Putting the Trust in Specialist Lending
By David Craik -
Taking on a new job at the beginning of lockdown was never going to be straightforward but being part of a culture of adaptation, relationship building, and innovation has helped both Marcus Dussard and Hampshire Trust Bank flourish over the last 12 months.
Marcus was appointed Sales Director at HTB’s Specialist Mortgages Division last March just before the first lockdown and so has taken on the new role working mainly at home.
“You miss that buzz in an office when a deal comes in and completes and I can’t wait to get back there,” he says. “But we have worked really hard to maintain and develop relationships over Zoom with each other and, of course, our brokers over the period.”
Indeed, Marcus, whose division focuses on all types of property investment lending, says close relationships are fundamental to the HTB culture.
“You need to know your operations director, head of underwriting and completions team and know them well,” he says. “That’s particularly important for HTB as the type of deals we do have their complexities from involving a limited company to an offshore trust or a UK national buying two buy-to-lets. One of our strengths is that we deal with each case on its merits, getting all the major stakeholders into a room and talking through its many characteristics. That’s been harder to do on Zoom, but the approach has remained the same.”
He explains that this includes having a daily meeting involving himself, the Managing Director of HTB Specialist Mortgages Charles McDowell, a member of the Risk Team and the Head of Underwriting.
“Our BDMs inform us about the cases they think need additional guidance or the ones they need more information to support a decision,” Marcus explains. “For each case we decide quickly whether we can support it or not. If we do go ahead, we know that we have got the buy-in from all the major stakeholders right from the start of the process. That makes it easier as the case proceeds.”
Last March the meetings largely involved informing brokers how the group was adapting to the outbreak of the pandemic and national lockdown.
“Supporting our borrowers through that very difficult time was our first concern,” Marcus says. “Everyone in the industry had to consider how to do that and we adapted really well. This included making some sensible changes to lending criteria. Together with our Managing Director and our Commercial Director we spoke to every broker about what we were doing. Taking the time to do that went down well.”
Criteria for lending on residential, commercial and semi-commercial bridging have all now returned to up to 75% NET LTV.
But it wasn’t just defensive action that was taken by HTB, the pandemic also sparked innovation.
This included the launch of the 5:2 mortgage last June where buy-to-let landlords can fix a mortgage rate for five years but leave after two without facing penalty charges.
“We were finding that some clients were wanting a two-year option because they had a plan to sell or do a significant development or refurbishment,” Marcus explains. “Now if they still want to do that, they can but they now also have the certainty of a 5-year deal if their plans change. It’s proving very popular and has given brokers that little bit of extra flexibility that they need.”
HTB also launched a new Refurbishment in Term product allowing borrowers to wrap up a light refurbishment such as rewiring or a new ‘spruced up’ kitchen into their normal 5-year term arrangement.
“We listen to brokers and their needs. They told us that some lenders were being restrictive about clients looking to upgrade and refurbish. It’s about offering diverse products,” Marcus states. “People are spending more time at home and refurbishment and space has become important. I don’t see that changing.”
Other social changes resulting from the pandemic include students staying at home to study and attend online lectures rather than living in University accommodation.
“More complexities post pandemic means more demand for specialists from borrowers. They come to us because there is a kink in the deal and it isn’t proving to be straightforward for a high street lender,” says Marcus. “But, even as a specialist lender, how do you deal with student accommodation loan applications when many students are not on site? How much of the income is guaranteed rent and how much will not come in? You then have to drill further down into the client’s situation to determine whether they can withstand void periods. What does the rest of their portfolio look like?”
Similar calculations will have to be made in semi-commercial given the difficulty seen on the High Street and other sectors such as pubs and hospitality in the pandemic.
“Some semi-commercial developments would have been wholly reliant on commercial income before COVID. But now the high street has been impacted we are asking that 100% of the coverage is dealt with by the residential element,” he explains. “Yes, semi-commercial is complex, particularly at the moment but fundamentally a mortgage is a very simple thing. It is the criteria around it which brings the complexity and again that comes back to our expertise. It is looking at each case on its merits and not differentiating on price. We know the LTVs that we are comfortable with.”
Marcus says despite the uncertainty around the social and economic fallout from the pandemic that HTB is eyeing up ambitious growth in the months ahead.
That includes bringing in new talent to the company and industry through a soon to be launched graduate scheme but also utilising its existing strengths.
“How will things adapt? Will city workers commute and go back to the office, and live in flats or will they look to move out into the countryside? We don’t know what we don’t know about the future, but we are good at adapting! What we do know is that we are looking forward to a period of stability,” he says. “We welcome opportunities right across the spectrum. We have a diversified portfolio and want to be the go-to bank in all our chosen areas. We want brokers to think of HTB with every case. That is our main goal.”
In a time of such change, it therefore comes back to solidifying those broker relationships. HTB is partly doing this through technology.
It is currently piloting a portal allowing brokers to see where their cases are in the applications cycle.
“We talked to brokers beforehand about what they wanted from it,” says Marcus. “We brought in desktop valuations during the pandemic and have been using eSignatures for a while now. We are always looking to enhance our proposition in any way we can. But it’s also about face-to-face meetings. We can’t wait to get our BDMs back out on the road and enhancing those relationships. I am also keen to get out there as well!”
He will have a lot to discuss.