View more on these topics

Prime numbers

Three interesting and complementary announcements by lenders recently are likely to produce some significant changes and opportunities for intermediaries.

Possibly the most influential is GE Money Home Lending’s decision to move into the prime market. When you add this to Beacon’s new shared-equity product, one can see that the US-backed new lenders which have traditionally occupied sub-prime space are now likely to move heavily towards the prime market.

Margins have always been relatively unattractive in this sector for the securitisation-based lenders but the attraction of volume fees for securitisation means the commercial arguments are dominant. I do not expect these two to be the last announcing such a move.

Halifax has obviously seen this coming. It plans to pay retention fees to intermediaries from August, together with revamping its retention and distribution strategy.

In many ways, we are cycling back to the early 1980s when the likes of the Mortgage Corporation, National Home Loans and First Mortgage Securities radically changed the market.

In the US, volume and price is dominant rather than brand and this must be of concern to Halifax. With the right organisation and planning, this is a major income opportunity for intermediaries and a recognition by the leading lending group that they have to work with intermediaries. It also heralds renewed price competition. The strategy will only work in an advisory sector if Halifax sustains market-leading new business productsfor retention.

We know that Alliance & Leicester is also planning a similar announcement and others will follow. This may transform the remortgage market. The key issue for intermediaries is maintenance of their customer relationships and grabbing as much of the market as possible. The market is likely to stimulate a new linear relationship between consumer intermediary and lender which may be far more stable than in the past. It will be interesting to see how the agency-chain-based intermediaries try to capitalise on their advantage in the marketplace.

Finally, we have seen Alliance & Leicester completing its much heralded entry into the specialist lending sector. This is again funded overseas. Although initial distribution is only through one mortgage club, the products are attractive. You can be certain that the strategy will be well thought through. It remains to be seen how the likes of Abbey, Nationwide and Cheltenham & Gloucester respond.

Probably the most interesting of the new lending initiatives is from Beacon. Many lenders are trying to put together an integrated shared-equity solution and the Beacon offering looks like a first to open up this sector. Details remain to be seen but this is potentially a massive market and others will work fast and hard to follow. Shared equity is no just for the first-time buyer as it is as relevant to second-time buyers and could be self-sustaining. It is no longer just relevant to certain employment groups. It is likely to be a self-fulfilling prophecy with a stable house price inflation environment and sustaining an ongoing need for it in the market place. The only constraint remains the availability of the market’s appetite at a wholesale level to assimilate the housing market risk that will be placed for our securitisation. Obviously, like London buses, innovation travels in packs. Let us just hope they all arrive on destination in time, carrying an intelligent group of intermediaries.

Mark Chilton is chief executive of Purely Mortages


Industry shocked by Hips “cop-out”

The mortgage and housing industries have reacted with shock to the news that the Government has made Home Condition Reports voluntary as part of the Home Information Pack regime. Many see the U-turn as a major blow to consumer confidence in the sellers’ packs, but some experts see the move as a positive one. The […]

A matter of principles

IFS head of faculty financial regulation Mark Roberts asks how well intermediaries are placed to cater for the needs of Muslim clients

Aim high

What are the prospects for Aim after two bumper years for VCTs?

Baring appoints Siller to EMEA equity team

Baring Asset Management has hired Matthias Siller to join its Europe Middle East and Africa (EMEA) equities team.Siller joins from Austrian investment management company Raiffeeisen Capital Management.He has over nine years experience on both the buy and sell sides, including proprietry trading Central and Eastern European equities and derivatives, and will be responsible for the […]

Graphic content – December; the countries most exposed to a rise in protectionism

President-elect Trump has suggested withdrawing from the North American Free Trade Agreement (NAFTA) and ending negotiations over the Trans-Pacific Partnership (TPP), albeit there is considerable uncertainty over what he will, or even can, do. If one of the main consequences of the election of Donald Trump is US protectionism, it’s worth considering who stands to […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm