JLM Mortgage Services is calling upon lenders to consider sector-specific product ranges focused on UK regions and cities in order to help support the advisers and the needs of their clients in those areas of the country.
The mortgage and protection network believes a homogenised product range is no longer suitable for today’s mortgage borrower, particularly in the specialist lending market, and argues newer lenders should look at tailoring their ranges to specific product types in certain areas of the country.
It says lenders, without historical legacy systems, should look beyond the “one size fits all” product approach because of the significant differences that can exist between various regions.
JLM would like to see lenders offering products tailored to, for example, the buy-to-let borrower in University cities, or those purchasing in higher-value markets such as London, the Home Counties and parts of the North West.
The network argues a region-specific product approach might allow lenders to look at increasing LTVs in the buy-to-let market, for example, or to look at offering a tiered LTV/rate approach to borrowers wanting to purchase in a different market like the Capital.
It also says lenders could learn from insurers who are able to tailor premiums to an individual person or have sufficient data to underwrite property in region-specific ways. JLM believes the mortgage industry, especially the buy-to-let sector, is ripe for a fresh approach.
Rory Joseph, director of JLM Mortgage Services, said: “Our view is that, in this market, a one size fits all lending approach is not going to work if you are a relatively new lender who is merely replicating the range of tens of lenders that already exist, have a larger lending appetite, and a far wider reach. In talking to numerous lenders, and weighing up the needs of our clients right across the country, there would be considerable mileage in providing region/sector-specific products.
“For instance, with buy-to-let that could mean increasing LTVs for HMO or multi-unit blocks in large student cities such as Sheffield, Leeds, Nottingham and the like, or it could mean offering different criteria/higher LTVs in London, which as we all know is a ‘different place’ when it comes to the housing market. There are opportunities to drill down and get much more specific in different regions.”
Sebastian Murphy, head of mortgage finance at JLM Mortgage Services, added: “Some of the larger, more established, mainstream lenders are going to find it difficult to carry out these sort of region-specific product options because of legacy and their traditional raison d’être which is appealing to everyone with the same range, right across the board. But the newer, leaner lenders, who are able to delve a little deeper into borrowers, properties and the risks involved, may find a considerable opportunity here. Previously, we would have had the smaller building societies operating in such a way, and while this still does go on, the market in different areas of the country is crying out for something aimed specifically at them, especially for example in the specialist sectors.
“We’ve had conversations with a number of lenders, and there is interest there, plus – as time goes by – and the industry becomes more adept at using the information provided by ‘Big Data’ we could see further moves in this direction. For example, lenders should be able to analyse all the borrower and regional data involved to get to a point where you could lend simply based on postcode. From our perspective, in many areas of the country, a regimented and fixed product range which is barely distinguishable from your competitors, is less than useless, and we’d therefore like to see something different from those who should be in a position to deliver.”
