Second charge lender Optimum Credit will now lend up to 100% loan-to-value.
The change applies to its prime product range on loans from £7,500 to £100,000 including fees.
The announcement was made in a broker bulletin seen by Mortgage Introducer, with the heading “We are cutting rates…….[sic]oh no we are not, we are actually increasing LTV’s to 100%.”
The note said: “At Optimum we are constantly looking for ways of expanding the market giving you and your advisors greater opportunities to provide good customer outcomes.
“We look to achieve this through more than simple rate reductions which largely migrate existing business volumes from one provider to another whilst not enhancing the overall product offering.”
In terms of the products that are available, there is a variable rate loan, as well as fixed rate loans for 2, 3, 4 and 5 years.
The product launch has prompted a mixed reaction.
One lender representative, who asked not to be named, said this is the wrong time to launch this product, given that the market is in a highly uncertian place.
And another said there’s a danger of the customer immediately falling into negative equity.
However Steve Walker, managing director of second charge packager Promise Solutions, said: “This is good news from Optimum as it raises the profile of high LTV lending and offers larger loan amounts and lower rates than current 100% LTV selection of products.
“Many brokers tells us they can place nearly all their remortgage enquiries but often automatically disregard business which doesn’t fit their perception of traditional first mortgage lending.
“Anything which draws broker’s attention to non-core opportunities is very helpful and high LTV second charges are a good example, with some lenders offering 100% LTV even with mortgage arrears and in more complex self-employed scenarios.”
And Scott Thorpe, director of London Money, said: “This is excellent news and we needed some outside the box thinking as the current rate war is unsustainable and loss leading for the lenders.
“I’m still concerned that the industry pays 2% proc fees to the broker when they have costs and overheads to contend with.
“Lenders can take the fight to the market with criteria changes which is what Optimum have done.
“But no one likes a rate war and I worry the rate cutting will lead to a lender pulling away from the market when they can simply reduce the procuration fee and create some margin for themselves.
“It then forces the broker to address their own business model while offering more competitive funds to the consumer.”
Optimum Credit confirmed the move today.
Craig Collins, wholesale director, said: “Optimum Credit are constantly looking for ways to innovate and expand the market in order to help advisors give their customers good outcomes.
“We look to achieve this through more than simple rate reductions. Our discount, interest-only and near prime products continue to offer diversity whilst our competitive fixed and variable rates ensure that we compete with the standard ranges available.
“Our latest development, with the introduction of a maximum LTV of 100% further enhances our offering.”
And Simon Mules, commercial director at Optimum Credit, said: “This is a high-quality product for borrowers with a track record of sound financial management, and we have a robust affordability assessment to ensure that our customers have the means to repay their loans without difficulty.
“We have an unrivalled track record in originating prime second charge mortgages, and we have the full backing of our funders in the launch of this new product.”