1. The 2015 Specialist Lending Market – no borrower left behind?
Chris Bramham
Director – Head of Specialist Mortgages

2. A typical specialist borrower!

3. A true specialist borrower!
“Rejection doesn’t mean your aren't good enough; it means the other person FAILED to notice what YOU HAVE TO OFFER”

4. Self-employed – The facts!
4.6 million self-employed people in the UK
15% of the UK work force
Self-employed highest point for over 40 years
Rise in employment since 2008 predominantly self-employed
Almost 500,000 self-employed over age 65
Number of women in self-employment increasing faster than men
Only 5% of self-employed surveyed believed they could get a mortgage
Self-employed borrowers are treated more harshly than employed

5. BTL – The Facts BTL lending up almost 20% YTD March 2015
18% of housing stock in in the Private Rented Sector
Over 12% of total advances in UK mortgages were BTL
One lender reports over 65% of BTL borrowers were self-employed in 2014
Rental yields diminishing in self-employment
Changes to tax laws in 2017 will see an increase in SPVs
Over 1,000 schemes available Aug 2015 up from 681 in Aug 2014
Impact of MCD in March 2016 – consumer BTL

6. Prime or Complex Prime – The Facts!
26% of all mortgage applications declined because of adverse credit
Specialist lending market up 425% since 2009 to £17billion in 2014
209,000 CCJs per quarter in 2014/2015
10% of adults had CCJs in 2014
In 2012 over 18% of borrowers had missed payments of some sorts
Jan £1.36bn paid on credit card to HMRC
Jan this was £2m
Over 99,000 personal insolvencies per qtr in 2014/15

7. ‘AMPD closes due to lack of appetite to lend’
The ‘Pariah’ Packager
Money Marketing - January 2012
‘MMR may sound the death knell for packagers’
‘Old-fashioned packagers are dead’
Mortgage Strategy – April 2007
Michael Bolton – June 2006
‘Packagers would crawl back under the stone from which it crawled out from”
‘AMPD closes due to lack of appetite to lend’
Mortgage Solutions – August 2011

8. Fiction vs Fact – Mortgage availability to the masses
Mortgages can be completed for those up to 85
“I’m too old to get a mortgage”
LTV up to 90% for self-employed
“I’m self-employed and no-one will give me a mortgage
Specialist lending is on the rise with more lenders launching
“Banks are just not lending anymore”
No second charge lender requires upfront fees and rates start at 4.85%
“Mortgage lenders charge high upfront fees”
There are schemes from prime to heavy adverse
Mortgages up to 70% for those declared bankrupt within 3 years
“I have adverse credit, no-one will lend to me”
“I was declared bankrupt, I have no chance”

9. Why has the specialist lending community grown post crash?
FACT
Prime mortgage lenders generally only want ‘vanilla’ clients
FACT
High Street banks are not lending enough to SMEs to keep up with demand
FACT
The specialist lending market is almost entirely intermediary lead
FACT
Market demands more specialist products to do the job

10. How do we improve the specialist referral process?
“I don’t understand it”
“Too complicated”
“Not worth it”
“Reputational damage”
“It’s a compliance risk isn’t it?”
“84% of respondents did not understand the specialist market enough to feel confident in giving the right advice to clients without expert guidance”
Brightstar – Intermediary Survey Jan 2015
“Already earning enough”
“More hassle than it’s worth”
“I don’t have enough time”
“Don’t want to deal with packagers”
“Too many options”

11. Why has the specialist lending community grown post crash?
Specialist lending – the intermediary ‘Cash Cow’
Network Information
Average Proc Fee £522
Average Protection Fee £562
Average GI £145
Average proc fee paid to introducers in 2014 by Brightstar
Mortgages & BTL £880
Second Charge £1,555
Bridging Finance £2,375
Commercial Finance £2,994

13. Why has the specialist lending community grown post crash?
The rise of a specialist distributor:
+45%
+58%
+214%
+179%
Source: Brightstar Financial Limited

14. What is the Specialist Market?
Specialist mortgages and Buy to Let
Second charge loans (secured)
Bridging finance
Commercial finance
Development finance

15. Second Charges After March 21 2016 a second charge is a mortgage – MCD
£800m per annum up from £672m in 2014
Average loan approx. £60,000
Will need full credit broking permissions to trade
Hand off vs authorisation

16. Bridging Finance Up 30% from June 2014 to June 2015
Annual gross lending £2.88bllion
Typical loan sizes up 12.6%
Average loan in excess of £700,000
Regulated v unregulated
Advice v no advice

17. Commercial Finance Commercial mortgage market up 55% to £3.5bn
Increase in lenders from 45 in recession to 128 in 2015
Specialist knowledge essential
Hand off v advice?

18. Specialist Mortgages & BTL
How do we improve the specialist referral process?
Bridging & Commercial
Second Charge Loans
Specialist Mortgages & BTL

19. Typical Scenarios Older borrowers Adverse credit
Semi and full commercial – flats above shops
Bridge to get a new property where one unsold
Second charge for capital raising – tax bill
Unusual properties
Specialist BTL – HMO/Student lets
Price for risk
Multi million pound development finance
Expat BTL

20. Liz Harris – Brightstar Compliance Manager
Can we place every case?
Could we in 2007? NO
Can we today? NO
Will we be able to in 2017? NO
4 Should we be able to? NO
“Doing the right thing for consumers at every stage in the customer journey. This includes asking should we do this, not can we do this”
Liz Harris – Brightstar Compliance Manager

21. In Summary
The Specialist lending market is where the growth in the intermediary market is likely to come from
Significant growth in appetite from new entrants to the market – Pepper, Foundation, Bluestone, Axis, Fleet
The community still needs to improve knowledge and position of offering
We cannot and should not attempt to help every consumer

23. THANK YOU & QUESTIONS