But now the group is taking one further step to develop its distribution tactic by launching into the sub-prime market – starting with Pink Home Loans.The two have worked closely together to develop a 5.75 per cent two-year tracker and a 5.95 per cent two-year fixed rate product. Derbyshire already offers a sub-prime service buying non-conforming portfolios from the likes of GMAC-RFC, Amber Home Loans and Kensington Mortgages through Derbyshire Home Loans. There is now some 700m of assets under management. But Capon says it will be entering this area of the market with a much more strident attitude. “We hope to ramp this up within the subsidiary and expect to build up assets under management to 1bn. But we are also launching a range of sub-prime and non-conforming products,” he says. The first stage of the launch will be through Pink Home Loans. The exclusive arrangement means Pink will package the loans on Derbyshire’s behalf. Derbyshire is offering onsite underwriting to get speedy decisions for brokers. The arrangement with Pink, though, is finite and Derbyshire hopes to be able to offer further prod-ucts and arrangements with other packagers and distributors in the near future. Ultimately, the goal is to offer sub-prime products direct to brokers. Capon says: “The prime market is very competitive and there are a lot of pressures on prime product sales between building societies. It is a very crowded marketplace. We remain committed to prime but need to augment our presence in other areas.” Current market conditions are creating opportunities for lenders to deal with the increase in consumer debt, including bankruptcies particularly among the under-30s, according to Capon. “There is a growing market to help people consolidate those borrowings. Interest rates have risen in the last year and, for many, pressure on budgets will result in a small increase in defaults. There is a massive market out there,” he says. Where in the past sub-prime was dominated by big players with little interest from the smaller lenders, the tide is now changing, Capon says, especially since the perception of the typical sub-prime customer has changed. But Capon is not just interested at stopping at sub-prime. “There is growth in the area of near prime too – somewhere in that grey area between prime and adverse lending, for people with modes default histories. The important thing to recognise is that there are people that are not consistent defaulters. It is the responsibility of the lending industry to recog-nise that these are good customers,” he says. To enact Derbyshire’s growth plans, it will inevitably have to go through some significant changes in its IT systems, something Capon confirms is already happening to its core systems. “We will expand sub-prime and delivery with a full end-to-end online administration system for sub-prime and other ranges for intermediaries,” he says. Derbyshire’s commitment to creating a sub-prime range and instigating improvements to its technology systems is shown by the appointment of Brian Carney, previously of HSBC. Carney’s experience in asset finance will enable him to look at specialist lending with a professional’s eye. Asked which other areas would be open for Carney to look at, Capon gives that age-old answer: “Nothing is ruled out.” Derbyshire is also well known for its buy-to-let proposition, often appearing in the best buy tables. Its BTL business was up by 60 per cent last year and it has openly increased its business objectives on BTL by moving into the market much more aggressively. It services a mixture of amateur and professional landlords. Capon says Derbyshire “remains bullish about BTL”. The building society has a strong relationship with several firms for BTL services. It has cut the rates of the fixed rate BTL mortgages – it funds exclusively for Mortgage Intelligence, Pink Home Loans and Premier Mortgage Services. Borrowers will benefit from a rate reduction of 10 basis points on all three exclusive products. The three-year fixed rate BTL product that the lender funds through Mortgage Intelligence will now have interest fixed at 5.8 per cent. It also has 250 cash-back incentive for remortgagers. The three-year BTL loan for Pink fixes interest at 5.08 per cent and is subject to an application fee of 495. The PMS three-year product fixes interest at 4.99 per cent, also with an application fee. Derbyshire clearly has strong relationships with some of the well-known names in the mortgage distribution and packaging market. Both Pink and Mortgage Intelligence have been dogged by rumours this year as to whether their respective owners will choose to sell in what has been a tough year for some. Capon would not comment on the rumours but when asked whether he would consider buying into distribution, he says: “Within our ambitious growth plans, we are looking for opportunities for acquisition. We are keen to talk with people who are interested in forming other alliances, providing there is synergy with our other plans.” Having been at Derby- shire for 11 years, Capon has been a witness to change. But it looks like a lot more is just round the corner.