Are lenders making their products too exclusive?

When April Mortgages and Gable Mortgages unveiled their 100% LTV, no deposit products over the past ten days, the offerings garnered much attention and generated plenty of excitement about how the industry was stepping up to address the affordability challenge of first-time buyers.

It was an excitement that clearly filtered through to borrowers too. As one mortgage professional put it after April’s announcement: “We are one of the brokers able to advise on this new product. Since launch we have received hundreds of enquiries, which really does show the need for a product like this.”

Great news, then, for all those brokers who can access these new solutions for first-time buyers, hungry to take them up, but not so great if you aren’t among the select few who have been approved to advise on these products. April and Gable have chosen not to make their innovations available to a wider community of brokers, it seems. This is a not a new approach, and can often occur with newer lenders. April has told Mortgage Introducer that its approach is, in part, about raising standards of mortgage advice and it will broad access over time.

Bob Singh (pictured left), specialist mortgage adviser from Chess Mortgages can barely contain his exasperation. “When a new product is launched that is so groundbreaking, like the 100% mortgage or 7x income, then it’s fair to say it will attract a lot of media attention,” Singh said. “Given the state of our economy, the 100% mortgage was a breath of fresh air. Some brokers who are not part of the few chosen networks will be unable to access this product and will, as a result, lose clients to their competitors. This is awfully frustrating when the market for such products is currently a duopoly between April and Gable. There are of course other 100% schemes, but none that have grabbed so many headlines.

“It’s perfectly normal for lenders to trial products with a select set of firms to test their systems and get feedback on processes and systems. However, when the initial teething problems are sorted and staffing is in place, there is no reason to prejudice brokers and deny access. Consumers expect advisers to have access to all these lenders, which is not always the case.”

Singh added: “I urge new entrants to start to have conversations with networks and distributors early on so brokers are able to onboard at the earliest opportunity to be able to offer their clients these products. Demand will find its way to the lenders if the products are deemed competitive and suitable, whether that’s through one network or via all of them. The rush will come either way. Let’s see the end of this practice where the ‘big boys’ get first dibs whilst the Olivers of this world are left wanting more.”

Singh notes that quite a few lenders have entered the marketplace recently. “There is another one  in the offing for Q3 whom I’m proud to have given some input,” he said. Is it possible they will launch products differently? We will have to wait to see…

Read more: Brokerage CEO reflects on the change he has seen during his career

When products are restricted by geography

Sheena Campbell (pictured right), managing director of Campbell Financial, relates to Singh’s frustration, though comes at it from a slightly different, geographic perspective. “This is definitely a bit of a headache, especially for those of us based in Northern Ireland,” Campbell said. “We’re often overlooked when it comes to specialist products or headline-grabbing launches. It can be frustrating to see brokers elsewhere showcasing a shiny new offering and building fresh conversations with clients, while we don’t even have access to it. That said, I do understand it from a business perspective. For some niche or specialist lenders, lending only in certain regions, like England, might be a strategic move to manage risk and grow sustainably. In some cases, network or mortgage club exclusivity comes down to size, scale and financial agreements.”

Campbell added: “From a client point of view, it’s easy to see how this lack of universal access could feel unfair. But most brokers, within their own locality, tend to have access to a similar core product set so the playing field isn't completely uneven. Still, I’d love to see more inclusive product launches that don't stop at the mainland.”

Restricting access is above raising advice standards

Mark Eaton (pictured right), chief operating officer at April Mortgages, acknowledges that its product, as a solution for those struggling to save for a deposit, has drawn considerable interest – and its approach to the launch is about raising the bar for advice standards.

“Despite its popularity, we’ve chosen to restrict distribution to a select group of intermediaries,” Eaton explained. “This is never an easy decision to make but it's a decision that isn’t about limiting opportunity, it’s about protecting standards. We believe lenders have a role to play in improving the overall quality of mortgage advice. That means working with advisers who demonstrate a high level of understanding, especially when dealing with higher LTV products like our no deposit mortgage. These advisers are not just selling a product, they are guiding clients through complex decisions with long term financial implications. By limiting access to those we trust to meet those standards, we’re helping raise the benchmark across the industry.”

The restriction of April Mortgages’ latest product is also about ensuring responsible recommendations, according to Eaton. “No deposit mortgages can be life changing but only when they are genuinely suitable,” he observed. “Restricting distribution allows us to work closely with selected advisers to ensure the product is being positioned appropriately and responsibly. We don’t just expect excellence we want to help build it. By initially limiting access, we can provide more intensive support, feedback, and education to advisers. This helps foster confidence, capability, and a higher standard of client care. Over time, as we scale, we aim to broaden access only to those who share our commitment to advice quality.”

Furthermore, it’s about April Mortgages managing risk and maintaining service, to ultimately drive change not just sales. “Of course, there are operational and financial considerations too,” Eaton acknowledged. “A controlled rollout helps us monitor early performance, manage risk exposure, and maintain strong service levels during a period of high demand. But for us, these are the mechanics not the mission. The real goal is to build sustainable growth while supporting advisers in delivering better outcomes. Ultimately, we want to do more than offer innovative mortgages we want to help set a new standard for how they’re recommended. Restricting access to products like out no deposit mortgage isn’t a barrier it's a statement that our products deserve expert advice, and that as a lender we have a duty to champion that principle.”

Mortgage Introducer has also approached Gable Mortgages for comment.