The Launch Pattern

Monday 15th March 2010

By Phil Whitehouse, head of The Mortgage Alliance (TMA)

I had a touch of déjà vu recently. Whilst taking a few minutes out of my schedule to catch up with the news from various trade publications and websites it was with a healthy surprise that I noted a pattern of product related stories dominating the headlines for the right reasons. This took me someway back to the pre-credit crunch days of old when a day didn’t go by without a number of products launches from various lenders across a number of sectors.

At the time of writing headlines such as; TrigoldCrystal sees 11% rise in broker mortgage products, Chelsea launches five-year fixes, Coventry launches fix with unlimited overpayments, Co-op Financial Services launches fix at 3.19%, Northern Rock cuts rates by up to 0.5%, Mortgage products at 15-month high were all featured over the course of a few days rather than the week long droughts of product launches we have previously been experiencing.

Of course it a little premature to suggest that the mortgage market is back and that brokers are being flooded with business as product choice increases but let’s be thankful for a few positive headlines after so much negativity. Having said this, the argument remains that until a few specialist lenders manage to release a few more products into the non-prime lending areas it is doubtful that we will see any major effect on the intermediary market. This remains a waiting game in terms of funding. We don’t need to experience anywhere near the adverse levels of old but surely there is still some room for manoeuvre in the near prime corridor provided products have common sense underwriting at their core.

So it with some degree of renewed hope that specialist lender Kensington has just launched a new range with lower rates and higher LTVs. Although they are prime deals, Charles Morley, head of sales and product development at Kensington, says: "We know there are a lot of prime customers out there who want a mortgage but are excluded by the big lenders because they fail an automated decision. So we make a decision based on a customer not a credit score. This means we are well positioned to consider self-employed borrowers, people who receive regular bonuses or overtime and customers whose circumstances are too complex to meet the rigid criteria of an automated system.”

It is certainly this part of the market that needs options especially for those self-employed people who have been hindered by the death of self-cert. Since its demise last autumn it seems that nobody has been able to fill this void in the lending landscape. This hasn’t been made easy by the FSA and it seems many providers hands have been tied by the restrictions placed upon them. Fundamentally, mortgages for the self employed should be founded on responsible lending principles and when properly advised upon remain an important, if relatively select, component in the mortgage market. It is a fine balancing act that needs to be performed. It is easy to see the FSA’s continued concerns as this is an area that does warrant greater scrutiny but it is also important to ensure that this does not unduly restrict existing borrowers from having full access to the entire mortgage market. There has to be some happy medium found for brokers to utilise their expertise to offer the necessary advice to this area of the market.
So let’s hope lenders can plug this gap and we can see more specialist lenders continuing to capture the headlines for the right reasons to help propel the mortgage market to the next level.

Phil Whitehouse is head of network, The Mortgage Alliance. The Mortgage Alliance has a loyal data base of 7,000 Directly Authorised mortgage intermediaries and as with most firms operating within the mortgage market it is having to overcome a number of obstacles in order to help members write business. He previously worked as a senior manager for Pink Home Loans and spent 25 years with Halifax/Leeds Permanent Building Society running various high street branches. Phil enjoys golf but says: “No matter what I do I cannot get any better and I beat myself up crazily about something that on the face of it is such a simple game."