While many may question launching a buy-to-let mortgage lender in such a difficult market, Precise Mortgages managing director Alan Cleary thinks it is exactly the right time. Cleary, who is also managing director of mortgage servicing business Exact Mortgages, says his team have learned a lot since the credit crunch to help them create a “new breed” of sustainable lender.
Precise Mortgages launched into the buy-to-let lending market at the end of May and Cleary is confident that the housing market has turned a corner.
He says: “The worst is behind us, the mortgage market is relatively stable and that’s why we have launched Precise now. We launched a mortgage lender, Edeus, last time at the crest of a slump so we believe we have to launch 12 months ahead of the market in order to prove ourselves.”
Cleary has certainly proved himself as an adept mortgage salesman in his career. He began at NatWest straight from school and found his talents lay in selling financial products.
He says: “I finished school on Friday and began at NatWest on Monday.”
This skill allowed him to progress at the bank but he felt confined in such a big corporate system and moved into life and pension sales.
“Selling pensions wasn’t me. I wasn’t enjoying it as I wanted to work with people. It was working from home and you got all your own leads and I was alone a lot – I like working as part of a team.”
So Cleary went through the phonebook to find a small bank to work for where he could go back to sales. “I knew I didn’t want to go back to a firm with 100,000 staff as it is dull and regimented. I saw Birmingham Midshires and had never heard of them, so I gave them a call.”
Cleary joined a small BM branch and soon found his niche. “Because I had come from a background of cold-calling and traipsing round East London selling things, when I turned up at a building society with 10,000 customers who all really liked us, it was so easy to sell stuff. It was unreal.”
He moved up the ranks at BM and within two years was the area manager for the South of England, working with Exact chief operating officer John Nixon. Halifax bought the building society in 1999 and Cleary moved into the BM head office as the head of mortgages.
It was here that he merged the direct and intermediary business and began running down the branch mortgage sales as the bank became a direct lender.
He says: “It was huge for BM. We wanted to be a direct player using telephone and the internet and we did it at just the right time. We did the first internet mortgage, the first online platform and the first KFI. We were on the cutting edge.”
BM eventually became part of the HBOS group in 2001 and working with former Edeus chief executive Michael Bolton, they turned the business into a direct mort-gage and savings provider, BM Solutions. BM became one of the UK’s biggest specialist lenders but Cleary was not comfortable back in a big corporation.
“I decided to leave while we were having a big meeting in the BM boardroom in Birmingham. It was a hot summer’s day, so I went down to reception and asked them to turn up the air-con. The response was yes but they would have to phone up the office in Halifax to get it organised. I walked away and decided I had to leave.”
Cleary and some of the team from BM Solutions left in 2005 to create their own lender, Edeus.
“We took a big leap of faith when we left BM as we had no funding – we ran the firm on mine and Nixon’s credit cards for the first few months. But we had a business plan and we were confident because it was boom time.”
Edeus, which lent self-cert and buy-to-let mortgages, thrived for two years but it became one of the earliest casualties when the credit crunch hit.
Cleary says: “Our model was flawed as we were reliant on capital markets and investment banks that went bust. We knew the risks and we knew we had a problem if the funding stopped but we didn’t believe that would ever happen.”
Edeus was wound up in 2008 but Cleary says there were no regrets. “Much clever and bigger people than little Edeus got caught with their pants down.”
While it was being wound down, Cleary, Nixon and Exact chief executive Ian Lonergan planned a new business based on using Edeus’ systems for credit analysis and collections. After the team found private equity backing, this became Exact Mortgages, which now assess mortgage books and collections for investment banks, hedge funds and building societies. Cleary says this analysis has allowed them to see the state of the mortgage market close up.
“The mortgage market still has a lot of risks. While it has stabilised, it is not stable. But it is not all doom and gloom.”
He says his team’s confidence in the market and their ability to assess borrow-ers’ credit quality through Exact is enough to launch new lender Precise Mortgages.
He says: “If you asked me 12 months ago when we would be lending again, I would not have said now. We did want to lend because we are good at it but the strategy assumed it was unlikely and was too far away to consider when we launched Exact.”
Cleary says he and his team have a much better understanding of the mortgage borrower and the credit risk issues after spending two years analysing mortgage books and thinks that will give them the edge in the market. “Precise is so different to lenders in 2007, we are doing a very different job in a very different way but we need a few years to prove ourselves.
“Will we have what we had before? No chance – it is history. It wasn’t normal and it will just be recorded as a blip on a graph somewhere. We will have a much slower growth curve and a lot more caution for the next five years but that’s what we need and that’s what I hope will happen.”
Born: London, 1969
Education: St. Gregory’s High School, CeMap, FPC
Career: 2008-present: managing director, Precise Mortgages, Exact Mortgages; 2005-2008: managing director, Edeus; 1991-2005: branch salesman, branch manager, area manager, head of mortgages, director of Halifax Intermediaries, Birmingham Midshires; 1990-1991: life and pensions rep, Guardian Royal Exchange; 1986-1990: cashier, NatWest.
Likes: Learning to fly, golf
Dislikes: Negative people
Drives: Porsche 911
Book: I’m currently reading the encyclopaedia of aviation law and I hate it
Career ambition: To build Precise and Exact into sustainable and successful businesses
Life ambition: To have a comfortable life and for my two kids to be successful
If I wasn’t doing this I would be… I’d like to say flying but I’m not qualified yet