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Knight vows he will rip up mortgage rulebook

Mortgage guru Stephen Knight has vowed that his new lending ventures will rip open the rulebook on product design and funding lines in a response to the current problems in the market.

Knight, who is working with Martin Finegold, told Money Marketing that his first two lenders through vehicle Checkmate Mortgages will see one focused on just the interme-diary channel and the other solely focused on the packaging market. Both are set to launch on October 1 next year.

He says they will offer products across the full range from mainstream to niche to non-conforming but not in the same form as current products.

Knight says: “We believe everybody offers the same type of products and they differentiate on niches of criteria, interest rates or loan to values.

“We believe there is so much more blending possible in the current approach to product design so we are going to rip up that rulebook. When we get nearer to the launch, you will find some products from us that are not available today.”

He says funding lines have got to be longer-dated and more committed. He says: “We found with this recent credit crunch that it does not work if funding lines can be withdrawn quickly or overnight. I think the funding commun-ity is expecting that and I think the lending community certainly does.”

Knight points out that the fundamental problem in the UK sub-prime market was that far from pricing for risk, the industry was not even pricing for profit. “We were doing very high LTV, non-conforming lending into adverse and I think that lending has gone.

“The high LTV non-confor-ming lending will disappear and I think that the frothiness caused by over-supply in the market will disappear as some of the lenders fail to make the grade.”

Knight admits that he will approach former GMAC-RFC managing director of operations Barry Searle, as tipped in Money Marketing, to join Checkmate Mortgages.

See the full interview on Money Marketing TV.

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