Although there is no manual as to how to create the perfect lender, there are many who would be interested to see the how-to guide Michael Bolton will be relying on for his new venture.Having made a success of BM Solutions, Bolton is now with Oakwood Group and will be ready to clone his HBoS success with a launch planned for this time next year, if not earlier. Bound by contractual obligations, Bolton is unable to talk to the press but there are many rumours as to how he is going to build his mortgage offering, along with his four former HBoS colleagues Alan Cleary, John Nixon, Rob Williams and Mark Smith. It has been widely predicted that the Bolton team will specialise in sub-prime, self-cert and buy to let and competing on price will doubtless be at the core of what the new team brings to the table. It is understood that the team is willing to forgo making any significant profit in the first five years of creation to make sure, in the words of one broker, “they completely obliterate the market on price”. Although Oakwood Group chief executive Mike Culhane would not go as far as to suggest that profit is not a top priority, he believes a significant amount of spending will have to take place before money can be made. He says: “If we are going to build a business in the market, we have to be looking at significant spending and building in technologies and this is for the long term.” Chadborn Baker & Kearle mortgage expert Peter Wright says: “Service is key. If he doesn’t get the service right it really doesn’t matter about great rates and costs. If he is willing to make some sort of loss to begin with and get the service right, he’ll get the respect from advisers.” Halifax Intermediaries managing director Jack Saxton says that whoever is at the helm of any company, the output or ultimate objective to succeed will always be the same. So cult of personality aside, what more does Bolton need to corner this competitive market? Much is known of Bolton’s distain of the packager market but some would say it is hard to ignore packagers in his field. Culhane says: “There is room for all types of distribution in the market and we are looking at these in lots of different and interesting ways.” A little cryptic perhaps but this could mean the start of a new phase in packager relationships between Bolton and the packaging world. Alexander Hall chief operating officer Andy Pratt says: “Brokers were forced to use BM Solutions direct rather than go through pack-agers and if they want to have that type of model again, they have got to make sure they are ahead of the market.” Exclusive Connections sales and marketing manager Craig Easeman says: “I don’t think BM would be where it is now without its packager support from the start. Apart from HBoS Group which has a third-market share, packagers offer quick and well-established distribution routes for new and niche lenders. One key example is Freedom Lending. Michael Bolton and any new lender launching into the market will have twice as much work to do to establish itself if they don’t use the packagers route.” Aside from packagers, the new lender will be investing heavily in technology. It is understood that Bolton is aiming to lend a minimum of 1bn in the first year of its inception and new technology will play a big part in this. Culhane says: “We are looking at ideas from the US and other parts of the world to bring the most innovative and up-to-date processes to the market. “Ten years ago, people were launching sub-prime product ranges that were new to the market but the service was merely okay. Now it is a lot more competitive and we are going to have to be number one in technology and our service proposition to intermediaries.’ There is no end to the competition in the market at the moment. As well as having to compete against his old bosses, Bolton will be joined by some other players. The four directors who left The Mortgage Business shortly before him are currently working on their offering through Deutsche Bank. It is thought that Morgan Stanley will be ready to launch a sub-prime lender within the next six months or so. Meanwhile, Infinity Mortgages has broken away from the Mortgages plc umbrella and is now independent, with funding from banking group Investec. Infinity Mortgages chief executive Matt Gilmour says: “Launching a new lender into an already crowded market may seem like a very brave thing to do. With so many lenders competing for market share it may be difficult to see how a new player can profitably enter the market and carve out a position for itself, alongside organisations which have well established brands and distribution networks already in place.” Whatever the magic formula for success, intermedia-ries are looking forward to whatever Bolton is able to create. Hamptons Internatio-nal Mortgages managing director Kevin Duffy says: “This really is a broker’s dream. New lenders are coming out of the woodwork and want to make an immediate impact on the intermediary market and attack without compromise.” We will see whether Bolton will launch an ad campaign similar to BM Solutions’, with leading members of the mortgage community extolling the values of the lending operation. John Charcol senior tech-nical manager Ray Boulger says: “If anyone is going to be launching a lender, it is going to be in markets other than mainstream ones. Margins are getting narrower but they are still there. The beauty for Bolton and Cleary is they will have a blank sheet to work from.” Although most of the ingredients for success are there for Bolton and his team, no one is saying it is going to be easy.
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