Em- predicts price war after edeus launch

Em-financial has predicted that a lender price war will determine the winners and losers in the mortgage market when edeus finally launches in September.

Roger Morris, managing director of em-Financial, says he expects rates to improve when the new lender begins trading.

“The lenders that are wise are sitting on a mountain of cash ready for a price war in September. Lenders that have planned ahead for this price war will gain market share,” he says.

Morris believes the likes of Platform, edeus and GMAC-RFC are ready to do battle over prices and will be successful. However, he is pessimistic about the fate of the likes of Scarborough and other societies.

Peter Charge, director of national accounts at edeus, says he wouldn’t like to predict a price war.

He says: “Edeus will be providing next-generation technology to squeeze the mortgage process. Service is as important as price.

“We will have competitive pricing and rates to keep up with the other players. But this year won’t be any different to others and the autumn quarter will see new products come into the market.”

Paul Hunt, head of marketing at Platform, also disagrees with the term price war.

He says: “With new entrants in the market, lenders will lower their rates. There are other important elements for us as well as price. I think the market is competitive for entrants and the sustainable level of margin compression will continue.”

Morris’s concern about societies hinges on their lack of experience compared with traditional sub- prime lenders.

He says: “Edeus will be detrimental to societies. The question is whether building societies will adapt, cut staff, get flexible products and invest in technology, or wither away.”

But Tony Burdin, head of group marketing at Scarborough, disagrees with these claims.

He says: “The decision to launch Scarborough Specialist Mortgages followed a comprehensive strategic review and extensive market research.

“While we are a new entrant to the specialist sector in terms of origination, we have many years of experience in servicing sub-prime assets through our mortgage administration subsidiary SMS.”