In an effort to win Sky Sports brownie points, I occasionally succumb to watching the odd cookery programme. None come much odder than Jamie Oliver’s, whose original programme name (The Naked Chef) sounds like it would be more suited to the adult channel than BBC2.
I caught his most recent series involving his well-publicised quest against the poor nutritional value of a ‘Turkey Twizzler’. Followed by cameras he trawled round schools brandishing a series of flash cards depicting various foods and brand identities. While only the elite children knew what ‘asparagus’ was, there was not one child who could not successfully identify the well-known ‘golden arches’. The fact is, brands are powerful.
Similarly in mortgages, the lender’s name or brand is vitally important in backing the products they wish to sell. It is even more poignant if you are trying to promote a firm on lending policy with speed of service rather than headline rate.
The CML has stated it has had 16 new lender applications in the last 18 months. This is fantastic from a competition perspective, but how do the lenders set about creating their own distinctive brand? Take an established corporation such as HBOS, for example, which has five strings to its bow. Evidently, it fully subscribes to the differences and incremental business each can bring. However, ask a broker to pin the tail on the donkey to select which brand offers fast-track income verification, and the ass wouldn’t be able to sit down for weeks – a point not lost on the new management at TMB, which has embarked on a series of ‘heavenly’ advertisements just to make its proposition clear.
HBOS undoubtedly possesses the lender equivalent of ‘MaccyDee’s’ budget, so it can afford a few mistakes and refinements in their branding along the way. But for many other lenders, it is crucial to get it right first time or else face extinction.
I’ve lost count of the number of times lenders have said they are stuck-in-the-mud despite their efforts to diversify. A classic example is those lenders who originally offered high loan-to-value (LTV) adverse products as their core business, teamed with understandably rigid criteria. So they broadened their appeal by offering the heavier stuff, boasting that the deals would sail through. Do we try it? Our head tells us if they have been fussy in the past they will be fussy in the future.
Lenders will, however, continue to develop brands to provide instant flexibility by having other names under their umbrella. Take a mutual building society, for example. A new limited company division can protect the existing member benefits and, if a lender is unsure about a market such as adverse credit, they can adopt a new guise, enabling them to delve in and exit while still protecting their core identity.
Creating a brand can also be done at the next tier down from lending money. This typically takes the form of joint-branding with the lead lender, which is a method commonly embraced by the largest packagers. It adds value by demonstrating that distribution can be cajoled if the brand provides a better service than the lender’s own. There have been several success stories amongst them – the ‘fleet of ships’ – and, building on the nautical theme, others have boomed. In theory, it creates a smooth path allowing packagers to begin lending themselves, although in my experience most have already re-invented the brand by this stage.
Finally, I am intrigued by how developments at RBS Intermediary Partners will pan-out, since an awful amount of money has been splashed on ‘Hector’ and the ‘Loud Speaker’. By concentrating on their re-branding, it will be focusing on specific markets to support its product offering. For example, there is talk of one of the brands taking responsibility for remortgages. But I wonder what will happen when its customer wants to move on to their next home – will they be forced out of the door to its purchasing brand? Let’s hope this seemingly narrow approach will not result in it becoming the next pigeon on Jamie’s plate.
Mainstream
Portman often appears to be able to produce the best two-year fix on the market. Its current 4.3 per cent to 90 per cent LTV with a relatively low £499 completion fee represents good value. Northern Rock’s 4.45 per cent two-year is on withdrawal watch. Bristol & West has always been the forerunner for mainstream business for packagers (including ourselves) with fair origination fees and on-site underwriting support. Its two-year discount, giving a payrate of 4.29 per cent to 85 per cent LTV and £399 completion fee, is currently a market leader.
Buy-to-let
Mortgage Trust managed to keep the rate increase on its popular Select range two-year fix down to 0.01 per cent (4.89 per cent to 4.9 per cent), albeit with a £100 increase in the completion fee. Was the rate change worth it? Probably, if only to differentiate with those in the pipeline.
Paragon celebrates its 10th birthday. It certainly seems to be a lender on the up since the infamous National Home Loans days. It is now probably the most respected professional landlord product provider, with the ‘light refurbishment’ feature being a particular winner. Northern Rock is the latest lender to join the armada of lenders with a 1.5 per cent completion fee.
Self-cert
It was only a few issues ago I was calling for further innovation in the shared ownership market. I am therefore happy to report that Cheshire Mortgage Corporation (the first charge arm of Blemain) is close to launching a self cert product – exceptional, given the normal deposit requirements for such lending is at least 15 per cent.
Adverse
Mortgages plc has certainly gone to town with its launch and marketing. The new technology will bring more intermediaries in so it has sensibly moved its competitiveness away from high LTV towards the bigger deposit business. This will give it a more preferable blend. BM Solutions has increased its pricing quite significantly. Amber Homeloans has withdrawn from the 100 per cent near-prime market.
