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Three new lenders set to enter mortgage market
Three new lenders are planning on entering the mortgage market, a leading mortgage servicer has revealed.
Andrew Jones, CEO of Computershare Loan Services, told Loan Talk that the firm has secured contracts to service mortgages for three new entrants, one of whom will launch later this year.
The revelation comes just months after Computershare was selected to manage £30bn worth of mortgages for UK Asset Resolution, the holding company of Bradford & Bingley and NRAM.
Andrew Jones, CEO of Computershare Loan Services
“The other area where we’ve been successful is securing two or three new lenders who are coming into the market over the next 12 months, one of whom will launch this year,” Andrew revealed.
“…At least one of the lenders who is coming online … with us is going to be looking at the second charge space as well in terms of originating.”
Computershare currently manages between £600-700m of second charge loans in its portfolio.
“…It’s a kind of core part of our offering and obviously there’s been a change in terms of the sort of regulation of second charge lending.
“…The market has been less active on that front in recent years, but I think what we [are seeing] is that activity [is] picking up again.”
‘Lender in a box’
Computershare is also developing an end-to-end lending proposition named ‘lender in a box’, that would allow investors to operate under a regulated brand name when they outsource their loans.
“I think the combination of those three lenders, two of whom have big brands behind them, and lender in a box will help us to generate a volume of origination activity that will offset the sort of gradual run-off of the existing book.”
The firm also operates Topaz Finance, a regulated lender that was purchased from Royal Bank of Scotland for an undisclosed sum in January 2015.
Topaz enables businesses who lack the necessary permissions to originate loans via Computershare.
It also offers commercial buy-to-let products.
“Something that we’ve wanted to do for a while is [to] effectively be able to go out into the marketplace and say to people: if you effectively provide us with some funding, we will originate mortgages for you under the Topaz brand or a similar brand, but under our regulatory permissions,” he added.
Andrew revealed that an investment bank was now keen to originate mortgages through Computershare.
“…What we can see is that there’s potential for some of the bigger retail banks or smaller retail banks or even building societies.
“They may want to do some lending in a certain space that doesn’t necessarily fit with their core brand.”
Brexit
Though Computershare currently services over 50% of outsourced mortgages in the UK, this figure represents approximately just 9% of total mortgages.
However, Andrew suggested that increasing cost pressures in the wake of Brexit could now enable Computershare to acquire some of the remaining 91% from big retail banks.
“In our experience, even the biggest lenders who invested hundreds of millions in platform consolidation, still have legacy books sat on old platforms that are costing them a lot of money to run.
“Every time there’s a change in regulation … they have to invest in those legacy platforms, which they don’t really want to.
“So if anything, in that space we expect Brexit to drive more [securitisation] activity because it will force those big banks to … ask themselves is there a better way of doing this.”
Computershare manages approximately £73bn worth of accounts under management in the UK, representing around 600,000 customers.
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