100 Ltv Bad Credit Commercial Loans

Reinventing the market

Front row: Adrian Whittaker, director of key accounts, the abbey for intermediaries; Sally Laker, Managing Director, Mortgage Intelligence Mortgage Holdings. Middle Row: Jon Round, CFO, LSL Group, Philip Cartright management Director, London Phil Cliff, Director, Santander in the UK, John Malone, chairman of PMS.Back row: Graham Sellar, head of mortgage intermediary development and general insurance at the Abbey for intermediaries, David Copland, Executive Director, Pink Home Loans, Andy Pratt, chief executive, Alexander Hall.

The mortgage market in the United Kingdom was one of the markets most diverse and competitive in the world for those looking to finance residential or commercial property. But when the crisis struck in 2007 and 2008, the market dynamics have changed.

Previously there were long product combinations, such as a self-cert, sub-prime, interest-only tracker 95% LTV deal, but these types of deals have been consigned by the regulator and the market to product hell and now only vanilla products are on display.

So with the Financial Services Authority putting further pres-sure on the market to temper its imagination where will innovation come from? What markets do lenders need to target and what could the government and the regulator do to assist?

Mortgage Strategy, in association with Abbey for Intermediaries, gathered the great and the good of the industry to debate these issues.

WAS THERE TOO MUCH PRODUCT INNOVATION PRIOR TO THE CREDIT CRISIS? John Malone: There were too many lenders with too many bad products, so the answer is yes. The one thing we didn’t have then were products that were structured and priced for risk. It was a market purely about growth. All lenders were trying to do was com-pete against each other and the pricing structure was skewed. It was madness that for a good period of time you could get sub-prime products cheaper than prime ones. We experienced a complete dis-tortion and we are now coming back to reality.

Phil Cliff: Those problems were not caused by product innovation but more by risk and price. The mortgage market generally is not an innovative one and that’s why it is struggling to find that key product and panacea to balance the risk appetite with what customers want.

Andy Pratt: A 100% LTV mortgage is not exactly innovative.

Reinventing the Market | LoanWorkout.org

The UK mortgage market used to be one of the most diverse and competitive markets in the world for anyone looking for finance on a commercial or residential property. But when the downturn hit in 2007 and 2008 the market dynamic changed.

Previously there were long product combinations, such as a self- cert, sub-prime, interest-only tracker 95% LTV deal, but these types of deals have been consigned by the regulator and the market to product hell and now only vanilla products are on display.

So with the Financial Services Authority, putting further pressure on the market to temper his imagination which is innovation? What are the markets the lenders need to target and what could the government and the regulator do to help?

Mortgage Strategy, in association with the Abbey for intermediaries, brought together world leaders in the industry to discuss these issues.

Was there too PRODUCT INNOVATION WELL BEFORE THE CREDIT CRISIS?

John Malone: ​​There were too many lenders with too many bad products, so the answer is yes.The only thing we had not then been produced which were structured and pricing for risk. It was purely a market on growth. All lenders have tried to do was compete against each other and the price structure was distorted. It was madness for a good period of time, you can get sub-prime products cheaper than the former. We had a completely distorted and we are now back to reality.

Phil Cliff: These problems were not caused by product innovation, but more by the risk and price.The mortgage market is generally not one of innovation and so it is hard to find the product key and a panacea for balancing risk appetite with what customers want.

Andy Pratt: A mortgage at 100% LTV is not exactly innovative.

Jon Round: This is not product innovation that was bad, but the extremes he went. Not all subprime mortgages that was done was wrong, but the limit at which it went. Similarly, some were good cashback mortgages for some borrowers, but the size of the fund-backs that deals effectively transformed into 100% LTV mortgage was too high a risk.

So what do we mean by innovation in the mortgage market?

Philip Cartright: When the work was coming to power in 1997 there was a lot of fears about rising interest rates. We have an exclusive contract before their joint called Election Busting. It allowed customers to go on a variable rate and after the elections, we guarantee a fixed rate for five years. I guess that's what we mean by innovation.