Prime lending is dominant in UK, says IMLA

Prime lending continues to dominate the UK mortgage market, says the Intermediary Mortgage Lenders Association. Despite prevalent fears over sub-prime lending in the US and at home, IMLA says prime and self-cert residential lending remain the majority.

It says this applies to loans generated both via the intermediary sector and direct to consumer.

IMLA says it has collated estimates of 2007 mortgage volumes split between direct and intermediary business. Its research shows specialist lending represents 30% of all lending and that the intermediary sector handles more than 90% of specialist business.

Peter Williams, executive director of IMLA, says: “Specialist, intermediary lenders are often associated with sub-prime, buy-to-let and other forms of specialist lending. “But we mustn’t overlook the fact that significantly more prime business is handled through intermediaries than direct - £140bn for intermediaries compared with £115bn direct.” He adds: “Even so, non-conforming business does represent around 30% of the whole market and as much as 40% of intermediary business.”

Williams believes it is important to recognise that non-conforming lending is not all sub-prime.

IMLA’s research shows the market share of self-cert and sub-prime activity declined slightly last year, while equity release remained a very small proportion of the market at well under 1%.

The association says UK sub-prime lending represents 6% of the market, as opposed to 20% in the US. Williams adds: “Intermediaries handled in excess of £230 billion in 2007, according to our calculations.

“Even in a slower market, based on projections for the size of the market in 2008, they will still be looking at substantial levels of activity in the current year.”

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Peer calls on NR to abolish Together mortgage

A Liberal Democrat
peer has called on the chancellor to ban Northern Rock from offering its 125%
LTV Together mortgage.

In a debate in the
House of Lords, Lord Newby the Liberal Democrat spokesperson for the Treasury
called on Labour peer Bryan Davies, Baron Davies of Oldham to get the chancellor
to abolish the product.

Newby says: “Does
the minister agree that one category of loans doomed to fail from the start is
that where the loan value, from the outset, is significantly greater than the
value of the house?

"Will he therefore,
through the chancellor, instruct the current management of Northern Rock, to
stop offering its Together loan?” Lord Davies replied saying that Northern Rock
is a private company that takes private decisions.

He added:
“Government anxieties about Northern Rock are acute, and it will be important to
take action in the very near future.”

In the same debate
Labour peer Lord Borrie also called on Lord Davies to consider taking criminal
prosecution against those that offer loans to people that are unable to pay them
back.

Borrie says: “Loans
are being given that are doomed form the start because the individuals to whom
they are given have quite inadequate means to pay them back.

"In those most
serious cases, would not the power of deterrence be of great value by the wider
use of criminal prosecution, which could have a great meaning across the board
if some well-publicised cases were brought?”

But Davies responded
by saying that although it was aware of the dangers in this area, particularly
on the sell-and-rent back arrangements, it was tightening up its regulatory
regime of these types of products. A spokeswoman for NR says that it has no
plans to abolish its Together product.

She also disagrees
with the comments made by Lord Newby, adding that the product offers 30% as an
unsecured loan and it is only 95% that is secured against the
property.

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B&B boss confirmed as CML chairman

The Council of
Mortgage Lenders has appointed Steven Crawshaw, group chief executive of
Bradford & Bingley as chairman for 2008.

Crawshaw succeeds
Jon Pain, former managing director of Cheltenham & Gloucester.
Mark Parsons,
managing director of home finance at Barclays and Richard Brown, managing
director of personal lending at Bank of Ireland have been appointed deputy
chairmen. Crawshaw has held his role at B&B since March 2004, and began
his career as a litigation solicitor.

Since joining the
banking sector he has held positions at Cheltenham & Gloucester, Lloyds TSB
and B&B. Crawshaw says: “While the fallout from the liquidity crisis has
been well documented, let’s not forget the strengths of the UK mortgage
marketplace.

“The UK boasts a
competitive and innovative mortgage market which currently helps over 11.8
million households.”
He adds: “Looking
ahead, 2008 will be an uncertain year for the mortgage industry and lenders will
continue to respond to funding constraints. But it is entirely possible that the
market will recover sooner than expected.”

Crawshaw says one of
the CML’s main challenges for the year ahead will be making sense of the
aftermath of the 2007 events and ensuring policymakers and commentators are
accurately informed on the market environment as it evolves.

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First-time buyers face soaring mortgage costs

Average mortgage
costs to income for first-time buyers are now higher than levels at the 1990s
housing boom peak, says the Building Societies Association.

First-time buyers
were devoting nearly 35% of their income to mortgage costs by the third quarter
of 2007, compared with the previous high of nearly 34% in 1990, the UK Housing
Review indicates.

The Review by the
Chartered Institute of Housing and the BSA, published today, shows increasing
numbers of households are moving into private rented housing.

It says a
sharp rise in house prices and mortgage costs over the last decade contrasts
with the pattern of private rents, which have kept pace with earnings.

This has resulted in
substantially lower rents than mortgage costs.

The Review attributes
rapid growth in the private rented sector to competitiveness of private renting,
as opposed to owner-occupation and the greater choice available to households
seeking such housing.

Steve Wilcox, professor of housing policy at the
University of York and author of the review, says: "Private renting has become
far more competitive as an option for households compared to the cost of buying.

"The sector has
grown by 21% in the last five years across the UK and is fulfilling a
significant role in the housing market."

Adrian Coles,
director-general of the BSA, says: "With first-time buyers finding it
increasingly difficult to get a foot on the housing ladder, the private rented
sector is providing good quality accommodation to increasing numbers of people."

www.mortgagestrategy.co.uk

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Packagers start to woo traditional lenders

Many packagers are striving to get more balance sheet lenders on their panels to minimise the impact of the credit crunch on business.
Last week, Praxis Mortgages re-vealed that it was adding Scarborough Specialist Mortgages to its panel and it is hoping to add CHL Mortgages on October 8.
Dudley Aldous, director of sales and marketing at Praxis, says: "Traditional lenders with their own funding streams are bringing much-needed stability to the sub-prime market."
Steve Field, managing director of Niche Mortgage Solutions, says the packager is in discussions with balance sheet lenders and has recently added BM Solutions to its panel.
He adds: "Until recently, packagers were at a disadvantage if they didn't have a wide range of securitising lenders on their panel. But the power has shifted to balance sheet providers."
Packagers are continuing to struggle as the credit crunch continues to bite business volumes. Last week, John Rice, managing director of the Regulatory Alliance of Mortgage Packagers, said applications to packagers were down 35%. He also forecast redundancies of 20% to 30% in the weeks to come, with packagers' income falling by up to 60% by Christmas.
Consultant Brian Pitt adds: "Firms that have been scraping by on small margins and high overheads will sink. No more than 50 packagers will survive this credit crunch."

FSA to crack TCF whip in 2008

The Financial Services Authority is set in 2008 to grill all 3,800 mortgage brokers in a bid to speed up the take-up of its Treating Customers Fairly initiative.

The regulator is also looking to focus on failing firms that need the most attention and debunk the myth that smaller firms are below the FSA’s radar.

Across the financial services spectrum, the FSA will be conducting mini-assessments with a whopping 18,000 advisers. Out of these, it says 25% of these mini-assessments will be followed up by a full assessment.

Mandy Spink, head of mortgage and credit unions at the FSA, says: “As everyone knows, the March 2007 deadline didn’t do particularly well. Only 41% of advisers implemented TCF and this was actually only 22% when you looked at mortgage firms.

“This strategy is about increasing the amount of contact with small firms, helping brokers embed TCF and focus on those that need regulatory attention.”

The FSA will be undertaking a major recruitment drive to bolster staff levels so it can undertake the TCF review.

Spink adds: "This is also a way of myth busting that firms are not under our radar. We would like to be in a position in giving as much help as possible to those engaging with us so we can focus as much as our resources on those that are not

Moneyfacts and iE launch outsourced online account opening service

Financial
news and information Web site Moneyfacts has partnered with UK retail
banking software vendor Intelligent Environments (iE) to launch an
outsourced Internet savings applications service.

The
package is targeted at small financial services firms and building
societies that lack the resources and connectivity to sign up customers
online.

The service will be offered on rental terms, for a minimum contract period and with full hosting and implementation support.

Firms
will be charged for each application generated instead of paying a
licence fee which, says Moneyfacts, means low upfront investment and
running costs.

Moneyfacts also claims the service will
save companies money on know-your-customer checks because the
applications it generates will already be fully verified.

Stephen Rumbelow, head of Moneyfacts, says the cost of running branches is forcing institutions to focus on the Internet.

"Although
the products themselves are often market leading, shortcomings in the
application processes can see much of the product potential and
investment in product pricing go to waste through poor conversion
rates," he says.

Commenting on the move, Jerry Mulle,
director, sales and marketing, iE, says: "With Moneyfacts.co.uk we've a
'pay as you go' pricing model to offer a low cost start-up solution
that supports the business case for online financial services - reduced
cost of acquisition and reduced operational costs."

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Misys acquires Dresdner Kleinwort's primary loan book building platform

UK banking software vendor Misys says it has agreed to buy eLoancoordinator, an Internet-based book building platform for the primary loan market developed by Dresdner Kleinwort. Financial terms of the deal were not disclosed.
ELoancoordinator was launched by Dresdner Kleinwort in 2005 and now has over 4000 registered users.
Misys says the platform will be further developed by its treasury & capital markets team to create a new system, branded Misys LoanCoordinator.
Managed in real-time, the system will provide bookrunners, borrowers and investors with comprehensive pipeline information required to track, analyse and administer syndicated loans on a single online site, says Misys.
The product will be available as a stand alone system or as part of Misys' Loan IQ suite for syndication, agency servicing and secondary trading activities.
Ken Katz, global product manager, Misys Loan IQ, says: "Once the product is integrated with Misys Loan IQ, bookrunners and investors will benefit from seamless front-to-back offering giving them a view of all information on a particular loan that is needed throughout the entire loan lifecycle."
Current Dresdner Kleinwort users will be transferred to Misys over the next six months. The two firms have agreed that the bank will be the first subscriber to the new Misys LoanCoordinator.

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Acquisition of N4 Solutions

Experian, the global information solutions company, announces that it has acquired N4 Solutions, a UK-based mortgage sector and financial services software provider. The acquisition is a strong strategic fit with Experian's consumer credit activities and represents a natural extension to Experian's application processing capabilities.

Founded in 1999, N4 Solutions provides industry-leading software which helps mortgage providers to allocate the most appropriate mortgage to a customer, while helping financial services clients meet key compliance objectives. Its clients include large UK mortgage providers, such as Barclays, Nationwide and Portman.

Sales of N4 Solutions in the year to 31 March 2007 were £9m and gross assets as at 31 March 2007 were £2m, excluding cash. The company was purchased from its founders and will form part of Experian's Credit Services activities.

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Nationwide confirms broking arm details

Nationwide has announced further details on how its prime intermediary arm will operate following the planned merger with Portman Building Society on August 28.

The lender will be recruiting a substantial salesforce to commensurate with the size of the newly merged organisation. The team will report into a newly created position of head of sales for prime intermediary lending which has yet to be appointed.

Nationwide’s intermediary support team - currently based in Swindon - will be relocated to Portman’s headquarters in Bournemouth over a phased period.

Portman group development director Matthew Wyles will become executive director at Nationwide with responsibility for non-retail business.

Wyles says: "Intermediaries are at the centre of our vision for the future. Our new broker development sales force is a key element of a three year strategic development plan which will revolutionise Nationwide's systems and service delivery to the
intermediary mortgage market."

Divisional director of intermediary markets Peter Leydon adds: "This
announcement is tangible evidence of the Nationwide's absolute commitment to intermediaries. My management team and I will assemble, during the coming months, a substantial and highly effective sales force to support the thousands of firms up and down the country who want to do business with Nationwide."

Reporting directly to Leydon will be: Head of corporate development Joe Rabbitt who is currently head of intermediary development at Nationwide and head of support Peter Saint Ruth who is currently a senior manager within intermediary markets at Nationwide.

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Bristol and West to scrap exit fees from July 31

Bristol and West has confirmed it will also be scrapping exit fees for future customers from July 31.

This follows Cheltenham and Gloucester’s announcement last week that it will be axing its £225 exit charge on all future lending.

Lenders had a deadline of July 31 by the FSA to sort out their fee structure.

Bristol and West are now the second top 20 lender to announce they will no longer charge exit fees.

The decision will apply to mortgages on both Bank of Ireland and Bristol and West brands.

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NR overtakes Lloyds TSB in CML lender league table

Northern Rock has overtaken Lloyds TSB in the Council of Mortgage Lenders’ table of the largest lenders for 2006 by gross mortgage lending.

HBOS retains its iron grip in first position with £73.2bn worth of gross lending and a 21.2% estimated market share.

In second place is Abbey with £32.6bn worth of lending and a 9.4% market share.

Northern Rock has slipped into third place, overtaking Lloyds TSB, with £29bn of lending and an 8.4% market share.

Lloyds TSB, now ranks fourth largest with £27.6bn of lending and an 8% market share.

Nationwide came in fifth position with £21.1bn and a 6.1% share of the market.

Once it merges with Portman later this year, its combined gross mortgage lending will still total less than that of Lloyds TSB, at £26.1bn.

Royal Bank of Scotland follows close behind with £20bn of lending and a 5.8% market share.

Further down the ranks, HSBC has fallen from seventh place last year to ninth place, and now sits below Barclays and Alliance & Leicester with £12.4bn of gross lending and a 3.6% share of the market.

Barclays saw £18.4bn of lending, while Alliance & Leicester saw £12.6bn.

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GE rumoured to be under investigation by FSA

Leah Milner - 05-Jul-2007

By Leah Milner

GE Money Home Lending is rumoured to be the subject of a Financial Services Authority probe.

The
rumoured investigation into the sub-prime lender comes a day after the
FSA’s review of the sector revealed serious shortcomings.

The FSA revealed it was investigating five mortgage brokers following on from its review of the sub-prime sector.

A spokesman for GE Money says the lender is unwilling to comment on industry speculation.

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Offset

New research published today by the Council of Mortgage Lenders has
revealed strong growth in the number of people opting for an offset
mortgage. During 2006 170,000 offset mortgages were taken out, worth
£29.3 billion - equivalent to 7% of all new lending. And, the
year-on-year growth of offset mortgages between April 2006 and March
this year was 49% (by value) - compared to just 15% for non-offset
lending. Offset mortgages combine a mortgage and savings in one account

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Offset mortgages gain in popularity

New
research by the Council of Mortgage Lenders (CML) has revealed that
170,000 offset mortgages worth £23.9 billion, or 7% of all new lending,
were taken out last year. They grew 49% by value in the year to
end-March, compared with the previous year, while non-offset mortgages
grew just 15%. "Mortgage lenders are constantly developing new products
to meet the needs of borrowers, and the fact there are now 250 offset
products available in the market illustrates this," said CML
statistician Phoebe Zhang said. "Continued innovation by lenders will
help to increase consumer awareness of offset products and expand the
market potential for offsets in the future."

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N4 predicts broader outlook for AVM's

N4 Solutions has predicted that AVM technology will be much broader than just valuations providing brokers and lenders with opportunities for added value services.

Since launching AVM desktop valuations, N4 has been working on a number of developments which will see AVMs used in a much broader context including buy-to-let investment management tools for mortgage brokers, providing them with the same analysis tools as available to investment advisers, including portfolio management, capital appreciation and yield analysis.



N4 predicts that AVM technology will be utilised by anyone that has an interest in pricing either individual properties, such as end consumers and local authorities for personalised rates calculations, through to portfolio managers for more accurate securitisation modelling.



David Wiseman, consultancy director, N4 Solutions, says: “Much of the current debate is focused on the short term implication of AVMs, with little regard for what they could mean for the industry.



“We see a very real opportunity for brokers who specialise in buy-to-let to offer portfolio management facilities, which will not only create additional revenue, but guarantee a regular dialogue.



“The technology will be used in an even wider perspective and will increase the accuracy of everything from local property taxation to house price indices.”

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Oracle forms financial services software unit

Oracle is establishing a new business unit focused on developing applications for the financial services industry. The new division will be headed by Rajesh Hukku, the current chairman and managing director of its majority-owned i-flex solutions subsidiary.



Headquartered in New York the unit will centralise and coordinate Oracle's financial services software products and serve as a vehicle for future acquisitions.



The new unit will bring together i-flex's applications - including Flexcube, Reveleus, Mantas, DayBreak and Insure3 - with Oracle's product suite.



In a statement Charles Phillips, president of Oracle, says the formation of the unit "will enable the consolidation and integration of our growing portfolio of financial services applications to provide the comprehensive and best-in-class solutions that our financial services customers expect".



I-flex executives R Ravisankar - currently CEO for international operations - and Deepak Ghaisas - who is currently CEO for India operations and CFO - will join Hukku to form part of the unit's management team.



Hukku will head the new unit in addition to his i-flex oversight responsibilities and will continue on the vendor's board as non-executive chairman.



Ravisankar and Ghaisas will both join the i-flex board as vice chairmen.



I-flex says its COO NRK Raman has been named managing director and CEO, while Makarand Padalkar, currently chief of staff and head of investor relations, assumes the role of i-flex's CFO.



Finally, Derek Williams, EVP of Oracle, will also join the i-flex board.



I-flex says the management changes are designed to achieve better co-ordination with Oracle's strategy for financial services. "This is an integral step in i-flex's strategic roadmap to position ourselves better to capture the enormous opportunity in financial services by expanding our leadership team," says Hukku.



http://www.finextra.com

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Lehman to take on rivals with £4m marketing budget

Lehman Brothers looks set to take the intermediary market by storm over the coming months after it revealed it will be spending a whopping £4m on marketing to develop its multi-brand market strategy.



Ever since Guy Batchellor, former sales and marketing director at Platform, joined the helm of Lehman Mortgage Capital as executive director of sales and marketing alongside chief executive Simon Hinshelwood, broker anticipation has mounted over what the planned changes to the Lehman mortgage brands would entail. These include Capstone Mortgage Services, SPML, Preferred Mortgages and London Mortgage Company.



Now the recruitment process has started to bolster brand positioning with a marketing budget of £4m - at least double that of some high street names.

Lehman was advertising in yesterday's The Sunday Times for a head of sales for SPML, a director of marketing and a director of strategy and change.



The latter two positions are both City-based and offer a six-figure compensation package. SPML's head of sales will also be based in the City and is offering a competitive salary.



But it's the advertisement for a director of marketing that sheds light on the Lehman Mortgage Capital strategy.



The advert says: “You will work closely with internal and external contacts to establish key messages and execute strategic marketing campaigns, on time and within a circa £4m budget.”



It also says: "This newly-created role will allow you to develop and execute a winning multi-brand market strategy, ensuring the success of Lehmans' residential mortgage brands.”



And in a strong commitment to the packaging sector it adds: “You will… expand and maintain relationships with key packagers and other core customers.”



The director of strategy and change will report directly to Hinshelwood and “will have full responsibility for ensuring that the strategic vision and ambitious transformation objectives for Lehmans' residential mortgage brand are implemented and achieved".

Also responsible for delivering a five-year business plan it would appear acquisitions are also on the cards.



The advertisement adds: “You will be tasked with delivering benefits to customers and stakeholders, through implementing multi dimensional change projects including acquisitions, business integration, operational improvement and organizational change.”



Earlier this month Mortgage Strategy Online revealed that Lehman Brothers Mortgage Capital was to launch a direct-to-broker specialist lender at the beginning of 2008.



The new brand will provide a full range of specialist products, from sub-prime, self-cert and buy-to-let to prime self-cert and prime buy-to-let, but with a dedicated direct-to-broker distribution and is designed to sidestep accusations of a direct proposition conflicting with products offered to its packager partners.



One recent entrant to the lending market, who asked not to be named, says: "This is big money. This will give Lehman blanket coverage across the trade press. It will be interesting to see how that £4m is allocated across the three and now four brands but you can guarantee that over the coming six to 12 months Lehman will be a force to be reckoned with."



http://www.mortgagestrategy.co.uk

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FSA sets out future of regulation

The Financial Services Authority has today published a paper setting out its current thinking on its move towards a more-principles-based regulatory regime.



The paper, entitled 'Principles-based Regulation - Focusing on the Outcomes that Matter', accompanies a conference also being held today at which FSA senior management, financial services industry leaders and other interested parties debate the challenges and opportunities presented by a move away from more detailed rules to a principles-based environment.



Callum McCarthy, chairman of the FSA, says: "We have set ourselves and the industry on a course towards more-principles based regulation.



"We are pursuing this with determination, but recognise there are difficult issues as well as excellent opportunities for us as a regulator, the industry and consumers.

"Today's paper and conference are designed to explore those issues as we attempt to move further towards delivering a more outcome-focused regime."



John Tiner, chief executive of the FSA, says: "Financial services markets are dynamic and innovative.



"To be effective, regulators must be able to adapt their regimes to keep pace with market changes.



"We believe principles which focus on an outcome are more enduring while at the same time better foster innovation and competition.



"More principles based regulation is the natural next step in the evolution of our regulatory system. It will give firms more choice over how they meet our requirements bringing for many a closer fit with their business processes and more clearly placing the responsibility for key regulatory decisions at more senior levels in firms.



"We have already embarked on this journey. During the past two years, the FSA has increasingly taken a principles-based approach to resolving issues in both retail and wholesale markets such as the proposed new regime for the conduct of business, our Treating Customers Fairly initiative and the work on contract certainty within the wholesale market.



"It is clear that this approach will require changes in behaviour by both firms and FSA staff.



"For the FSA's part we are ready to meet the challenge and our 2007 Business Plan sets out our plans to invest in the recruitment, development and training of our staff to ensure they have the market knowledge, competencies and skills to make the judgements necessary to make more principles based regulation work.



"We are also aware there are external issues that need to be addressed. The current preference of the EU Commission to adopt specific rules, the inevitable and proper establishment of precedent by the Financial Ombudsman Service and the role of consumers of financial services in a more principles based environment.



"All of theses issues need to be examined carefully and will not be ignored as we plan and pursue our course."



To help firms the FSA will provide, either directly or through confirmation of industry guidance, a greater range of clearly sign-posted information to enable firms to plan their business processes and controls with confidence.



http://www.mortgagestrategy.co.uk

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TietoEnator Digital Innovations appoints Business Development Director to new UK role

TietoEnator Digital Innovations UK has announced the appointment of Alister Hoad to the role of Director of Business Development. Alister joins TietoEnator from Cable Wireless, where he was responsible for the development of the Real Time Nostro programme and more recently in the development of Banking Solutions for corporate customers.



Digital Innovations, part of TietoEnator, is responsible for the delivery of services across the key vertical markets. It combines TietoEnator's best practices, innovations and deep industry expertise for the benefit of all the Group's companies and business units. The unit is working closely with the Banking Insurance sales teams to deliver serviced based solutions including eInvoicing and eHotel. Digital Innovations has 600 employees in nine countries.



SEPA, although a cost challenge, can offer multiple opportunities to those banks that are willing to proactively engage with their corporate customers. The TietoEnator Full SEPA service based solution offers banks a number of key attributes when servicing their corporate market; including speed to market, technical flexibility and return on investment. These services are operated over the TietoEnator eExchange platform which carries over half a billion messages per annum.



TietoEnator has a strong client base in the UK and a solid reputation in the market as a trusted partner in the safe delivery of complex solutions. Through the service based solutions of Digital Innovations, TietoEnator is well positioned to support the banks service offerings to their corporate customer base. />

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