According to Pepper Money’s adverse credit White Paper, of the 1.09m people who have experienced adverse credit in the last three years, t66 per cent will be approaching a broker for advice, up from 40 per cent a year ago.

In the second video debate focused on the research, Rob Jupp Brightstar’s CEO said the quality and in-depth nature of brokers’ online customer reviews have never been more critical.

“What your potential customers will be looking for is people who look like them. Normal people with similar issues to theirs. What I would really urge your [adverse] customers is not just to leave online reviews, but encourage clients to make them relevant. You’ll find that they will be refreshingly honest about their own situation. It’s almost a cathartic thing, they say this is me, this is what I had and this is what the broker did for me – and that will be tremendously encouraging to the million or so people looking to buy in the next 12 months,” said Jupp.

If they can see people who look like them, they are more likely to pick up the phone and say can you help me, said Jupp.

Dale Jannels, managing director of Impact Specialist Finance said education will be key for this market as a lot of adverse credit customers still don’t know they are in a position to buy a home.

“It’s down to all of us – advisers, packagers, lenders, networks and even trade bodies – should be out promoting to the end-consumer the fact it is an option to get a mortgage, no matter what your scenario,” said Jannels.

Of course it’ll depend on their affordability, credit history and score but they must come in to an adviser to explore all avenues,” he added.

Pepper Money sales director, Paul Adams said he was ‘chuffed to bits’ that interest in brokers’ services had risen from 40 to 66 per cent since the first survey was taken over 12 months ago and advocated a higher online presence promoting support for adverse credit customers as part of that skillset.

For more from all of our panelists watch part two of our debate [09:50] – and click on the link under the video to download the research.

Download the full report from: https://www.pepper.money/wp-content/uploads/2020/10/Pepper_Autumn-White-Paper-2020_09.pdf

Watch the first video in the four-part series here: https://www.mortgagesolutions.co.uk/news/2020/11/25/lender-treatment-of-mortgage-payment-holidays-still-pretty-unknown-jannels/

Impact managing director Dale Jannels said some were being “naïve” in their treatment of payment deferrals given the current economic conditions.

Speaking on Mortgage Solutions Television in association with Pepper Money, Jannels explained the confusion around the subject.

“Mortgage payment holidays are still pretty unknown,” he said.

“Some lenders are taking it quite happily if you’ve taken a payment holiday for six months, whereas others are really looking at it on an adverse basis, which I think is still a little bit naïve in the current climate.

“And of course we’ve got the possibility of another six months of mortgage payment [deferrals] for those who didn’t take them before. So we’ve still got a long way to go.”

Pepper Money sales director Paul Adams and Brightstar CEO Rob Jupp were also taking part in the panel discussion which addressed the findings of Pepper’s latest adverse credit report.

The research revealed nearly half of people who have missed credit repayments as a result of Covid-19 did not have an agreed payment holiday in place – and three-quarters of those were concerned it would affect their ability to get a mortgage.

Around a third of people with adverse credit also confirmed they had missed more payments in the last six months.

And a greater proportion of people with adverse credit have seen a decrease in their income compared to everybody else and have increased the level of debt they have.

“We’ve learnt Covid-19 has not impacted everyone financially in the same way,” said Adams.

“It would seem though that the less equipped to cope financially are those experiencing the most difficulty. These people have been impacted in a greater way than across the whole national picture.

He added: “It’s important we do not let this group of potential customers become disenfranchised from the mortgage market.

“There’s so many intermediaries in the mortgage market place that can help these customers find solutions, to help them become homeowners.”

Download the full report from: https://www.pepper.money/wp-content/uploads/2020/10/Pepper_Autumn-White-Paper-2020_09.pdf

However, although the lenders noted progress has been made, there is unlikely to be any change in policy during the current coronavirus wave.

While all mortgage lenders were affected by the cessation of in-person valuations during the first lockdown earlier this year, those who are solely funded through capital markets and funding lines were particularly badly hit.

They were unable to introduce remote solutions or automated valuation models that banks and building societies were able to use to take some of the strain off their caseloads.

‘Little appetite for change’

Speaking on the latest Brightstar video debate, Fleet Mortgages distribution director Steve Cox said: “For those of us that rely on capital markets and funding lines the honest and brutal answer is there is currently no alternative to physical valuations.

“That isn’t likely to change fast. It’s not a Fleet thing or a Keystone thing, it’s not even funders objecting to it.

“It is other people in the chain of securitisation that just won’t accept anything other than a physical valuation.”

Keystone Property Finance CEO David Whittaker explained the reason for this was a result of interventions following the credit crunch put in place in the USA, and while there was hope, it was still some way off.

“There’s little appetite currently from the capital markets to change that,” he said.

“We all did a lot of work during the first phase of lockdown to change the capital market’s view and that’s an ongoing project because we see it will come round again in different forms, so not automated valuation models (AVMs) but remote valuations.

“Tony Ward chairman at Landbay did a lot of good work on it and it’s a project we’re all working on, but we haven’t been able to land it in time for this round two.

“But you’ve got to expect there will be variations of this virus going forward and therefore having a remote valuation solution maybe possible but not in time to help us out in this current cycle.”

Cox added that it any alternative to physical valuations was more likely to come in for the remortgage market, when it was less important to the client to have an in-person viewing.

Limits on specialist lending

OneSavings Bank sales director Adrian Moloney also joined the panel, hosted by Brightstar CEO Rob Jupp.

Moloney noted that while such a move would be important for non-bank lenders, there were still many situations where on physical valuations could work.

“In the specialist market there are still great limitations on what a desktop valuation can give you,” Moloney said.

“In the markets we all play in there’s freehold blocks, there’s houses in multiple occupation (HMOs), there’s certain new builds that desktops can’t pick up.”

He noted some banks may start using the technology, but it was unlikely to be suitable for vast numbers of cases.

“It would be a very different prospect in terms of getting desktops switched on in the specialist market now with the volumes of people who want to purchase or refinance properties,” he said.

“I think valuers are doing a really good job keeping us informed.

“We’ve got to keep really patient with them, it’s taking about five or six days to get appointment booked in with clients so a survey takes a bit longer but it’s for brokers to help manage clients and us to be transparent about turnaround times,” he concluded.

However, lenders have emphasised there could be regional variations in this timeline depending on how valuations are affected by lockdown measures and if case volumes increase.

Warnings are being issued already in the mainstream residential market that prospective buyers should have started the process by early November to be sure of meeting the deadline.

And despite lobbying from conveyancers and other trade bodies for some flexibility, housing minister Christopher Pincher said there would not be an extension to the deadline.

But the specialist buy-to-let sector is not currently suffering the delays and service level issues hitting the residential market.

Ten weeks before deadline

Speaking on the latest Brightstar video debate, Keystone Property Finance CEO David Whittaker said he thought he would start to warn borrowers in the “second or third week of January”.

“It’s probably not in our segment where the pain is, but we could feel the pain going forward. As long as we’re honest with people that’s all we can ask,” he said.

“I think towards the middle part of January we’ll start running up the chequered flag and saying to people, you’re now taking a risk because this sort of transaction will take X number of days.

“Are your lawyers on top of it, if they are we can get there.”

He added that the end of March would be difficult to control for lenders because the transaction was out of their hands as it got closer to completion.

Brightstar CEO Rob Jupp agreed and urged lenders to be clear in their communications on the subject.

“I think mid-January is spot on,” he said.

“I’ve written if you’ve got less than 10 weeks to complete a new transaction in what is historically quite a busy time of year in Q1… there’s a whole part of the process that may not have enough room.”

Bumper year for brokers

Fleet Mortgages distribution director Steve Cox and One Savings Bank sales director Adrian Moloney both agreed there was no need to panic for the buy-to-let sector at present.

And the trio of lenders suggested that 2021 should be a good year for business in the sector even after the stamp duty holiday deadline.

Whittaker noted that along with macroeconomic conditions, 2021 is the five year anniversary of George Osborne’s stress testing rules introduction so there will be a surge in remortgage business towards the autumn.

“It might go a bit flat into Q2, then Q3 should see a bit of a pick-up and Q4 should be as strong a Q4 as we’ve seen in many years,” he said.

Moloney added: “For brokers it’s going to be a big year because people’s circumstances have become more specialist.”

Brightstar is also contacting its key lender partners to let them know the distributor will be accepting visits from lenders now it has put procedures and facilities in place.

Speaking on the Brightstar Vlog, Bluestone Mortgages managing director Steve Seal agreed there would be a change in the way lenders worked which could be a challenge for field-based BDMs to adapt to.

“We are seeing some appetite from intermediaries for BDMs to start knocking on their doors again,” Seal said.

“I think we’re a long way off from finding ourselves in the situation where we have BDMs out in their cars all day doing five or so appointments and knocking on brokers’ doors.

“But where certain key firms have established Covid secure environments where they can go in and be safe and continue to maintain that relationship, then we have started to see that and have facilitated that already.

“In a relatively small number but I’m sure that will grow over the coming months,” he added.

Very strict rules

Brightstar CEO Rob Jupp (pictured) who was hosting the Vlog noted that the firm was taking steps of its own to start bringing lenders back in to visit.

“I will be writing out to all our key partners with a scheme of work we put together in the last month,” Jupp said.

“People at Brightstar and Sirius have put together a really good document, track and trace app and full scheme of work for lenders’ key account people to come back into our businesses within very strict rules.

“It may be for some people, it may not be for others, but certainly where that key partnership has been really important and we want to make sure that those that want to come can do so – as much for the benefit of mental health as to get back into doing the job well.”

Productivity increased

Discussing plans for potentially returning staff to offices, Seal noted that while Bluestones offices were open having had significant mediation work completed, he had told his teams they were free to work from home until the end of the year.

“We’ve gone out and researched with colleagues… and largely people want a balance between home and office working in the long term,” he said.

Seal added that productivity had increased with people working from home.

“We found during this period where we’re doing record volumes, I would argue we have seen increased level of productivity from people working from home where they don’t necessarily have distractions from working in an office environment.

“The challenge is preventing that level of isolation that might occur and keeping people feeling embedded in the business – but we’re very comfortable with the working from home principle,” he added.

Not one-size-fits-all

Vida Homeloans managing director of mortgages Louisa Sedgwick and Pepper Money sales director Paul Adams were also taking part in the call.

They had both conducted research around their firms about when people should start returning to offices and how that should take place.

Sedgwick explained that Vida was in the process of whether to bring people back into offices for next three or four months or to keep them working from home if it works for them.

Its survey of staff had found around 90 per cent were very comfortable working from home but the remainder were potentially hampered by their individual situations.

The lender already had underwriters working from home but Sedgwick noted there could be compliance issues which needed to be taken care of.

Pepper’s Adams noted that with three sites it was likely to be a very complex scenario for the lender and many decisions may be taken on a team or individual basis.

“We’re engaging with a third party to help on a consultancy basis,” he said.

“It’s not going to be one size fits all.”

“One of the things that causes anxiety is uncertainty. We’re not going to suddenly say ‘everyone back’.”

And Adams emphasised that interaction with broker firms will look different because of changes in the way people work which can make them more productive.

Watch the rest of the Brightstar Vlog by following this link.

The lender said that completing its £350m securitisation last month had enabled it to begin plans for re-entering the market ‘imminently’.

Pepper Money has also revealed it is in the process of conducting a securitisation which should help it increase liquidity and lending volumes later in the year.

Weeks rather than months

Speaking on the Brightstar Vlog, Vida Homeloans managing director of mortgages Louisa Sedgwick said: “We’re getting ready to come back into the market imminently, so you will see something over the next few weeks.

“We’ve been working on products, pricing and proposition, making sure it’s ready to come back with something that might be pretty sexy when we do come back.

“And also working on a new sales team structure to compliment not just the new virtual trading world but also compliment what we want to do as a business going forward.”

Sedgwick noted that the team would be coming back from furlough over next couple of weeks and the lender was finalising and defining what it wanted to do on return.

“So it is just a case of watch this space, we haven’t formed a view on the date but we are weeks, rather than months away – so I’m really excited,” she added.

Capital markets open

Discussing the state of the securitisation market and its importance to the specialist lending market, Sedgwick was generally positive and credited Kensington Mortgages with being the first lender to get it going.

“I think the capital markets are definitely open, they are very keen to do trades which has been seen in the last few weeks,” she continued.

“Securitisation markets re-opening and relieving some of the liquidity issues is going to drive some great opportunities in the specialist market.

“The credit risk piece hasn’t yet played out, but capital constraints have and I think you’ll start to see some really good competitive products out there, which will enable some of the specialist customers to come back into the market,” she added.

Pepper securitisation

Pepper Money sales director Paul Adams joined Bluestone Mortgages managing director Steve Seal alongside Sedgwick on the session hosted by Brightstar CEO Rob Jupp.

Adams noted that Pepper had started the year “like a train” and was well on track to reach lending targets, however he agreed that liquidity had been one issue slowing the market and the lender was in the process of releasing more funding as it targeted a big push towards the end of the year.

“We’re working on a second securitisation now which will help building our appetite and volumes towards the end of the year,” he said.

Seal added that since Bluestone returned its full product suite to market in June the lender had seen very high demand and was posting record months.

“Since then we’ve seen great appetite, we’re doing record volumes which is brilliant – and we’ve had great support from the broker community,” he said.

Watch the rest of the Brightstar Vlog by following this link.

Sirius, which was previously a wholly owned subsidiary of Brightstar, will now be trading as a separate limited company with Christofi (pictured) leading the business.

Brightstar will retain a majority ownership stake in the broker firm which it formed in 2016 to focus on arranging loans over £1m for high net worth individuals.

A statement from the firms said Christofi “will now have a significant interest in the company as he expands his role as managing director of Sirius Property Finance”.

The size and value of Christofi’s shareholding in Sirius has not been revealed.

Since its formation Sirius added a second London office and a base in Manchester, both of which it expanded in the autumn.

Significant moment

Rob Jupp, group CEO at Brightstar Group, says: “This change to our group structure might be a technical change on paper, but it represents a significant moment in our journey of growth and recognises the fantastic success that Nick has had in building Sirius from scratch.

“I’d like to congratulate Nick on his new role and look forward to working together to deliver even more success in the future.”

Nicholas Christofi, co-founder of Sirius Property Finance, said the firm had only been in a position to exist because of the backing of the Brightstar Group.

“I am really excited about the next chapter for our business and look forward to continuing to work with Brightstar Financial to deliver more success to the group,” he added.

In November of that year, more than 500 people in the mortgage industry raised more than £110,000 for the charity End Youth Homelessness (EYH) by sleeping out across the UK.  

Maria Harris, then-director of retail mortgages at Atom Bank, and Rob Jupp, CEO of Brightstar, set up Mortgage Sleep Out after Jupp tweeted about homelessness and Harris replied calling for an event to raise awareness. 

Jupp’s tweet prompted other members of the mortgage industry to voice their interest in supporting the initiative. 

With 25 events spread across 20 different UK regions and 40 different companies taking part, #mortgagesleepout made it into the top 10 UK Twitter trends with 1.5 million impressions on 30 November – the day that most sleep out events took place. 

Prominent figures from across the industry also released the single ‘Take Me Home’, which was performed under the name MIC (Mortgage Industry Collective).  

Bigger goals

Details about the 2020 Mortgage Sleep Out will be announced on 20 March, along with information about some of the projects that benefitted from the funds raised in 2018. 

The organisers said the goal for this year’s event was to involve more people, raise more money and have a greater impact. 

Rob Jupp, CEO at Brightstar said: “Everyone who took part in Mortgage Sleep Out in 2018 made a tangible difference to the lives of young people who are struggling to find their feet. 

“This year we want to get more people involved so that we can help more people. As an industry, it is in our power to make this a very significant event and raise a lot of money for those less fortunate than ourselves.”  

Nick Connolly, managing director at End Youth Homelessness, added: “I’m so excited that Mortgage Sleep Out is returning in 2020 and promises to be even bigger and better. The 2018 event raised a phenomenal amount of money that was put to good use to help homeless young people across the country. Just imagine what we can achieve this year.”

Over the last few years businesses have started to use social media platforms as a channel to attract new customers.

So, this week Mortgage Solutions asked our brokers whether social media has helped them win more business, and if so, how?

Chris Hall, mortgage and protection adviser at Mortgage Guardian

I do not think it can be disputed that the number of mortgage brokers taking to social media has dramatically surged in the last three years.

Although visual growth on social media has been impressive I am yet to be convinced that this is the most beneficial way for me to recruit new clients at the moment.

I do attract customers through social media but not nearly enough to discard other lead generation activities, particularly word of mouth and not forgetting repeat business.

Social media is a great tool for building trust and recognition, however I find that potential new clients will want to connect with me on a personal level first before doing business. People buy from people they know, like and trust when connecting and engaging on their personal social media platforms.

The concept of social media is still the same in my opinion but volume has risen with technology making social media more accessible than ever. Sales messages have risen immensely which is clearly not the way I would want to try and connect on a personal level.

I do tend to find though that a new client will often check out my various profiles on social media platforms before calling me regardless of how they found out about me. That’s great because it makes my job easier when they do actually call.

Just like many, I am not yet a social media expert but I can only see things getting better with time.

Miranda Khadr, founder at Yellow Stone Finance

Social media can provide a good channel to reach new clients. At Yellow Stone Finance we have a LinkedIn profile, Facebook page and Twitter account. Each of the platforms helps to reach a different type of audience.

Our LinkedIn profile for example is really good at getting our brand in front of professional clients who might be looking for business funding or development finance. It also helps us to reach broker firms with whom we might establish referral relationships in the future.

With LinkedIn, we tend to share press coverage, our blogs or other information about the business. We take a similar approach with the content we use on Twitter and we tend to use more visual content, such as infographics or pictures, on Facebook.

One misconception is that social media gives brokers an opportunity for free promotion. The channel may be free, but in order for it to be successful, it is worth investing in the content you use to populate your social channels – this might be an investment of your own time, or money to pay someone else to create the content, but it is still an investment.

The great thing is that a good idea can go a long way and achieve a lot of traction. For example, at the height of the media frenzy around a Brexit deal, we ran a royalty-free image of Theresa May, with the “A good deal, is better than a bad deal” and our logo.

This was a simple idea that worked because, while being a bit cheeky, it was also quite neutral and did not say anything negative or derogatory.

Rob Jupp, Group CEO at The Brightstar Group

In my mind there is no doubt that, used correctly, social media can help brokers to win more clients and grow their business. The key here is using it correctly.

We have all heard horror stories of a poorly considered tweet or social post creating havoc in someone’s career, but this can be avoided if you understand that anything posted on social media has the potential to appear on the front page of a paper and so filter your own activity accordingly.

This does not mean that your profile needs to be filled with entirely professional content.

One of the reasons that social is so powerful as a channel is that provides a platform in which you can share a bit of your personality and build a rapport with followers, and for brokers this can help to build trust with potential clients.

I am quite active on Twitter and have more than 4,000 followers and anyone who follows me will know that I use it to communicate business announcements and share press coverage, but I also talk a bit about my life and interact with people.

I’m not saying I get it completely right, but it does demonstrate that you can show a human side on a professional profile.

So, my tip to brokers would be engage with social media and don’t be afraid to be yourself. With a bit of common sense, it can be a great way of establishing an initial relationship with potential new clients, before you have even met them.

Private Label, which is part of the Brightstar Group, will be focusing on residential first-charge cases of more than £500,000, particularly those where the circumstances are less mainstream, such as complex incomes and non-standard property types.

The Private Label brand was originally started back in the late 1990s, before it was relaunched by Brightstar in 2017 to target innovative new lending deals.

However, Rob Jupp, chief executive officer of Brightstar, admits that “the traction we got was disappointing”, as lenders were cautious about the types of product – such as a dedicated Airbnb mortgage – and this was reflected in the pricing.

The move to high net worth

But after seeing that Brightstar was receiving a lot of calls from brokers who were having difficulty placing large loan cases, the firm decided to rejig the Private Label proposition to focus instead on high net worth cases.

Jupp explains: “We were seeing a large number of intermediaries, including high net worth specialists, who had tried the private banks but couldn’t get the cases placed, so they came to us. We didn’t have a formal proposition for this with our lenders. So we looked at, if we could bring them the leads, could they be more dynamic with their processes?”

“If you are a broker that doesn’t want to do these sorts of cases, then you can refer it over. We’ll go to all the high net worth banks for you. But if you are in this market, and you’re still coming up against a brick wall, we have a panel of lenders that will take a sympathetic look at it and price it based on the individual risk.”

The brand, which officially relaunched yesterday, has already received £14m-worth of enquiries from brokers, which Jupp describes as a “relief”.

“It shows that there’s a place for this, that we can add value to the people we work with and they will pick up the phone to work with us.”

Rigid criteria

Research this week from Butterfield Mortgages suggested that high net worth borrowers struggle to get credit from high street banks, with four out of five of those surveyed suggesting that banks’ lending criteria is too rigid.

Jupp pointed out that for a long time there has been a broad assumption that if a borrower is looking for a large mortgage “then you’re going to be alright. Chances are you have a good salary, good credit rating and you’re buying a nice house in a nice community. That’s often right, but in a minority of cases it’s very wrong.”

This may be because the borrower is looking for too large a loan on an interest-only basis, is buying non-conventional land, or may have been out of the country for too long.

“These interesting cases, the mainstream market won’t do them,” Jupp concludes.