In The Pipeline On the back of a successful 2017, Optimum Credit has ambitious plans for this year
It’s not surprising to find that Simon Mules is a happy man. Optimum Credit’s commercial director has just seen the lender through what he calls “a hugely successful year”. It wrote over £225m of second charge mortgages and he points to the Finance and Leasing Association’s published statistics in November, which shows that Optimum was writing 27% of all loans issued in the Market.
“It’s very clear that brokers are thriving on our innovative way of doing business and they recognise the lengths we have gone to to reduce their costs, by both saving time and removing the valuation cost in almost 60% of cases,” he says.
Optimum’s ability to continue to lend such substantial amounts in the second charge sector has been facilitated by its securitisation last year. Mules unsurprisingly says the transaction was a significant achievement for the second charge market, being the first publicly placed securitisation backed exclusively by second charge mortgages since 2004.
“This securitisation will allow us to continue the development of our business and help us develop our product offering,” Mules says.
“It’s our strategy to continue to securitise as part of a diverse range of funding sources, so you’ll likely see us come to market again in the medium term and periodically going forward.
“This was a magnificent achievement for Optimum and was a hugely impressive success for our finance and risk team, in conjunction with our owners Patron Capital and with support from Nat West Markets.”
In The Pipeline
A prime example of its product development was Optimum’s launch of a new interest- only product into the market in January. The product has a range of options that include a two and five-year fixed or variable rate at the end of which the mortgage is converted to a capital and Interest basis, which Mules explains ensures there is a credible repayment strategy built in. While Mules says the lender is already working on its next range of second charges, he reveals that Optimum wants to use its experience of debt consolidation lending and introduce first mortgage products to the market in the summer.
“We have seen other lenders move in to this space and we feel it would compliment our longer term strategy very well,” he says.
To support this, Optimum will be looking to recruit staff with first mortgage industry experience.
2017 saw staffing numbers at the company continue to increase. The lender now has a small internal sales team, which can deal with customers who like to transact direct or require a further advance.
“We recognise that as our sales grow in both the direct and broker channel, it is important to ensure that we have a strong compliance and QA team, which we have also strengthened,” Mules explains.
Although many lenders and distributors are leveraging technology to improve service and visibility, Mules says that Optimum is not overly reliant on sourcing systems.
“Optimum would like the sourcing systems to look at the way we transact business and recognise the accuracy of the results that we can give in real time and move forward with us,” he says.
“Sourcing systems like [to employ] a matrix; this way of working is flawed and impersonal, but the lending market has found it difficult to transition to a more individual and personalised approach.
“That said, we recognise that a move into the first mortgage market may require a combination of approaches to ensure we get established.
“We recognise the role played by sourcing systems and hope that we can encourage them to look at different ways of working.”
Future For Seconds
Mules says Optimum’s success has only been possible through the dedication of its staff and the support from the broker market. He points out that the lender has an excellent relationship with the Y3S/ SMG Group “…and not only because we are both Cardiff based – very easy to drop off urgent documents!
“More importantly, we recognise the work that the SMG Group put into generating substantial volumes of second charge business, this comes from dedication and experience, I once described them as ‘mavericks’; in this instance, being unconventional or non-conformist is not an outlier or weakness, but a tribute to their belief in how they break down barriers to being successful.
“It’s not ‘a job’ for the SMG Group or Optimum, it’s a passion and a shared drive to be the best at what we do.”
Mules reflects that, despite £1 billion of lending in 2017, there remains a lack of awareness that the second charge market exists.
“The expected hope of first charge brokers turning to seconds, where appropriate has happened on a small scale but nowhere near the levels hoped for despite the efforts of second charge lenders to educate the broker market,” he says.
“That said, the market is unlikely to diminish. Regulation has quite rightly improved the process for customers and brokers alike, but one thing is for sure, if the unsecured lenders continue to lend at the rate they are, there will be a continual need for customers to reassess their finances and seek consolidation where appropriate.
“The market is in rude health and there is no reason to suggest that we will see less than 20% growth in 2018.”
He adds that there is a drive to see the market grow and Optimum would like to continue to take the leading share of what is available in the second charge market, subject to it meeting the lender’s risk appetite.
“The way we work is innovative and we expect to continue to find ways of helping the market grow through both system enhancements and product development and are not simply reliant on reducing interest rates or moving up the risk curve.
“If I look back in 12 months, I’d like our brokers to recognise our service ethic, even if we can’t always be perfect.
“Optimum has brought a different way of working to the second charge market and there is every reason to believe that we could do exactly the same in the first charge market.”
Specialist first mortgage lenders would do well to be wary of Optimum’s dedication and drive.