The question is what represents success for Edeus’s stakeholders, particularly given their sizeable initial investment? I dare say the original business plan will have represented a meaningful penetration of the specialist lending arena but my hunch is that the business will overwhelm these predictions and within 18 months will be enjoying loan applications upwards of £200m a month.
Speculation has abounded on the technological edges which will be at the vanguard of the new proposition. For me , these are a given. If, courtesy of AVM and title insurance assistance, a mortgage transaction can be completed within five working days, then the buy-to-let sector, in particular, is going to enjoy a veritable shot of adrenalin, especially so if the loan to value and underwriting liberations witnessed at Platform and GMAC are taken a step further by Edeus.
But there are further reasons why Edeus might achieve divine acclaim in quick time. First, there is the product. Don’t believe for one minute that Edeus will limit its involvement to specialist lending. Some commentators are suggesting that it will need to focus on the “toxic” end of the market to achieve worthwhile early profitability. Yes, that is where the fattest margins still exist but both treating customers fairly and Basle II will have an effect on that dynamic. Do not be surprised to see Edeus launching prime and near-prime suites and not just to test its systems or cosy up to the London broker community.
Second, many are underestimating the extent to which Edeus may align with packagers. Virtually every member of Michael Bolton’s team has long-standing links with an assortment of packagers. Some of these may not welcome a more consumerist procuration fee ethic but how many of them might end up compromising on this in the name of satisfying their own brokers’ and networks’ needs for slick and competitive new products? Furthermore, how many packagers sitting within the trade bodies opting not to deal with their anti-hero Bolton may ultimately need to promote a peace accord with a lender which may be delivering a superior proposition to their non-member trade competitors ?
Finally, and most tellingly in any sales organisation, it comes down to the actual people. If you analyse every member of the management team, there are few who cannot be described as winners in previous industry roles. Bolton’s posse may enjoy or be prejudiced by a maverick and cantankerous reputation but defeating these perceptions is a very close-knit team which has skill-sets which I feel go under-recognised, particularly in Steve Darby, Martin Reynolds and most of all Alan Cleary. I know of absolutely nobody in the industry who has as potent a blend of personality, energy, stamina and customer-orientation as Cleary has.
HBOS and GMAC will not lose too much sleep about this, nor should they, as £70bn plays perhaps £2bn in annual loan delivery. Elsewhere on the specialist landscape there is going to be some serious collateral damage. The smaller building societies and conservative mainstream lenders which have meekly dabbled in the specialist markets are going to find their propositions will come under threat from an organisation with a lot to prove.
The real winners will be the consumers and brokers. It is going to be an interesting autumn.
Kevin Duffy is managing director at Hamptons International Mortgages