Mark Sismey-Durrant, chief executive of Heritable Bank, said recent moves by building societies into the specialist market are motivated by concerns for the future.
He said: “The line-up of the specialist market is broadening as everyone scrambles for market share. It seems like every week someone is announcing they are moving into a new market. Building societies used to buy books from the likes of GMAC-RFC but now these are being bought up by the big investment banks so where will they get the growth now?”
Scarborough BS recently announced it was launching a specialist lending arm and Tony Burdin, head of group marketing, was confident it had made the right move.
“The decision to launch Scarborough Specialist Mortgages follows a comprehensive strategic review, which began last November. We are confident, therefore, that our strategy is right for the market.”
However, Sismey-Durrant also questioned whether the industry as a whole could cope with the number of lenders in the specialist markets.
He commented: “You have to remember the specialist market is a lot different to the mainstream, so while it may be easy to announce you are moving into the sector, it is much more difficult to bring the proposition through. I would question whether there are enough buy-to-let and self-cert underwriters to write the business.”
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, said:
“The average margin in the two-year fixed prime market has reduced significantly in the last six years so lenders are looking for new ways to generate capital. There has also been relative economic stability in the last 10 years so there has been a favourable environment for businesses, making buy-to-let and self-cert products more desirable.”
