The British Specialist Lending Senate 2022 in pictures

The British Specialist Lending Senate 2022 in pictures

Bluestone Mortgages releases cashback remortgage range

Bluestone Mortgages releases cashback remortgage range

 

The product offers a £500 contribution to solicitors’ costs, which will help customers looking to consolidate debt, transfer equity or those unencumbered properties.

The credit tiers include clear, AAA, AA, A, BBB and these range from borrowers with minor credit issues such as one satisfied default in the last three years to those with four defaults in the same period.

Rates start from 4.1 per cent at a loan to value (LTV) of 60 per cent, and is available on two, three and five-year fixed rate terms.

Like-for-like remortgages and capital raising are eligible for the lender’s free legal process, and it comes with no application costs and free valuation.

Reece Beddall (pictured), sales and marketing director at Bluestone Mortgages, said: “We’re delighted to launch our first ever cashback remortgage product range. With many customers struggling with the financial challenges brought on by the pandemic and the rising cost of living, this has led to a rise in the number of missed payments and therefore increased debt.

“This product will give these customers the opportunity to consolidate these debts, as the cashback available will help with the payment of disbursements often required during the debt consolidation process.”

The lender has been expanding its range, bringing out a right to buy range and relaunched its Help to Buy offering. It has also relaunched residential mortgages at 85 per cent LTV.

Additionally, Bluestone Mortgages has made a trio of hires in the new year, including Victoria Robb as its chief risk officer, Christopher Keyden as head of capital markets and Dave Pione as colleague development and culture business partner.

Last year, it also appointed Chris Holcomb as new build and national account manager.

July mortgage house purchase approvals hit two-year high

July mortgage house purchase approvals hit two-year high

 

However positive the figures, this remains within a narrow range as the annual growth rate also stayed at 3.2 per cent, which is close to 2016 levels, according to the Bank of England’s Money and Credit report.

The central bank also announced that gross mortgage lending for July was down to £21.4bn – the lowest for two years.

The figure was a drop from £21.6bn in June, continuing a slide over the last four months from £22.4bn in April.

The reports are used by the BoE’s policy committees to understand economic trends and developments in the banking system.

Net consumer credit rose by £0.9bn in July, broadly in line with the average seen over the past year and the annual growth rate of consumer credit remained at 5.5 per cent in July, markedly down from the 10.9 per cent high of November 2016.

Within the July figure, the extra amount borrowed for other loans and advances fell on the month to £0.6bn, while net credit card borrowing remained stable.

 

Steady as she goes

Commentators across the market celebrated the resilience and stability of the mortgage lending and advice markets despite the political upheaval.

Kate Davies, executive director of the Intermediary Mortgage Lenders Association, said: “The mortgage market clearly remains in a strong position despite turbulent times in Westminster. IMLA’s research has shown that borrowers’ appetite for finance continues to grow – completion rates are on the rise and intermediaries’ confidence in the market remains strong.”

“Ongoing political uncertainty is undoubtedly on the minds of people looking to step onto or up the housing ladder, but advisers are playing an important role supporting these borrowers,” she said.

Danny Belton, head of lender relationships, Legal & General Mortgage Club said: “Innovation from lenders is helping to provide the solutions for borrowers to join and climb the property ladder, while competition in the sector means that there are some great opportunities and deals available for those looking to buy or remortgage.”

Richard Pike, sales and marketing director at Phoebus Software, said the Bank of England’s latest figures, alongside Land Registry data confirming a 15.3 per cent increase in homes sold shows a healthier market now than at the beginning of the year.

But, he cautioned: “We do have to ask whether this particular turnaround is as a result of the uncertainty of what may happen after October 31 when the UK leaves the EU? It is only natural that people are looking to the future and wondering how the market will fare post-Brexit.”

 

Linking valuations and credit checks could improve mortgage processing – Hometrack

Linking valuations and credit checks could improve mortgage processing – Hometrack

 

Often these two processes are managed separately. In fact, even the way banks model these risks for capital and provisioning purposes – the cash they set aside to cover potential bad debts – can be isolated.

More can be done to bring these two elements together.

For example, some lenders are currently only prepared to use automated valuation models (AVMs) for valuations where the estimate is associated with extremely high precision, or high confidence level.

This means they can have a narrow view of the losses they would incur if the mortgage was not repaid and the bank had to resell the property.

However, if the borrower had a stellar credit history and affordability – and hence are extremely unlikely to default on their mortgage – there might be some leeway in relaxing the expected narrowness of the AVM result.

This would allow the lender to automate the valuation process in more cases.

 

Decisions for customers sooner

An example of this is an existing customer with an excellent credit history borrowing to renovate a rundown property in an otherwise gentrified area.

Because of the lack of transactional history on that particular property the AVM might allocate a lower confidence level to its estimate, perhaps only marginally below the bank’s threshold for instructing a full physical valuation.

The applicant is still extremely likely to repay the mortgage and the bank is extremely unlikely to have to repossess it and potentially suffer a loss.

A credit-adjusted AVM policy makes a lot of sense and could unlock additional digitalisation of the mortgage application process without impacting a lender’s risk appetite.

By bringing these decision points upstream as much as possible, banks can provide outcomes to their customers sooner in the process.

 

Better customer journeys

Of course, these policies need to be defined within a clear risk and governance framework and with a clear understanding of the impact on the risk management of the mortgage book.

However, if done correctly, this strategy could result in better customer journeys for some segments of banks’ customer base.

Additionally, more can be done to test the correlation between collateral and risk models.

For instance, an AVM’s confidence level is a reflection of the market liquidity of a particular area, which can also relate to a borrower’s ability to cash in and move on in case of payment difficulty.

It would be interesting for lenders to test whether the AVM’s confidence level adds predictability to their credit scoring models.

Generally, a better understanding of a bank’s customer base and segments, and tailoring of credit and valuation strategies to these segments, will result in better customer journeys and automation.

 

Borrowers could pay more for loans if credit score merger completes

Borrowers could pay more for loans if credit score merger completes

The Competition and Markets Authority (CMA) said Experian’s proposed merger with ClearScore could reduce competition for people wanting to check their credit score.

It said given they’re the first and second largest providers of free credit score checking, and that Experian is also the largest paid for credit reference agency, the proposed merger could mean the firms are “less likely to innovate to help people better understand their finances”.

As such, the acquisition of the rival firms could potentially lead to people paying more for credit cards and loans.

Experian and ClearScore have until 27 July to respond to the CMA’s concerns, otherwise it will be referred for an in-depth investigation.

The proposed merger was announced in March with the firms expecting the move to get the go ahead later this year.

At the time of the announcement, Charles Butterworth, managing director, Experian UK&I & EMEA, said: “It’s Experian’s goal to deliver the best choice of services to consumers to help them plan and better manage their financial lives.

“Bringing ClearScore into the Experian family is an important step on that journey, allowing us to share knowledge and insight between the two organisations and bring new scale and support to ClearScore’s existing business.

“We’re excited to combine the experience and strength of Experian’s global organisation with those of a successful and rapidly scaling business. And together, we’ll be able to deliver a broader range of products and services that will further improve consumer choice in the UK and beyond.”

Related: See YourMoney.com’s Seven credit score myths busted for more information.

Later life vulnerability consultation launches to find lending solutions

Later life vulnerability consultation launches to find lending solutions

FTSE-listed specialist UK financial services company Just and the International Longevity Centre (ILC) launched the Innovating for Ageing project to identify the biggest risk issues facing the credit industry and older people with physical disability, serious illness, dementia or financially excluded.

Afterwards, innovators and entrepreneurs will be invited to devise and share solutions to these challenges.

Just Group was created by the merger of Just Retirement Group and Partnership Assurance and in partnership with the ILC-UK plans to drive the initiative through events and awards, identify key lessons and report back on policy implications.

David Sinclair, director of ILC-UK, said: “Our ageing society is a driver for increasing levels of vulnerability – more people with dementia, with sight and hearing loss, and multiple long-term health conditions, for example.

“This project aims to seek out technological and policy innovations and solutions, with an aim to removing barriers and ultimately rethinking the products and services that are available on the market. We have already had lots of interest in the project and we are looking forward to receiving input from many people and organisations.”

Stephen Lowe, group communications director at Just Group, said the project will be a rallying point for those looking to rise to the regulator’s challenge to the industry to design better products and services.

The need is clear and demonstrated by research from the Financial Conduct Authority suggesting half of UK consumers – more than 25m people – currently show “one or more characteristics of potential vulnerability”.

The regulator published its ‘our future approach’ to consumers document which laid out expectations that firms must ensure sales are clear, fair and not misleading, with plenty of product choice. It emphasised quality and value and that vulnerable consumers must be protected from ‘harm.’

Submissions are being sought ahead of the 29 April deadline. See the Innovating for Ageing website, launched in February for the submission form.

A further announcement inviting innovators and entrepreneurs to submit competition applications will follow.

The British Specialist Lending Awards finalists

The British Specialist Lending Awards finalists

The illustrious list below has been drawn up from a spread of industry nominations. A weighting system is applied to the overall number of nominations cast to ensure greater emphasis is placed on nominations cast from outside the candidate’s own businesses.

 

British Specialist Lending Awards – the 2018 finalists

 

Broker categories

Rising Star – Distributor
William Lloyd, Brightstar Financial
Dan Morris, Crystal Specialist Finance
Laura Toke, SPF Private Clients

Complex Buy to Let
Jeni Browne, Mortgages for Business
Abbie Gaul, AtoM
Howard Levy, SPF Private Clients

Commercial Finance
Robert Collins, Sirius Property Finance
Andy Elley, Mortgages for Business
Matthew Yassin, Coreco

Second Charge
Mark Fry, CSC Loans
Scott Thorpe, London Money Loans
Matt Tristram, Loans Warehouse

Bridging and Short Term Finance
Phil Mabb, Bridge Development
Sam Norris, Clifton Private Finance
Kit Thompson, Brightstar Financial

Complex Credit
Ryan Radford, Zebra Mortgage Centre
Kevin Jones, Omega Group
Luke Saint, Mortgage Thoughts

 

Other

Marketeer
Fiona Kitchin, Aldermore
Ian Giles, Vida Homeloans
Michelle Westley, Brightstar Financial

Innovation Advocate
Nicola Firth, Knowledge Bank
Neal Jannels, AToM
Clare Jupp, Brightstar Financial

 

Provider categories

Underwriter
Jane Lee, Aldermore
Craig Richardson, OneSavings Bank
Andrew Thomson, Kensington Mortgages

Business Development
Craig Beattie, Aldermore
Ryan Brailsford, Pepper Money
Helen McKinney, OneSavings Bank

Head of Sales or National Accounts
Paul Brett, Landbay
Jamie Pritchard, Precise Mortgages
Louisa Sedgwick, Vida Homeloans

 

Business Leader categories

Surveyor
Joe Arnold, Arnold & Baldwin
David Ellison, Pinnacle Surveyors
Simon Jago, Allied Surveyors

Conveyancer
David Gilman, Blacks Solicitors
Eddie Goldsmith, GW Legal
Harry Peradigou, Brightstone Law

Specialist Distribution
Matthew Arena, Brilliant Solutions
Dale Jannels, AToM
Rob Jupp, Brightstar Financial

Bridging Lender
Alan Cleary, Precise Mortgages
Gavin Diamond, United Trust Bank
Jonathan Sealey, Hope Capital

Commercial Finance Lender
Karen Bennett, Shawbrook Bank
Marc Goldberg, Together
Darrell Walker, Interbay Commercial

Complex Buy to Let Lender
John Goodall, Landbay
Adrian Moloney, OneSavings Bank
David Whittaker, Keystone Property Finance

Second Charge Lender
Alan Cleary, Precise Mortgages
Marc Goldberg, Together
Buster Tolfree, United Trust Bank

Complex Credit Lender
Guy Batchelor, Vida Homeloans
Steve Griffiths, Kensington Mortgages
Colin Snowdon, Pepper Money

 

Congratulations once again to all our nominees.

The finalists who make it onto the shortlist in each category will be asked to submit a supporting testimonial based on the following criteria:

– Key achievements the individual has delivered in the last 12 months
– Key strengths which deliver value to their role and the marketplace they serve
– Any positive contributions made to the wider specialist intermediary market beyond the contribution to their business performance

Our finalists will next be judged by a respected industry panel, which will assess the testimonials and ultimately decide the winners.

For more information see the British Specialist Lending Awards 2018 website.

We’ll see you on the 16 May at the glittering awards ceremony, hosted by Specialist Lending Solutions and AE3 Media.

Equiniti calls for lenders to pay more attention to declined applicants

Equiniti calls for lenders to pay more attention to declined applicants

Equiniti argues that lenders are making a mistake by not focusing attention on applicants who have been declined, because it means losing out on a potential revenue stream, harming customer relationships, and wasting the resources expended in the initial assessment.

“At the point at which a customer is declined credit, lenders have a real opportunity to turn a negative into a positive, for everyone involved,” said Sarah Jackson, director of Equiniti Credit Services.

“When the lender declines an applicant, they turn away a potential customer about whom they have already collected a wealth of information,” she continued.

“Commonly, this data is abandoned and the lender’s attention is redirected to new applications, the viability of which cannot be determined until the lender has committed resources to processing them. This is inefficient to say the least. The lender is voluntarily putting itself back to square one.”

 

Commercially viable

Moreover, being declined multiple times can damage a person’s credit score, which could in turn trigger a cycle of falling credit scores each time they apply, making it more and more difficult to qualify for credit despite their financial circumstances remaining unchanged.

“Instead of losing the customer, lenders should focus on identifying alternative loan products,” said Jackson, “ideally from their own portfolio, but also from other lenders as needed.”

“Doing so will enable them to maintain their customer relationship for the future and, at worst, leverage an introducer’s fee. At best, they will achieve a full conversion with a different product of their own.”

By creating an effective declines management system, Jackson posits that lenders can increase customer retention, secure a new revenue stream and save on costs.

“Turning a ‘no’ into a ‘not that loan, but how about this one?’ is surely a more attractive and commercially viable proposition,” Jackson added.

“With the right technologies, an attractive and affordable alternative product can be quickly found, so both customer and lender can walk away happy.”

Carney expects rates to rise ‘in near term’

Carney expects rates to rise ‘in near term’

However, he emphasised that this would be a limited and gradual process as the bank begins to ease its “foot off the accelerator” of the UK economy.

Carney also warned about lenders becoming more reckless in their consumer credit lending, including credit cards and car finance.

Speaking on the BBC’s Today programme, Carney said: “If the economy continues on the track that it has been on, and all the indications are that it [will], in the relatively near term we expect that interest rates will increase somewhat.

“But we’ve also said we are in a circumstance globally and certainly in the UK, we’re talking about just easing our foot off the accelerator to keep the speed limit of the economy. And so interest rate increases, when and if they come, will be to a limited extent and gradual.”

 

“Reckless lending”

Regarding household lending, Carney insisted that there was not a personal debt bubble but criticised lenders for an increasingly liberal approach.

He chastised lenders for a “shift from what has been responsible lending towards reckless lending”, where they had not been exercising disciplined underwriting and pricing.

“We’re worried about an emerging pocket of risk in consumer debt – credit card, debt for cars, personal loans that has begun to grow fairly rapidly,” he continued.

“We think banks have been giving too much credit for a relatively good economic environment and not being as disciplined as they should be in their underwriting standards and their pricing on this debt. And so the advantage of the system we have now is we can identify this overall risk and the Prudential Regulation Authority (PRA) can do something about it as the supervisor of the banks.”

Carney warned that there was the possibility of the PRA needing to take action to tackle this problem.

He added: “It is getting a little frothy and should be addressed and we have the tools to address it.”

BoE warns banks could lose £30bn from consumer credit losses

BoE warns banks could lose £30bn from consumer credit losses

It warned that as a result in a severe recession “the UK banking system would, in aggregate, incur UK consumer credit losses of around £30bn, or 20% of UK consumer credit loans”.

Brokers and other industry representatives have been growing increasingly uneasy about the volume of unsecured consumer credit being issued and it appears the Bank of England is starting to recognise these issues.

However, the Bank of England also noted that it was happy with current mortgage lending which was in a stable position and broadly comparable to the last 20 years.

This is according to the latest notes from the Bank’s Finance Policy Committee (FPC) in which it stated: “Within a benign overall domestic credit environment, there is a pocket of risk in the rapid growth of consumer credit.

“This is not a material risk to economic growth, as consumer credit represents only 11% of overall household debt. It is a risk to banks’ ability to withstand severe economic downturns, because this asset class is disproportionately more likely to default.

“Although the overall credit quality of consumer credit has improved significantly since the financial crisis, the FPC judges that lenders overall are placing too much weight on the recent performance of consumer lending in benign conditions as an indicator of underlying credit quality. As a result, they have been underestimating the losses they could incur in a downturn,” it added.

Pocket of risk

The findings arose from stress tests that are regularly carried out by the Bank of England to model the reaction of different scenarios. The worst case scenario incorporated a UK economic downturn that has the unemployment rate rising to 9.5%, and Bank Rate rising to 4%.

The £30bn losses in this stress test comprised impairment rates of around 25% on credit cards, 15% on personal loans and 10% on car finance. These overall credit impairments on consumer credit represent 150 basis points of the aggregate capital ratio of the UK banking system.

Despite this “pocket of risk”, the FPC stated that: “In domestic credit markets, risk-taking is currently judged to be at a standard level overall. Domestic credit has grown broadly in line with nominal GDP over the past two years. Lending spreads on new owner-occupier mortgages are in line with their average since 1997.

“The share of households with mortgage debt-servicing costs exceeding 40% of their income (the percentage beyond which historical evidence suggests that households are materially more likely to experience repayment difficulties) is just 1%. And the aggregate debt-servicing ratio for UK non-financial corporations is below its average since 1999.”