FR: Secured loans have been going from strength to strength recently - why do you think this is?"This week Financial Reporter had a chat with Nick Jones, National Sales Manager at Blemain Group, about secured loans, the buy-to-let market and the challenges facing brokers."
There are several reasons for resurgence in the secured loan marketplace, which can be attributed to a couple of key areas. The first is that the main stream mortgage lenders are concentrating on managing their current book rather than looking to expand, so their restrictive criteria results in creditworthy customers being declined or the lender not having a suitable product for them. This also applies to unsecured lending; more and more quality customers are being declined due to restrictive criteria and lender appetite rather than the quality of the customer.
The secured loan marketplace, with its array of flexible criteria, is welcoming these customers and providing with a highly suitable option. Most have a perfect credit rating; however, even customers who may have historic credit issues are catered for. With the mainstream lenders' rates remaining at an all-time low, it is more difficult for remortgage products to be recommended particularly when the low rate, which could be fixed or discounted, has ERCs and tie-in periods. This low rate coupled with potential early redemption penalties and large set up costs, and long completion times, has given the secured loan product a highlighted presence and a more acceptable (and, in the right circumstances, a cheaper) option for the client.
Secured loan brokers have been doing a fantastic job educating the mortgage broker market that the secured loan concept is a viable option, which is another reason for growth in the secured loan arena. By promoting and educating of the benefits of a secured loan product to those finance intermediaries which may have not in the past offered the option to their clients, they are creating new opportunities. I discuss marketing with brokers weekly and the message coming from them is 'education, education, education' - many of the e-marketing and phone calls are geared to show the secured loan as an affordable, viable and regulated means to raising new finance on both residential and commercial property.
FR: What do you think the next 12 months holds for the buy-to-let market?
The flexibility in the product offering currently in the buy to let marketplace has also given more opportunities to new potential property landlords. The lenders active in the BTL marketplace appear to be looking consistently at their product offering and ensuring that what their client are requiring are being catered for. This is apparent in our own group's recent changes to the BTL lending criteria. With niches such as no minimum ownership period, no additional minimum income requirements and all credit status of clients considered it makes ourselves a must have on any intermediary's panel.
Property professionals have been in quite a good position in recent years. They've been able to acquire property at a low cost, for example at property auctions, which often offer lower prices for a quick purchase. The recession has resulted in more property becoming available to the market which again has opened up opportunities for landlords. These situations and the fact the banks aren't lending as they did pre-credit crunch, has generated a rental boom in the last 2 years which again benefit landlords. They are seeing a higher demand and longer tenancy agreements, as would-be house buyers struggle to get on what used to be the traditional property ladder.
FR: What have been some of Blemain Group's key milestones over the past couple of years?
Just under a year ago we moved in to our new purpose-built building in Cheadle, providing a much better working environment but also indicating a long term strategy and commitment to the secured lending market place. We also secured funding lines, in a difficult market, last November which allows us to implement plans for growth over the next few years. Next year will be the Group's 40th anniversary in the lending marketplace – quite an achievement considering we've operated in the specialist lending during some difficult times. But, through careful planning, product innovation and responding to the changing needs of brokers and the market, we have continued to offer a full spectrum of products via financial intermediaries
FR: How has the relationship between Blemain Group and brokers shaped what the business has to offer?
Everything we do is fuelled and sculpted from the feedback from our packaging partners. We have many appointments and feedback sessions both face to face and over the phone and all of these discussions are summarised and feedback into our internal teams either the product design team or the residential underwriting and processing department to ensure enhancements to both service and products are what our customer requires are considered against what the business can provide. Many of the new criteria changes to the secured loan and Buy to let product range have been solely attributed to key packages feedback, the historic adverse changes and the increases to the loan to value and the shorter early redemption charges where a direct result of the broker community feedback. We are never adverse to adaption and change, for these are the two elements which have been the key to the group's continual development.
FR: What are the biggest challenges facing brokers at the moment and how does Blemain Group aim to help brokers in light of these?
The biggest challenge facing the broker market over the next 24 months is the industry's movement towards a single regulatory body. This will present challenges for both brokers and lenders alike and this is something which we will look to work hard with our broker partners for our mutual success in this new regime. There have been some smaller forums held in recently across the marketplace and ones which we would like to see grow into sessions with all broker partners participating, to help and assist them with the regulators key requirements
FR: If you weren't in the financial services industry, what would you be doing?
I would like to think somewhere in the golf world, probably still relationship development and selling as sadly my playing ability wouldn't allow me to earn a living.
