New lenders will continue coming to market and there is room for them to cater for niche borrowers, two industry experts indicated at My Home Move’s annual conference yesterday.
Despite the likes of Atom Bank and Vida Homeloans coming to market in the past year, Stephen Smith (pictured), director of housing partnerships at Legal & General, is expecting more entrants.
He said: “We’ve added quite a few lenders to the Legal & General mortgage club panel specifically because they serve a niche, be that self-employed or things springing back to custom build; there are a couple of lenders specialising in that space.
“There will be more, there are people who will look at particular market niches and say ‘we can make money out of servicing that sector’.
“There is more to come.”
Keith Street, vice chairman of group lending at Kensington, reckoned there is room for new players – provided they target a niche.
He said: “We are not serving everybody at the moment in the market; there are still mortgage prisoners out there.
“There is still reasonable headroom in terms the underserved at the moment.”
Smith reckoned these new lenders are more reliable than they have ever been because the Financial Conduct Authority has thrown the book at them.
He added: “I’ve been around long enough to see several waves of Americans coming in, setting up, going bust and going away again.
“This time round it is a bit different because in 2009 when Mortgage Martket Review was first mooted the government said they were going to intervene an awful lot further upstream and they have done that by making it very difficult to get a mortgage lending licence.
“If you talk to anybody who has launched a bank… it’s taken them a long time to get through the FCA approval process and the FCA is right on your case about your business plan, it’s viability and that you are not going to overcook it by suddenly saying ‘I know I said I was going to do a billion a year but I’m going to do five and throw my underwriting book away’, which was what was happening in 2006-7.
“So sustainability is far greater and people who have entered will have sustainable business models.”