In a market such as mortgages where – in the mainstream – one product provider is very similar to another, price is often the primary way to differentiate. As new entrants have emerged, specialist suppliers have moved into the mainstream, while conversely some mainstream suppliers have moved into what was once termed specialist (primarily buy-to-let). It means competition has increased significantly, with price very often being the only real deciding factor for an adviser recommending one lender’s product over another.
In the mainstream market the principal lenders are competing for the same prime customers. Lenders are far less willing or able to innovate relative to historic levels due to regulatory constraints, capital adequacy, risk aversion and related factors. As a consequence and particularly in recent months, price has become more of a critical factor in ensuring that lenders’ products are sufficiently prominent to generate the level of sales they are looking for.
Price will however only stimulate those able to borrow into action, and so how much more can lending volumes realistically rise from here when so many are still excluded? You could argue that if today’s lending restrictions were applied to borrowers in 2007, would lending have even reached 2014’s levels of £205bn?!
So called specialist lending is now pretty much anything non-vanilla by today’s standards, and so it is important that as intermediaries we are on top of everything lenders in this sector can do for our customers.
I was at the first British Specialist lending Senate last week, sitting in on presentation and workshops from lenders such as Kensignton, Precise, Onesavings Bank, and Shawbrook. Although we are a long way from having an active and competitive mortgage market for many of what have historically be classed as prime customers, there are solutions out there, and these lenders and others may be the only solution for many, so make sure they are at the forefront of your thinking, or work with specialist distributors such as Brightstar whose job it is help you identify opportunities to help your customers.
