Aldermore Mortgages says it is not worried by the regulator’s concerns about innovative high LTV products such as guarantor mortgages.
Last week the Financial Services Authority said in its Retail Conduct Risk Outlook it was concerned about small lenders that have launched innovative products for first-time buyers to compete with large lenders.
It says products which take a charge on parents’ property or use their savings to offset the loan, as well as shared equity deals consisting of a mortgage and a top-up unsecured loan, may pose a risk.
The report says: “Innovation can deliver benefits for consumers, but it can also result in increased levels of complexity, thereby creating potential detriment to consumers.
“Without appropriate controls in relation to the targeting and marketing of these products to consumers, there is a risk that innovative niche products will be sold to consumers for whom they are not suitable.”
Aldermore offers a 100% LTV mortgage which takes a charge on the borrower’s parents’ property, as well as an 80% LTV mortgage topped up by a 15% LTV unsecured loan from Hitachi Capital.
Charles Haresnape, managing director of residential mortgages at Aldermore, says it keeps the FSA appraised of its plans before launching products.
He says: “Aldermore therefore has no concerns about the contents of this paper and we agree with the comment by Martin Wheatley, managing director of the conduct business unit at the FSA, last week that the industry must deliver a fair deal for consumers.”