Following on from last month’s update, it is encouraging to observe that the funding constraints and difficulties of the past few years appear to be rapidly disappearing. This is evidenced by the announcement of a new lender to the market place, backed by a global investment firm, who clearly has no issue in providing both capital and funding lines. They are putting together an experienced team who command respect and we think they could be followed by more re-entering the mortgage arena.
A lot of discussion at recent industry events has focussed on the expected growth in mortgage lending within the first and second charge markets over the coming year from both existing and new lenders. We continue to ask questions, of both categories, around the new set of challenges potential growth will bring. For new lenders, the regulator wants to see external quality controls set up to ensure that standards, controls and business goals are being adhered to without going ‘off message’. For existing players, have they amended their own risk processes to manage the expected growth in volumes?
Rockstead can help in both scenarios. We have secured a number of contracts with funding institutions who, recognising the potential issues, have asked us to review new mortgage originations as soon as they complete, in both existing and new lenders. Gone, we hope, are the days when it takes the funders sometimes years to discover that the quality of asset they are funding is not what they envisaged when they had input into the original criteria. It is far more cost effective and ensures regulatory compliance, to rectify issues that are discovered early on in a process than to postpone decisions and have to invest in a major and possibly costly audit later.
Internal resources always come under immense pressure when a company is enjoying a sustained period of growth, whether it is a new entrant or not. The external audit function supplied by Rockstead can help “fill the gaps” that can appear and working with our clients, we can assure that growth is in line with their own aims and objectives.
By adopting a collaborative approach, it is possible to achieve growth without compromising lending standards.