MYI: How are you finding the current market conditions?
GB: Blemain Group has continued to build on its strong position and, over the past 6 months, we have experienced some stability returning to the market. Our unique business model has been an important factor in our resilience. We are still 70% privately owned and have several hundreds of millions of pounds reinvested in the business.
We have had to adopt a more prudent approach over the past couple of years, but as our brokers are aware, we continue to have a very proactive stance on lending and are still able to cater for an incredibly broad spectrum of lending requirements with substantial funds to lend:
- Blemain Finance lends provides secured loans and bridging finance secured on residential properties, as well as semi-commercial and buy to let loans, mortgages and bridging finance;
- Cheshire Mortgage Corporation provides regulated mortgages and also covers niches such as shared ownership
- Lancashire Mortgage Corporation caters for commercial mortgages, loans and bridging finance, as well as land finance and portfolio funding;
This diverse product range spreads risk and allows us to control volumes more appropriately within the various market sectors. It also assists our liquidity as the different products have a wide range of redemption balances, the funds of which can be reinvested in the market.
With our wide ranging criteria and broad coverage of property types we have products for almost any circumstances, allowing our brokers to take advantage of more opportunities. We really are the complete lending solution for the intermediary sector and there is great strength in this level of diversity. Our prudent lending and our diverse product portfolio has ensured we still have substantial funds to lend.
MYI: What trends are you seeing in the residential market?
GB: Our lending performance for residential first and second charges was consistent throughout Q4 2009 and it was gratifying to see some stability returning in terms of transaction levels and demand. However, we did experience a surge in enquiries for both of firsts and seconds that was precipitated by the withdrawal of other lenders and various announcements from the regulator.
Obviously these events also had a significant impact on brokers and I think this demonstrates that the market is still very fragile. In terms of our typical customer, although we still have plans to suit applicants who have more than a slight blemish on their credit profile, a significant proportion of our current business is with borrowers whose financial history is excellent and unaffected by the recession.
We are also lending to people for whom we are now one of the only options in the current market, despite their having only a very slight blemish on their credit record, and this is especially true in the second charge market, where we are now the largest lender by volume who is able to assist borrowers who do not meet with the stringent requirements on the high Street.
MYI: How does that contrast with commercial lending?
GB: As you know, the commercial sector has been hard hit in recent years, particularly with the banks being more cautious about lending and liquidity almost drying up. However, we are now receiving an increasing number of the enquiries from brokers representing property professionals who want to take advantage of the current conditions by picking up commercial property and rock-bottom prices.
This is particularly the case for short term finance enquiries. Our borrowers are sourcing attractive properties from agents, or by simply driving about on the lookout for opportunities. We are even seeing a trend similar to that which has recently been experienced in the residential buy to let market, whereby investors are taking their money out of the bank or increasing the leverage on their existing portfolio with bridging finance to provide the funds for further investment.
All this activity is being driven, at least in part, by the large volumes of distressed commercial property that are currently hitting the market. With RICS predicting that the trend is set to continue in 2010 I hope that we will continue to see comparatively strong levels of activity in this particular corner of the lending market.
MYI: What kind of services are you providing for introducers to help them build their business and maximise opportunities?
GB: The key thing that we have done is to remain active in all our markets and decided not to withdraw, providing continued support for brokers through difficult times. We recognise that given our product offer we have become even more essential to the survival of many brokers and we have been working hard to ensure we can continue to support them by implementing numerous internal improvements, such as lean Sigma projects to streamline our processes and make the business as efficient as it can be.
One of the other developments in 2009 has been the assistance we offer to our intermediaries for their marketing activities. During the past 12 months we have been added to over 30 different networks lending panels and are working more closely with networks and packagers on the production of joint marketing material, including e-shots and press releases.
They can take advantage of our experience of our diverse niche markets to help them maximise the opportunities available to them and assist more clients.
MYI: What are your thoughts on the outlook for the future?
GB: What will happen when all the various government initiatives that have been helping to bolster the economy come to an end in 2010? I am afraid that I have to agree with recent predictions from Nationwide which foresee a double-dip in the market.
As soon as support is withdrawn and heavier taxes are levied individuals will have less disposable income. Combine this with rising unemployment, which is expected to increase throughout 2010, and low wage inflation, and the recovery is likely to stall. This would create the proposed W effect.
Within the sector, I think that regulatory changes to buy to let, secured loans and self-certification mortgages will all be points of contention, but perhaps the biggest changes to the overall shape of the industry would be caused by the proposed regulations regarding approved persons and non-advised sales. These could potentially affect the structure, budgets and income streams of many people within the industry.
Obviously the preliminary discussions regarding these proposals are not yet complete and it will be some time before any concrete changes are on the cards, but 2010 is already shaping up to be another important and interesting year for the mortgage and secured loan industries.
