Risky lending environment is a big opportunity for smaller lenders – Star Letter 20/11/2020

Risky lending environment is a big opportunity for smaller lenders – Star Letter 20/11/2020

 

The first comment was from Stuart Philips, who reacted to the article: Vulnerable borrowers and first-timers most at risk from Covid-hit mortgage market – FCA Insight 

He said: “Whilst 70 per cent of mortgages in the UK go to the big eight lenders who will struggle to adapt to this with very rigid credit and risk policies, there is a huge opportunity for building societies and challengers who have the ability to look at cases on their own merits. 

Outside the big eight there are still another 50 or so lenders in the market.  

Philips added: “The problem is in matching complex clients with niche lenders because there is no financial incentive for brokers to put in the extra work required in these cases. The procuration fee on a £100,000 loan is the same regardless of whether you send it straight to HSBC with a few hours work or spend days on the phone to business development managers.  

Higher broker fees for complex cases affect those who can least afford them. The Financial Conduct Authority (FCA) and the industry as whole should be looking at this for a solution.” 

 

High LTV caution 

The second comment responded to the story: Lenders seek FCA permission to re-enter high LTV mortgages at same time 

Kevin Roberts said: “Lenders should be applauded for considering a simultaneous return to higher loan to value (LTV) lending, a request I hope the FCA will sanction in due time.  

Nationwide Building Society had the courage to remain in the market whilst a handful of others dipped in and out in a way that was helpful to an extent but perhaps added somewhat to the frustration of our clients. 

He added: May I temper this promising news with a note of caution.

Working from home for these parties may not work as well as it should after seven months or more of planning. I fear that adding more transactions to an already protracted process will lead to a further deterioration in service and timescales.