Mortgages PLC is to launch a 50-50 joint venture with national franchise brokerage mortgageforce to offer sub-prime mortgages and loan products direct to the consumer.
The operation, branded Spring Mortgages & Loans and headquartered in Derby, will see most of mortgageforce's 128 franchisees market loans exclusively from MPLC under a separate trading name.
Spring will be a standalone company with MPLC and mortgageforce continuing to operate as separate businesses. For the first time, mortgageforce will be heavily involved in the sub-prime market having previously focussed on mainstream broking.
Mortgageforce says an objective for some time has been to become a specialist non-conforming brokerage and this is the first of a number of strategic developments.
Mortgage Strategy exclusively revealed last September that MPLC was looking to launch a direct to consumer operation. At that time, the London City and Glasgow-based lender was denying it had appointed John Rice to oversee its development.
Rice, who went on to become managing director of RAMP, was formerly head of sales at retail sub-prime operation The Mortgage Lender, owned by rival lender Kensington Mortgage Company. His appointment at MPLC was terminated shortly afterwards and has nothing to do with the mortgageforce joint venture.
MPLC and mortgageforce, who have been working on the deal for months, have been seeking the services of at least one lead generation firm to get sales off the ground from day one.
MPLC sales and marketing director Peter Beaumont says: ” MPLC has been considering entering the consumer market for some time and mortgageforce is an ideal partner.”
Last September Beaumont told Mortgage Strategy: “There are three types of acquisition cost. Through a branch network is the most expensive. Second is through intermediaries and the cheapest is direct to consumers through a central point – similar to centralised lenders.
“We are looking at all the options in a pre and post-regulatory environment. Any lender that says they are not is probably not telling the truth.”