When V Loans was acquired by the Key Retirement Group last September, it was not just welcome news for the firm but also demonstrated the industry’s appeal to the wider financial market. Loan Introducer speaks to one of the firm’s founders, Marie Grundy, about how the investment from the Key Group is helping shape the business.
Q: How has being acquired by the Key Group changed your business?
A: Being part of the Key Retirement Group has been hugely beneficial in enabling us to invest for growth and we believe that the combination of our expertise in the secured loan market, allied with the financial strength and stability of a major financial services brand, delivers one of the most compelling second charge propositions in the industry. We are now building for further expansion of the business so the future looks very exciting.
Q: Do you welcome FCA regulation of the second charge mortgage market?
A: The transference of second charges into the mortgage regime will provide greater consumer protections, and we would fully expect more intermediaries to include second charges within the advised sales process as a result of the alignment of regulation between these two markets. It is important though that second charge lenders can continue to operate as a specialist market; serving those borrowers who can demonstrate long term affordability and may not fit the tick box lending mentality deployed time and time again in the mainstream lending market post Mortgage Market Review.
Q: Do you predict more acquisitions will take place in the second charge market due to the cost of regulation?
A: I think it is highly likely that there will be further consolidation in the market; but my view is that this is borne more out of opportunity, as a result of regulation, combined with the consistent year on year growth this market has demonstrated in recent years.
Q: How do you see the market changing over the next five years?
A: Distribution channels may change to adapt to the expected demand from mortgage intermediaries, however this is a specialist market and given the increasing demands on the time and resource of mortgage intermediaries. Master brokers will continue to play an important part in sourcing and placing customers within this specialist area of lending. I also expect to see much more product innovation from this sector as a result of the rule changes, which should have a hugely beneficial effect on customer choice and suitability.
Q: Do you see your business expanding outside of second charges?
A: We’ll be proactive in looking at other areas of specialist lending which will benefit borrowers. We already offer bridging and buy-to-let lending products and we would expect to experience more growth in these areas of lending. We have strong links with the retirement market and we will continue to drive product innovation in this area.
Q: Do you feel enough second charge mortgage brokers are utilising their trade body – the Association of Finance Brokers?
A: The AFB is well supported by the majority of this industry. Clearly the role of the trade body has never been more important in representing the industry with the regulator and government bodies as we move towards the biggest regulatory overhaul this market has experienced. We all need to pull together as an industry and engage with our trade body to ensure we fully understand what impact the new rules will have on our businesses, and how we adapt to the dual regulation changes that will be upon us in less than 12 months.
Q: What would be your ideal product from a lender right now? / What are you seeing demand for?
A: We are very interested in the growing opportunities in the buy to let market and there is an increasing appetite amongst second charge lenders to enter into this space. We do need increased competition in this product area to drive innovation, and more competitively priced products, to meet the growing number of landlords in the UK.
Q: Do you think the market will continue to see record growth in the next 12 months?
A: I think the next 12 months will continue to demonstrate strong growth in this market. Networks and mortgage clubs are becoming increasingly engaged with this sector and it is important that we continue to provide educational support to mortgage intermediaries to give them the knowledge they need when considering what is the most suitable product for their clients.