Investec Specialist Private Bank says that increased lending restrictions from banks and building societies has resulted in a growing number of high net worth individuals finding it difficult to secure mortgages of £1m or more.
It says many of these people are successful entrepreneurs, but they are being refused credit because their finances and wealth are not straightforward, and often other banks and building societies are bound by rigid lending criteria which do not accommodate this.
Investec, which specialises in servicing the financial needs of the ‘entrepreneurial class’, sees this development in the market as a huge opportunity to dramatically grow its lending business.
Investec’s mortgage business is aimed at the top end of the market, with loans available exclusively to individuals with sustainable earnings in excess of £300,000 a year who are looking to borrow a minimum of £1m. A typical client would be in the market for property starting at £1.5 million.
Investec offers highly personalised mortgages based on the income and wealth of the individual client rather than the mortgaged property alone – the approach used by the majority of lenders. It aims to ‘out-think’ the opposition with offerings such as currency mortgages and innovative facilities for clients with complex requirements.
As an example of banks and building societies becoming less willing to lend to mortgage customers, analysis of industry data by Investec Specialist Private Bank reveals that the average maximum loan to value for mortgages featuring in Moneyfacts’ best-but tables in January 2008 was 88%. However, by March 2009 it had fallen to 77%, and by February 2010 it was 75%.
Nicky Walden, Investec Specialist Private Bank, says: “In the residential high end mortgage market, there is too much focus on the property as opposed to the individual, and this needs to be rebalanced. However, in order to do this you need to be able to understand the intricacies of a potential client’s finances and their true wealth.”