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Virgin to launch range of mortgages this year

Virgin Money is gearing up to launch its much-anticipated mortgage range by the end of the year and is considering using brokers, Mortgage Strategy can reveal.

Virgin Money, part of Sir Richard Branson’s Virgin Group, says that its products will initially be available direct but it regards brokers as a key distribution channel.

A spokesman for Virgin Money says since it was granted its banking licence it has planned to launch of range of savings products. This is likely to happen in the summer, followed by the launch of mortgages.

This is the first time the company has put a timeframe on when it will launch a mortgage range.

The spokesman says: “The mortgages launch is likely to be by the end of this year and will be funded from our deposits.

“We can’t rule out using brokers as they are a key distribution channel. It won’t be this year, but we will be looking at moving beyond our direct and telephony channels to use intermediaries.”

Virgin Money entered the retail banking market in January, with the acquisition of small private bank Church House Trust providing it with the platform it needed to launch its UK banking business.

US investor Wilbur Ross has put in £100m into Virgin Money in exchange for a 21% stake. He has also pledged £500m to power Virgin Money’s bid to buy up the 318 Royal Bank of Scotland branches up for sale after the part-nationalised bank was ordered to offload them by the European Commission.

Ross was also part of Virgin Money’s attempt to refinance Northern Rock in 2007 and 2008, before the bank was nationalised.

Jonathan Clark, mortgage partner at Chadney Bulgin, says: “Virgin has always been an innovative organisation and it was the first to come out with the One account.

“Although we won’t be able to access its mortgage deals immediately it’s good news that another lender is coming to the market. It keeps others on their toes and shakes the sector up.”

And Andrew Montlake, director at Coreco Group, says: “The more talk there is about new lenders the more positive it is, especially if they use brokers.

“Competition sparks innovation – it just comes down to what distribution route these lenders are going to take.”

Other new entrants known to be looking to stake a claim in the UK mortgage lending market include Metro Bank, Aldermore, Tesco and the Post Office.

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  • joe king 12th April 2010 at 3:33 pm

    Automated solutions and underwriters should go hand in hand. The ideal set up (in my opinion) requires both. The auto solution handles the bulk of simple decisions. Leaving the underwriters look at the marginal cases and add value to the business/client/IFA.

  • Grey Haired Underwriter 12th April 2010 at 3:27 pm

    Anon 1.33 – Most large lenders are still using automated decision making – they don’t actually have thee eperienced staff to do otherwise. It tends to only be the small Building Societies that continue with proper manual underwriting and they are usually very approachable. The brick wall you are hitting is the tightening of the Score card and they won’t talk to you because they have evn less reason to justify the computer’s decision.

  • Jon Shears 12th April 2010 at 1:33 pm

    A note of caution to the Grey Haired Underwriter… Not all irresponsible lending came from the banks/institutions with electronic underwriting, the ‘human touch’ now is completeley disabling the country and making brokers’ jobs impossible. The majority of us have only ever submitted completely Prime business and now come up against a brick wall even with completely top class applications. If you are that good, why can’t we ever talk to you about your ‘perfect’ decisions?

  • Howard Mortgage collector 12th April 2010 at 1:21 pm

    True, electronic decisioning does not work in a sub prime portfolio, that is where the underwritiers are needed. I am in charge of Mortgage collections for both tyopes of portfolios and where a product is prime, built with risk avoidance rather then risk management, electronic decisioning is OK, but definately not on sub-prime.

  • Gray Haired Underwriter 12th April 2010 at 11:42 am

    It is great for the entire market that new lenders are entering the fray but I would always sound a note of caution (I am an underwriter after all). The same thing happened in the 80’s and the 90’s and new lenders pursued volume mainly at the expense of profit. They were also the forerunners in the use of electronic decision making and employed very few skilled risk assessors. This is a great model in a buoyant market but history has proven too many times that this business model collapses in a down turn. So I warn them to take on skilled risk assessors not marketeers or IT gurus. They will need people who fully understand our market place and who can see a good deal when it lands on their desk.

    The last thing we need is another bubble that kills the market again and that allows a lot of highly optimistic applicants to end up in possession. Bad lending kills the industry and the weakness in electronic decision making has already been proven.