Precise Mortgages will be headed up by Alan Cleary, managing director, Ian Lonergan, chief executive, John Nixon, chief operating officer and Seb Maloney, chief financial officer. It is the first new intermediary lender to launch from scratch since the credit crunch hit.
Cleary wouldn’t be drawn on the amount of funding Precise Mortgages had raised, but he told Mortgage Introducer: “We’ve got backing to the tune of hundreds of millions not billions, with the opportunity to get more than that at a later date.”
Precise Mortgages is backed by Elliott Associates, the US-based equity house which provided Exact with the finance to launch in 2008.
Loans will be warehoused by Precise Mortgages and sister company Exact will service the loans through to redemption. At present, Cleary says the lender has no plans to refinance the book.
No plans to refinance
“We’re not reliant on wholesale funding or on retail deposits to fund this lending,” he said. “Our funding is matched to term which will allow us to hold loans for the full duration. Exact is already servicing loans and Precise Mortgages will build up that base of assets.”
Precise Mortgages CEO Ian Lonergan said the lender would consider wholesale sources of funding in the future when the market returns.
Cleary said the lender was not planning to “chase volumes arbitrarily”. “Precise is about quality,” he added.
Precise Mortgages will lend in the buy-to-let market only to high quality borrowers earning a minimum of £50k and with no adverse credit history. The maximum loan value will be £300,000.
“Our target market is small-scale landlords investing in buy-to-let for the medium to long term, probably in professional jobs. They represent the best credit risk for our business and our volume aspirations,” said Cleary.
He added: “We’re building on the expertise we have assembled over the past eighteen months at Exact. We’ve performed due diligence on £5.2bn of mortgages for multiple banking clients which has given us considerable insight into the current shape of the mortgage market in the UK.
Quality
“We intend to write quality buy-to-let business and believe there is a strong demand from creditworthy investors for our product.”
The lender will be taking applications from today and is initially distributing through a controlled panel of intermediaries including L&G Mortgage Club, Mortgage Intelligence and Mortgage Next.
Cleary said: “We are 100% focused on the intermediary market and there will be no dual pricing.”
Precise Mortgages will be working exclusively on valuations with surveyors Colleys, and solicitors, Shoosmiths and Goldsmith Williams, which Cleary said was an effort to mitigate fraud.
He said: “Working with two partners limits our risk to those two firms. The same applies to Colleys – they’re one of the best and can protect us most as the lender.”
Precise Mortgages has checked its score cards, which Cleary said have been used consistently during the downturn as part of Exact’s due diligence offering, which has reviewed 36,000 loans with a total value of £5.2 billion.
He said: “The score cards used in the Precise Mortgages underwriting process have been improved and verified throughout the credit crunch to cope with the current environment.
“We have contracts with Experian and Equifax and our IT systems pull data from both sources to check credit scoring on applications. That allows us to give brokers a decision in principle pretty much immediately.
“Our team of underwriters will then corroborate application details to verify all of the information on file, at which point we can then tell the broker if the application has been successful. Precise Mortgages is keen to ensure controlled credit quality.”
Much of the intermediary market has been concerned that lending based solely on credit scoring is preventing quality borrowers from getting a loan.
Cleary said the credit scoring Precise Mortgages will use is based on borrowers’ credit information at today’s date.
He said: “Credit scoring is based on 30 years of industry learning. Why on earth would you throw that away? You adapt your learning and improve the process.”
Precise Mortgages is in discussions with the CML about membership and Cleary said he expects to be having conversations with IMLA in the near future about becoming a member.
Market reaction
Nigel Stockton, sales director at Lloyds Banking Group, who previously worked with Cleary and Nixon at HBoS, said: “We’re thrilled that Precise Mortgages has chosen to work with Colleys.
"The UK mortgage market and Lloyds Banking Group always welcome new lenders. We wish them every success particularly at this time of tight funding availability.
“We look forward to competing with them in their chosen buy-to-let markets. This is especially the case here when we know Alan Cleary and the others so well.”
Ben Thompson, director, mortgages at Legal & General, said: “We’re really pleased to be in a position to bring another new lender to the market, and we’re sure that this is the start of great things to come from Precise Mortgages.
"There is a distinct gap in the buy-to-let market that Precise Mortgages are looking to fill so this is bright news for private landlords.
"There are only a small handful of lenders that are serving the buy-to-let sector and Precise Mortgages will bring innovation and much needed competition.
"Both parties expect the buy-to-let market to grow significantly in the near future.”
And Colin Snowdon, chief executive, Residential Mortgages, Aldermore said the Precise Mortgage launch was good news for both brokers and borrowers.
He said: "Today's news that the Exact mortgage servicing team is launching a buy to let lending business is good news for both brokers and borrowers.
"The buy to let sector needs additional funding and the launch of both Aldermore and Precise Mortgages will be a welcome boost to a sector which has suffered from an undersupply of funding for far too long.
"My best wishes go Alan Cleary and his team - I have no doubt that both our businesses will help to shape the future of the UK mortgage market."
