'Evolution is vital in the mortgage market'

Promotions recognize talent and reveal rethink of operating model

'Evolution is vital in the mortgage market'

Mortgage companies “can’t become Nokia” – they have to keep evolving in response to market changes, the director of sales at Foundation Home Loans has said.

Grant Hendry told Mortgage Introducer that firms “can’t become complacent”, given the current economic situation and the fallout from the COVID pandemic, which forced companies to rethink their operating models, including remote working.

Hendry made the comments following the lender’s recent promotions of key staff, the latest of which saw mortgage veterans Keith Jones and Katie Quigley move up the ranks to become senior regional account managers.

Hendry said the move was part of an expansion program by the Bracknell-based lender and also a response to the effects of the pandemic, which forced him to re-evaluate work practices.

He said: “If you go back over the last couple of years, we’ve had management come in and go out - it’s been a lot of change and a bit of instability.

“Since we’ve had the senior management team in place, we’ve basically been doing a lot of it ourselves and we’ve been spread very thinly. When somebody leaves the company, you ask why. There are some very talented people in the company, (but) a bugbear of mine is losing talent.”

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He said he reviewed the business model and the way the sales team operated to ensure that they were more accessible to brokers, whose feedback proved invaluable.

“We changed the operating model when we brought all the sales team back after furlough. We’ve embraced things like Teams, doing webinars and using technology as a far more cost-effective way of working. The regional account managers are only out one day a week and they’re at home four days a week. You wouldn’t think it’d be the case, but I speak to people more now being at home because I’m more accessible,” he revealed.

Founded in 2015, Foundation Home Loans is an intermediary-only lender that focuses mostly on the buy-to-let market and higher-income residential properties. 

For Hendry, understanding a customer’s needs, as well as offering a good underwriting proposition and having a knowledgeable sales team are paramount.

“When you strip it back, there’s a lot more complexity to what’s going on,” he said. “So, when a broker submits an application, let’s say a £5 million portfolio, they’re bringing three or four cases to us to begin with. We underwrite the customer once and we underwrite the property separately, so it just makes it easier for a broker to then submit another case to us because we already know that customer, we already know that structure.”

Hendry said landlords were now diversifying, adding that there was “a huge opportunity” in HMO (house in multiple occupation) and short-term deals.

“We’re seeing more lenders come into this space now because landlords want to diversify. They want to take advantage of those additional opportunities. So by constantly evolving the product proposition, it puts us in a very strong position,” he said.

In response to that and other market shifts, the lender recently increased its LTVs to 85% on buy-to-lets, and to 90% on residential.

“That area of residential is a really important part of our business and it’s getting to the stage where that makes up as much business as it does on the buy-to-let side,” he said.

“It’s a very crowded market at the moment with new lenders coming in, with people mirroring criteria and copying products, and if that happens, that’s natural. But for us, it’s really important that we continue to evolve. We can’t become Nokia. You can’t become complacent, you have to keep evolving as the market continues to change. And that’s where we are as a lender at the moment.”

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Evolution notwithstanding, firms are also having to navigate strong economic headwinds, with inflation now at 7%, mortgage rates increasing rapidly and property prices at an all-time high, which will put many potential buyers off as well as force lenders to rethink their strategies with greater vigour.

Foundation’s bespoke approach could set it apart from other lenders, however. Hendry said: “For us, if you look at residential, this is where specialist lenders have their own market. If you’re on the high street you’re doing volume and you haven’t got time to look at the complexity of the actual case.

“But that’s where we’re seeing the benefits at the moment. We have time to assess the application on its individual merits. And that’s really important in today’s market.”

Hendry summed up his overall philosophy when asked what advice he would give a young broker starting out in the industry.

“I use this quote all the time from Winston Churchill which is ‘a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty’. Never say ‘no’ to a deal.”

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