Bluestone reports rise in lending and record profits for 2021
Its profits were up from the £2.85m it recorded last year. The lender also wrote £450m in loans, a 54 per cent rise from the £295m completed at the end of 2020.
The lender said the increase in profits signalled “strong growth” for the business. It also reported a 94 per cent rise in applications during the period.
Steve Seal, chief executive at Bluestone Mortgages, said to deliver record profits during the period was a “testament” to its employees’ commitment to supporting those who were unable to obtain mortgages from mainstream lenders.
He added: “We have invested significantly in our team throughout this financial year, which has resulted in the business growing rapidly with overall headcount increasing by 40 per cent since June 2020.
“We have also continued to prioritise our support services to ensure our underwriters and broker networks are best equipped to cater to both existing and new customers.”
Seal said the pandemic was expected to continue having an impact on finances, especially since the closures of the furlough and other support schemes, which would create more complex needs.
“Following our successful year, we are well positioned to support these people and demonstrate that Bluestone is the leading specialist lender to make the homeownership dream a reality,” Seal said.
DIFF podcast: Support for LGBTQ+ people should be authentic and embedded in company culture
Speaking about what he described as “rainbow capitalism”, events consultant at Legal and General Richard Thomas, said it was becoming more obvious when companies used awareness events such as Pride to drive sales and customer engagement.
He said it could be seen as “brands jumping on the bandwagon of Pride” so they could “exploit it to sell their goods and services”.
Thomas added: “It’s really important that more brands understand that they can’t just be superficial. If you’re going to support this community, it needs to be more embedded in many different aspects of their corporate culture and their customer and employee engagement.
“If you’re going to be superficial, be expected to be caught out – particularly on social media.”
Steve Seal, chief executive of Bluestone Mortgages, said this also happened with other minority groups and issues.
He added: “We saw a similar kind of trend around the Black Lives Matter concept as well, didn’t we? Where businesses were embracing what I’d describe as ‘on trend messages’ to drive commercial value without being able to demonstrate that the core principles of what they’re trying to promote and advocate are actually embedded through their businesses.
“It’s purely a capitalist attitude to drive commercial value by using the brand, which is a terrible thing.”
Thomas said companies needed to engage with the lesbian, gay, bisexual, transgender, queer or questioning and plus (LGBTQ+) community consistently not just during particular events.
Being open at work
While Thomas and Seal both acknowledged that attitudes had changed towards their homosexuality over the years, they noted experiences where they felt that being gay had led to them feeling like they could not be themselves.
Seal admitted his experiences were likely more to do with his own reservations about society in general, saying he made sure to refer to his husband as “they” instead of “he” when meeting industry peers at events.
“I think it’s all about fear rather than reality. That’s a fear I had in myself. I’ve never ever found myself in an experience in the mortgage market where when I have been open with people, I faced any kind of challenge of issue in terms of lack of acceptance or being made to feel uncomfortable,” he added.
Thomas said at a previous job, being the only gay employee made him question if he was being excluded by his heterosexual male co-workers.
His colleagues would arrange to meet up with each other outside of working hours without inviting him. Those colleagues ended up forming closer relationships with each other than Thomas had with them.
“It was changing the dynamic in the workplace as a result,” he said.
Thomas also noticed that when another gay colleague joined the company, he also wasn’t asked to join in with outside work activities.
He added: “It was just the two of us who were left out. I don’t know if it was a conscious or an unconscious thing on the part of those guys and I would imagine it probably wasn’t [a conscious thing]. But nevertheless, it did make me feel marginalised. It did alter the team dynamic a bit because I’d come into work and feel like I was being made to feel othered from everybody else.”
While the behaviour did not affect Thomas’s career progression or performance, he said it affected his mental health. He also noted that straight men who later joined the company were invited to spend time with the group.
He added: “That felt very deliberate.”
Thomas said because the behaviour was not something obvious like physical abuse, he felt uncomfortable to confront colleagues about it.
He added: “It’s a very difficult, complex scenario to be in. Nowadays attitudes are changing so maybe I might feel a bit more inclined to discuss it with my line manager and some of the individuals on a very informal basis. Back then, I just let sleeping dogs lie and got on with it.”
Seal and Thomas also agreed that it was unnecessary for them to announce their sexuality to colleagues, with Seal saying the expectation to do so wound him up.
“If people find out I’m gay they say ‘why didn’t you tell me?’ and my response is ‘well you never told me you were straight’.
“There’s the expectation that because you’re gay, you have to tell people that you’re gay. Whereas I don’t see why, people don’t introduce themselves as straight so why do I have to introduce myself as gay? I’m just Steve,” he added.
Non-specialist brokers at disadvantage as adverse credit needs rise – Bluestone Supper Club
The rise in people with financial difficulties and therefore needing specialist mortgages was one of the topics of discussion. Attendees also touched on the issues of lender service and relationships with brokers.
Discussions centred around the fact the specialist market is expected to grow and due to the financial difficulties faced over the last 18 months, there would be higher numbers of adverse borrowers.
A lender representative said there would be “exceptionally strong demand” for specialist mortgages and the challenge lay in getting brokers to a position where they would competently and confidently support these clients.
The brokers in attendance agreed, with one saying the low rate market could restrict criteria even further in the favour of clean credit, lower risk borrowers.
“There’s going to be a growing opportunity for the specialist market,” the broker said.
However, there was the sense that brokers were not ready for a rise in borrowers in need of specialist help. A broker said most advisers “didn’t have the education”.
“Anything separate from Natwest, Santander, Halifax – they don’t know Bluestone or what Bluestone is good at,” they added.
The attendee said: “Right now, I would say brokers as a whole who have buried their heads in the sand for the last two years thinking they were going to live off remortgages, five-year fixed rates and product transfers are not prepared.”
The broker said customers with a clean credit score would not need advice to complete a simple product transfer and for that reason, brokers who do not deal with the specialist market would be left behind.
A lack of understanding over the impact of taking out a payment holiday was named as a factor as to why there would be a rise in borrowers with specialist lending needs. An attendee described the use of the word holiday to refer to payment deferrals as “sloppy”.
However, the attendee said the specialist market could serve as a two to four-year credit repair program to help borrowers get back into the mainstream sector.
A lender representative said there was naivety on the part of the regulator who originally assumed payment deferrals would not have an impact on future mortgage lending.
One broker said advisers could be deterred from conducting specialist business due to the time it took to complete a case, go through underwriting and the overall risk involved.
“There are potentially millions of borrowers who aren’t being served by these advisers,” they said.
Another broker disputed this and said as long as advisers understood the criteria, it was not too complicated.
“I think this is the fallacy – that specialist lending is complicated because it really isn’t. It’s just the set of products are different,” they added.
The broker went on to say the proc fees gained from advising to borrowers with specialist market needs were also “generous”.
The broker added: “This is the most sustainable mortgage business because you get people who are in the same predicament coming to you and giving you more business because they’ve been recommended by others.”
Service levels or client solutions
Next for discussion was whether the quality of lender service levels outweighed the product itself.
One broker said service levels were key as by the time most clients had come to their firm, they were already weeks into the mortgage process having been turned down by other providers and were keen to progress.
A lender representative said Bluestone valued service and expected this was the same for other providers.
Another attendee said: “I’d argue the thing that matters in the end is the outcome. If it takes six days or six weeks to get there, as long as the customer comes out of it with the right solution that’s what matters.”
A broker interjected to say outcomes would not take precedence if the client had lost the property in the meantime.
“There are already stress points within their journey, do we need to add to that? There needs to be an element of transparency with lenders around service. An adviser should be able to be clear and upfront and say ‘if we go with lender A it might take a couple of weeks more’.”
The broker said this allowed both the adviser and client to make informed decisions.
Lender and distributor relationships
Attendees were asked about how the working relationship between lenders and distributors could develop going forward.
One broker said lenders had to decide whether they wanted to work in partnership with distributors as too many wanted to go it alone.
They added: “Lenders should be brave enough – it doesn’t matter about size or scale – to approach the distributor. Work out a plan that is helpful for both sides and allow the distributor to be an extension of their business to help them get their name and products on the market.”
They said lenders who were willing to work with distributors in this way would do well going forward.
Another attendee said the relationship between distributors and lenders had been “love hate” but with intermediated mortgage sales growing, lenders had to remember that brokers have a huge role to play in the distribution of mortgages.
A broker said in the mainstream market, lenders tended to upset brokers, but this was less of a worry in the specialist market.
They added: “The specialist market belongs to the intermediary and long may that continue.”
Bluestone Mortgages relaunches Help to Buy range to whole of market
The last time its Help to Buy offering was made available to the whole of market was a six-month period between October 2018 and March 2019.
Since then, it has been distributed through four packaging firms TFC, 3MC, Brightstar and Impact FS. Brilliant Solutions were later added as a fifth packager.
Rates for the range start from 4.5 per cent, and products are available to all the lender’s credit tiers at up to 75 per cent loan to value on a five-year fixed rate.
The maximum loan size is £600,000, which is based on the maximum property value available through the scheme for England.
Builder incentives of up to five per cent of the purchase price are also accepted. These include white goods, carpets, small cashback, legal fees and contribution towards stamp duty.
Applications from those with CCJs, defaults, unsecured credit arrears, debt management plans and IVAs can be accepted. Offers are valid for six months with possible extensions if construction is delayed.
Reece Beddall, Bluestone Mortgages’ sales and marketing director, said: “The Help to Buy scheme has played a vital role in helping thousands of first-time buyers onto the property ladder, however for those with credit issues and irregular sources of income it can be much more challenging.
“As such, we’re delighted to have secured a new funding line from a major investment bank that has enabled us to reopen distribution across our Help to Buy range to support more first-time buyers, who otherwise may have not been able to achieve their homeownership dreams.”
The lender entered the Help to Buy market in 2018, covering the England and London schemes.
Bluestone Mortgages hired new build and national account manager Chris Holcomb in September to help expand the proposition.
Majority of brokers expect growth in specialist lending market
In a poll of 78 mortgage brokers, 63 per cent expect the market to grow significantly, and a third expect it to grow slightly.
The biggest opportunities for the specialist lending sector were borrowers with complex credit, with just under half of brokers selecting suggesting this.
This was followed by a growth in self-employed workers and increased product choice, at 16 per cent and 15 per cent respectively.
Bluestone Mortgages sales and marketing director Reece Beddall said: “It’s great to see such confidence in the specialist lending market among brokers. As more people come out of lockdown in a more challenging financial situation than they were in before, it is an area of the market that is only going to grow as more customers get turned away from the high street.
“This represents a huge opportunity for brokers who are going to be approached by a growing cohort of underserved borrowers looking for a helping hand over the short, medium and long-term.”
He acknowledged that despite the confidence there were areas where the specialist lending market could improve.
According to the survey, brokers suggested that the market needed to lower product costs, as well as improve loan to value ratios, flexibility and accessibility.
“We, as lenders, must listen to these demands and provide brokers with education and the tools they need to support the growing number of non-vanilla customers in achieving their ultimate dream of homeownership,” Beddall added.
Bluestone Mortgages reduces rates by up to 1.87 per cent
Rates in its residential and BTL ranges have fallen by up to 1.87 per cent across all products, whilst its Help to Buy products have decreased by up to 1.14 per cent.
Its residential variable rate product at 80 per cent LTV has fallen by 1.87 per cent to 5.1 per cent, whilst its residential two-year fixed rate at 60 per cent LTV will now start from 3.45 per cent, down from 3.89 per cent.
The lender’s five-year fixed rate in its Help to Buy range will now have a rate of 4.5 per cent, a reduction of 0.59 per cent.
The lender’s BTL two-year fixed rate product at 60 per cent LTV has gone from 4.89 per cent to 4.45 per cent.
Reece Beddall, Bluestone Mortgages sales and marketing director, said: “We remain committed to supporting the complex credit market throughout the pandemic and beyond, and we only expect it to grow as more people come out of lockdown with financial challenges.
“These rate cuts reinforce our commitment to our customers who have been disenfranchised from the mainstream mortgage market and will position us as one of the most competitive lenders in the specialist space at a time when we expect demand to increase.”
NatWest changes self-employed SEISS grant criteria
The lender said that it would accept applications from self-employed borrowers who had received an SEISS grant as long as it was not in the last three months.
In an update to its criteria it added that brokers will no longer need to complete a mandatory self-employed application submission sheet and the self-employed triage team will not have to complete an affordability check.
The lender continued that it would use an average of the last two years or the most recent year’s income, whichever was lower, and look at the last three months’ business bank statements to assess its ability to sustain a declared level of income.
NatWest previously said that it would not accept applications from customers who have applied for an SEISS grant on or after 14 July 2020 but said that it would unveil a new criteria change in August.
Brokers speaking to Mortgage Solutions have also expressed dissatisfaction with the options available to self-employed borrowers over the past year.
However, lenders have started to soften their criteria, with HSBC announcing earlier this week that it would no longer ask self-employed applicants to provide bank statement from the first three months of 2020.
Santander and Bluestone Mortgages have also announced that they would not look at accounts for the 2020/21 financial year.
Bluestone Mortgages relaunches resi at 85 per cent LTV
The relaunch follows a reduction to 75 per cent LTV in June which was implemented to allow Bluestone to maintain service levels for its intermediary partners and customers, following unprecedented demand.
Reece Beddall, sales and marketing director, Bluestone Mortgages, said: “After making proactive changes to our maximum LTV lending in June, we’re delighted to relaunch at 85 per cent LTV in such a short space of time. The fact we have relaunched ahead of schedule is a testament to the team’s hard work and passion to provide the solutions the complex credit market needs, along with a first-rate service to our brokers and end-customers.
Adam Hinder, managing director, with adviser Simply Adverse, said: “We are delighted to see a key strategic partner in Bluestone returning to the market at 85 per cent LTV. The flexibility that the range will now provide in addition to the communicated increases in turnaround times will support our clients’ aspirations of homeownership.”
Stephanie Charman, head of strategic relationships, Sesame Bankhall Group, said: “The demand for specialist lending has accelerated as a result of the pandemic as people’s financial needs become more complex. Bluestone’s relaunch to 85 per cent demonstrates its commitment to supporting the needs of this growing cohort of customers, no matter how complex or unique.”
Bluestone Mortgages is the residential lending arm of Bluestone Group, a European specialist lending and fintech business with its headquarters in Cambridge and offices in London, Sheffield and Dublin.
Founded in 2000, investors in the lender include Australia’s Macquarie Bank, interests associated with Bluestone’s founder and chairman, Alistair Jeffery, and the management team and staff.
Bluestone’s other businesses include Fignum, its fintech start-up, Bluestone Credit Management, and Bluestone Motor Finance in Ireland.
In June, the lender exclusively spoke to Mortgage Solutions to detail the reasons behind its step back from the high LTV lending market after a rate increase in a bid to manage service levels.
At that time, specialist lender Bluestone’s managing director Steve Seal (pictured) said the City of London-headquartered lender would return to 85 per cent LTV lending within two months after ‘breathing space’ to regulate and maintain quality service levels.
Bluestone Mortgages to relaunch at 85 per cent LTV within eight weeks – video exclusive
After lending volumes hit 90 per cent year-on-year, Seal said the lender nudged its rates up to manage inflow and “try to take the heat out of some of the original volumes coming through”.
“Perversely this had the opposite effect and after we increased our interest rates, we saw higher volumes than the weeks before. From our perspective, we didn’t want to allow that situation to continue,” he added.
In a One to One with MD, Bluestone Mortgages Seal explained the lender had instituted its cap at 75 per cent loan to value (LTV) in early June, because it was “passionate about service”.
A different take on service
Seal also suggested case by case metrics to assess lender service levels were useful but that measuring the end-to end journey might be more valuable from a broker perspective.
“Regardless of how long it might take for one element of the process, if the overall app to offer period was market-leading, would it matter if one element was perhaps a little elongated?”
He added: “What we want to do is be very clear about every element, but also publish more robustly and transparently overall application time to offer and averages so we can be very clear about how long it will take overall to reach that offer point.”
For more on Bluestone’s flexible lending policy on the self-employed and strategic plans for the year, watch the rest of the one to one below.
Bluestone caps maximum LTV at 75 per cent as demand rises
Ranges that will be affected by the reduction are Bluestone’s Clear, AAA and AA credit categories. The LTV cap will only be in place for a short period of time.
The restriction will allow underwriting and service teams to spend more time to processing the existing pipeline of applications, said Bluestone.
The lender has reported increased demand over the last eight months, with sales and lending growing by 70 per cent.
In its latest financial report, released in February, the lender reported profits for the year ended 30 June 2020 of around £2.1m, up from a loss of around £2.9m in 2019.
Bluestone Mortgages sales and marketing director Reece Beddall said: “After experiencing such high demand for our products over recent months, we’ve taken this important step to ensure that we can provide a first-rate service to our brokers and end-customers.
“With the added support of our increased headcount, we will be in a much stronger position to support underserved borrowers in the weeks to come and provide them with high-quality solutions and service that cater to their needs,” he added.