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Take a long-term view on innovation

Terry Pritchard

January 4, 2022

Terry Pritchard is a director of Charter HCP

It is not often I feel compelled to write too much between Christmas and the return to work, but after reading the recent article in The Times promoting the new product from Habito I feel like doing just that!

Especially, when industry legend Andrew Montlake has deemed to comment. He is essentially a broker and would benefit from this, however, like me he is sceptical.

It’s clear that they have thought the basics through but their timing is atrocious, given the economic issues about to hit us, whether we like it or not.
The only possible reason that they have done this (that I can see) is for the marketing and PR benefits it brings, something that seems to have worked well so far…
Have they thought through the consequences of their actions? I think not. What they have done is rekindled a debate that will draw in other lenders who may look at this sector differently and come up with some viable alternatives.
As a matter of interest, it was a factor of the last credit crash that the majority of defaulting borrowers were those who had taken either self-cert products or who had used enhanced multiples at outset. I know this is not a direct comparison, but it is an indicator as to which type of borrower suffers first in times of economic crises.
If you really want to get the press’s attention, plus get some support from the government then look at all the previously good borrowers that are going to struggle over the next 24 months, and see how you can help them whilst maintaining good credit and risk policy alongside decent margin.
This is exactly what we are doing at Charter HCP and we already have one bridging product being finalised for this, plus a first charge product due in the spring, once we have our lender purchase completed. (Pardon the plug)
In summary, we are not opposed to innovative ideas, just those that could cause future issues, which this could if left unchecked. Just act responsibly and all will be well.


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