Let’s not blow Fleet and Secure Trust Bank out of proportion
Bob Hunt (pictured) is chief executive of Paradigm Mortgage Services
You’ll be forgiven for thinking it has been a somewhat tentative start to the new year in the mortgage market. After all, given the large political stakes currently being played for and the undoubted uncertainty this is generating throughout the country, it’s perhaps not surprising that stakeholders are feeling their way into 2019.
Of course there are ongoing news stories which might add to this feeling. Last year Amicus Property Finance announced it had to stop all new lending and, no sooner had we begun the first full week back to work, than we received the news that Secure Trust Bank is currently consulting on a decision not to seek any new lending, while Fleet Mortgages pulled its entire product range.
The fact these last two announcements were made 24 hours apart understandably provides something of an unsettling feeling, but I can’t help believe that those who have been quick to say that 2019 is now going to be end up like 2008 – because of such announcements – are well short of the mark.
For a start, while Secure Trust Bank’s may not return to lending anytime soon, I’m led to believe that Fleet Mortgages is currently finalising a new funding line with a new product range to be launched before the end of the month.
I suspect this is not an ideal situation for them but it hardly smacks of a full-scale escape from new lending by countless lenders which will ultimately lead to a shortage of mortgage options for clients. If anything – and again this is reading between the lines a little – the decision from Secure Trust Bank seems to have been predicated on it facing increased competition in the sectors it was active in.
Over the last 12-18 months we’ve definitely seen, what we might describe as, more ‘mainstream operators’ looking to move into previously niche parts of the mortgage market which (up until then) the specialists might have enjoyed to themselves.
This diversification into, for example, credit repair products or loans for contractors or later life lending was always going to impact on those lenders who had made their moves earlier, especially given the fact the mainstream players might (on the whole) benefit from cheaper source of funds.
To that end, competition across the mortgage piece is still very strong and all the conversations I have with lenders are based on their continued appetite to lend, although they (like all of us) would like to see a far greater degree of certainty around the Brexit question than we’ve been able to garner up until now.
One suspects that we’ll need that certainty in order to embark on a ‘normal’ mortgage year and the fact that we look – politically at least – quite far away from normality clearly isn’t going to help anyone, be they lender, distributor, adviser or client.
There is however something of a danger in viewing these recent announcements and jumping straight to a 2+2 = 5 approach. It’s not nice to see lenders having to stop lending, especially when they are quality operations with experienced staff who know their markets inside out, but sometimes these things just happen. I expect, specifically in the case of Fleet, that normal service will resume very quickly, especially given its management and overall understanding of the buy-to-let market.
What we can say is that a ‘tread carefully’ approach probably isn’t the worst one to take, especially in the early part of the year. As football pundits are prone to say, the league isn’t won in January. Indeed, UK Finance recently suggested that 2019 gross lending figures were likely to eclipse those of last year.
Advisers have plenty of opportunities, clients are still keen to borrow especially for remortgaging/product transfer, and the structure of lending and product availability is still highly competitive with a continued downward pressure on pricing.
That’s good for advisers and clients and my view is that, as the year progresses, we’ll seeing a growing confidence that will allow us all to maintain, sustain and grow our businesses. We have a long way to run in 2019.