cement Bluestone as a trusted leader in the specialist lending market.”
While it is good to make note of where things have not been up to standard so it can be learned from and avoided, it is also beneficial to praise those who do good to those in their respective industries so they know what they have done right and possibly inspire others to follow.
This week, Mortgage Solutions asked our Marketwatch panel which lenders have gone above and beyond in their service with brokers this year?
Dominik Lipnicki, director of Your Mortgage Decisions
One case stands out in my memory this year.
Newcastle Building Society pulled out all the stops for the placement of a case at £835,000, outside current affordability criteria. It was reviewed by underwriters and they liked the case so agreed outside of policy and lent on net profits of £127,600 plus salary of £11,500 equating to approximately six times income, enabling our clients to repay their parents.
Another great case for us: Bluestone Mortgages reviewed our client credit file and agreed to lend despite five payday loans that were not settled in the background.
They offered a mortgage on the basis that those payday loans will be repaid prior to completion at which point funds will be released, enabling our clients to achieve their objectives by clearing expensive secondary debt and releasing disposable income meaning the clients can now remain in their home after receiving poor advice previously.
Our Accord business development manager (BDM) James Trevis is another great example as he will always respond to our advisers quickly and does take up every query. Wherever possible, he gets decline decisions overturned and I would say he is one of our most proactive BDM’s.
David Hollingworth, associate director at L&C Mortgages
What stands out across the board is rates have been excellent and that’s one way of attracting volume. We’ve seen a growing realisation from lots of different lenders both large and small that service is a key part of that. One who gets a mention is Accord.
They worked really hard on making improvements, not just this year but over time they’re really starting to show genuine consistency in service which – going back a few years – has always been a sore point for brokers.
We knew their products would be priced really well but that’s now backed by consistent service levels.
For bigger lenders, Halifax are the standard, but their peers are also making improvements. It’s a fiercely competitive market both on rates and service from a lot of the major banks.
From a product point of view, I liked the Hero Mortgage from Kensington Mortgages – it was something a bit different and showed it was possible to think of different ways around circumstances.
For building societies, the smaller ones have worked really hard at making sure brokers understand they can take a more individual approach. While they’re still very much offering mortgages to the mainstream market, they’ve looked to make sure they’re covering different niches that they’re perhaps well placed to deal with on a case by case basis.
Virgin Money have led with long-term fixed rates as it becomes more government-led to offer that type of lending. Coventry BS should also get a mention as they’ve long had 10-year deals but also with five-year tie-ins which is a well-placed product in that market.
Chris Oatway, owner and director of LDNfinance
We would like to give a big shout out to Glenhawk, Octane and Alpha Property Lending who have all given exceptional service on a few key cases we dealt with this year.
All three lenders have provided a flexible, common sense approach in doing deals and supported our cases through to completion.
It is a very strange market at the moment, where deals are taking more time to get through than normal due to multiple reasons and it takes hard graft from all parties involved in a transaction from start to finish.
These lenders have a strong commitment to pushing complex deals through to completion, demonstrating their in-depth understanding of the current market and risk.
They stand out by having certain niches either within their product range or lending criteria that is supported with a quality team that allows them to outperform others.
Hollingworth (pictured) will lead sales and distribution at Bluestone, strengthening relationships with the lender’s key intermediary partners, from January 2020.
She has clocked up 14 years’ of mortgage distribution experience across the industry at the Mortgage Advice Bureau, Intrinsic, SimplyBiz and MSN.
“Emma has demonstrated her ability to drive high quality service over the course of her career. To have someone with her skillset on board will be crucial for us as we go into the new year looking to deliver a first-rate mortgage proposition that meets the demands of brokers and customers,” said Steve Seal, managing director at Bluestone Mortgages.
Hollingworth said: “Bluestone has shown itself to be a lender driven by technology and innovation. To have the opportunity to help strengthen the business’s intermediary proposition is a real pleasure.”
Bluestone added that it increased its volume of residential mortgage settlements by 264 per cent in June 2019 compared to June 2018.
Despite this the firm reported net losses of £2.42m, though this was a reduction of 37 per cent on the losses reported the year before.
It said it is on track to report a profit this year, with gross margins at more than four per cent and arrears representing less than one per cent of its book.
The lender has also seen a sharp increase in staff numbers, rising 58 per cent to 49, with a new office opening in Sheffield to supplement its London operations.
Alistair Jeffery, founder and group chairman, said there had been a “very solid lift” in new loan levels, with growth continuing in this financial year, despite the “Brexit headwinds”.
Steve Seal (pictured), managing director of Bluestone Mortgages, added: “We’re delighted with the strong lift in volumes, driven in large part by the support of our broker network and their adoption of our uniquely flexible mortgage products, the continued development of Bluelink, our proprietary loan application platform and a relentless focus on service levels.”
The lender completed its first securitisation last month, raising £210m.
