With lenders who are reliant on the money markets being pushed out of ‘higher risk’ sectors to make assets more attractable to investors, balance sheet lenders have been able to capitalise and maintain a presence in these areas.
However, Linda Will, managing director at Accord Mortgages, believed these lenders would also be dragged into amending criteria and market positions as they would not want to accept all the risks now being passed on by securitising lenders.
She said: “Even balance sheet lenders will have to follow suit and look at criteria as they don’t want to be picking up all the risk that others don’t want. Balance sheet lenders can now make hay while the sun shines but while they are seeing the benefits now, they will have to look at their positions further down the line.”
IGroup was one lender that had already drawn back in some areas, capping loan-to-values from 100 per cent to 95 per cent and reducing the number of arrears accepted.
It has also hiked rates by as much as 1.40 per cent, leading one anonymous source to claim: “So much for the benefits of it being a balance sheet lender.”
IGroup was unavailable for comment at the time of going to press, but Matt Grayson, head of PR at BM Solutions, said some lenders would be looking at their propositions.
“We’re very happy with how we’ve judged risk and there are plenty of opportunities for the bigger balance sheet lenders to take advantage of others moving out of markets. However, smaller lenders who might not have the large deposits to base lending on might find it more of an issue.”
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