New lender New Street Mortgages has today launched into the buy-to-let market, pledging top-notch broker service, online product innovation and speed.
So Mortgage Strategy caught up with New Street director of distribution David Finlay and sales and distribution director Adrian Whittaker to find out what makes it different and what brokers can expect.
HOW DID NEW STREET MORTGAGES COME ABOUT?
Finlay: It’s been an idea in the build stage for nearly two years. It’s owned by a consortium called the Northview Group, and the backers of the group are TBG and Blackstone. New Street complements [New Street’s sister lender] Kensington in that it is looking to service customers that are near the prime end of the market.
We’d love to be able to take on Santander and Barclays, but because we’re funded through the money markets we probably won’t be able to beat them on price. So we’re looking at near-prime and prime customers who effectively want to take advantage of the technology and proposition that New Street has.
That gives us access to near 80 per cent of the market in which we want to play.
HOW WILL NEW STREET DIFFERENTIATE ITSELF FROM OTHER LENDERS?
Whittaker: The history of Acenden (the third-party servicing arm within the Northview Group) in terms of managing back books allows them to develop a suite of analytics which gives us the ability to give different decisions and better customer outcomes.
So intelligent, analytics-driven credit profiling as opposed to using a standard credit score. We can segment borrower types and match that against relative risk in the market. So we can come out with innovative and smarter mortgage solutions.
In terms of benefits, we’ve developed a range of advanced extra products. These allow us to offer differential rental calculations for clients in the London and the south east. Nationally it allows us to offer discounted products for landlords earning more than £100k and those landlords that benefit from high yielding properties, in excess of 175 per cent at 5 per cent.
We are looking to bring innovation to residential mortgages too. We are initially launching limited products and limited distribution in buy-to-let initially, but by no means is it a buy-to-let only specialist lending play.
HOW UNIQUE IS THIS TYPE OF ANALYTICS IN BUY-TO-LET?
Finlay: I think it’s different. I’m sure the other buy-to-let players would say they are taking an analytical approach. But what you’ve got with us is not only the analytics we have but how we interpret those to come up with something innovative. That’s where we want to be. We don’t want to be the same as everybody else, or we’d just be another new lender. We want to cone out with innovative products that we think the market needs.
Whittaker: Lynda Blackwell at the FCA recently said that rental calculation was a very blunt tool. We are showing one way to use that in a different way, and addressing those concerns.
Finlay: And it’s not just addressing the regulator’s concerns, it’s addressing true customer need.
Whittaker: It’s very different from the high street, in terms of existing lenders’ legacy systems, legacy decisioning. In addition, there’s full transparency around it. That’s a big differentiator to what you see elsewhere. When you put a decision to us, we either accept, subject to verifiable documentation, or decline and we give the reason. Then we have a broker portal which gives full visibility of the case. Also, it gives full visibility of the case notes, so there’s nothing hidden. They can see, real time, exactly what’s happening in relation to that case.
As a result of the technology that sits behind it, the instant and reliable decisioning, and subject to valuation, the system allows offers to be generated in as little as four or five days. There is an element of speed which New Street will be able to offer that isn’t always available elsewhere on a consistent basis.
Finlay: This gives ownership to the broker as well. In terms of instructing a valuer, yes, they are our valuers, but the broker can instruct. They sit with the customer, decide the instruct the valuer and are able to do it straight away.
Whittaker: We are intermediary only. We are not conflicted in any way.
WHAT ARE YOUR DISTRIBUTION PLANS?
Whittaker: We have initial pilot brokers to test the service we want to provide, and then have phased rollout throughout 2016. The aim is to make products available to customers through all brokers in the UK. We don’t want to deny any.
WHAT ARE YOUR PLANS TO LAUNCH NEW PRODUCTS?
Whittaker: In terms of innovation, we are demonstrating that with the advanced extras we have in terms of buy-to-let. I think watch this space for anything else.
Finlay: We are keeping our powder dry!
WHAT ARE YOUR LENDING AMBITIONS?
Finlay: I think it would be unfair to say we have a single figure for New Street, but in terms of the combined group we want to be a decent-sized player. If the Council of Mortgage Lenders says the market is going to be around £236bn, and more than half of that is intermediated, we want to have around 1 per cent of that market.