Three lenders waiting for go-ahead from FSA

DAVID TWEEDY: NEW LENDERS ARE A POSITIVE SIGN
DAVID TWEEDY: NEW LENDERS ARE A POSITIVE SIGN

Three new mortgage lenders have applied for authorisation from the Financial Services Authority.

Responding to a Freedom of Information request from Mortgage Strategy the FSA has confirmed that it has received three applications for authorisation to undertake the activity of entering into regulated mortgage contracts as a lender since the beginning of the year.

Alan Cleary, managing director of Precise Mortgages, says the number is smaller than he would have expected.
He adds: “The number of lenders applying is small but funding is still a massive issue and there’s no point in anyone applying if they haven’t got funding in place.”

It is not known when the firms applied for authorisation.

The FSA has increased the intensity with which it scrutinises lender applications. It says it aims to complete the process within six months of receiving accurately completed applications, or 12 months for applications that are incomplete.

David Tweedy, managing director of Platform, says the number of applicants is pretty much what he expected, and any new lender is a positive sign.

He says: “New entrants can only be a good thing because it means that there is capital in the market.
“Competition keeps everyone on their toes and helps to promote better customer service.”

But he adds: “These applications are a sign of confidence in the mortgage market but on the other hand three is not a big number in the grand scheme of things.”

Aldermore Mortgages launched into the residential mortgage market earlier this year, while other lenders such as Mortgages plc are rumoured to be making a return soon.

Tesco Bank has confirmed it is hoping to offer mortgages by next year and Virgin Money is also expected to enter the fray by the end of 2010.
David Hollingworth, mortgage specialist at London & Country, says brokers want to see more choice in the market.

He says: “It’s good to hear that there are people looking to enter the mortgage sector. New lenders such as Aldermore have brought something fresh to the table.

“Brokers would prefer to have as many lenders in the market as possible as it improves competition. But there’s a slight unknown with these three firms because it’s not clear whether they will be direct-only or intermediary-focussed.”