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Adverse reactions

Outgoing Kensington chief executive Alison Hutchinson has hit out at mortgage firms which are “frozen in hope” and waiting for the adverse market to come back.

Hutchinson, who will leave Kensington in April following its integration with parent Investec’s capital mar-kets division, says it could be three to five years before the market gets back its momentum.

In an interview with Money Marketing, Hutchinson says some firms mistakenly believe there will be a quick recovery. She says: “People are waiting for it all to come back but it is not going to. Finito. History. Stop.

“There will be a new market, fewer distributors, fewer lenders, a different set of requirements and therefore you need to make your bet on where you think the market is going and move your business to that end game.”

Hutchinson says there was a three to five-year recovery cycle after the recession of the late 1980s and early 1990s. “I do not think we will see that much difference until you get true momentum going. I do not think it is going to be stagnant for three to five years but I do think it will take a serious amount of time and that is why I think you will find that some organisations will reinvent themselves and diversify into other areas.”

On Kensington’s decision to pull out of the adverse market last November, Hutchinson says it could still have been originating adverse business but it did not want to do so if the value, level and approach were not right.

Kensington head of marketing Ian Giles says the firm was one of the first out of the market but will also be first back in with a new breed of adverse product.

Hutchinson says: “I think that with Kensington being a part of Investec, although the timing was awful from an Investec point of view, in many ways, the bringing together of two expertises means there is a whole range of opportunities that Investec would not have without Kensington, and Kensington without Investec. It might not be where the business traditionally came from 12 years ago.”

Hutchinson believes there will be a lot more consolidation in the intermediary sector due to the market conditions. She says: “The best cash quarter would usually be the fourth quarter. The toughest is the first quarter. Well, they have just had a tough fourth quarter and the first quarter is not picking up. For me, that is where over the next few months you are going to see some change.”

Hutchinson insists Kensington is not in any rush to sell on its book of mortgage business. She says it has renewed all its warehouse lines, with some of them lasting for up to two or three years.

“All our warehouse lines are renewed, we have great relationships with our banks, our assets are quality, so why sell them off when you do not need to? We have got good borrowers that we want to look after,” says Hutchinson.


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