The number has surprised many in the industry and, while the FSA refused to confirm the figure, it has prompted speculation as to how they would fit in the already competitive mortgage marketplace.
Thomas Reeh, chief executive of blackandwhite.co.uk, said: “Unless they have very deep pockets, entrants will find it very difficult to come in and gain a meaningful market share. Among the 28 there are some very specialist lenders and people write them off at their peril. Smaller players can be much more nimble and have a far greater effect than their size would suggest. In my view, they will be looking at high loan-to-values (LTVs) and high adverse, particularly with the growth of consumer debt showing no signs of slowing up.”
Paul Brett, director of Freehold, commented: “Entrants to the market will either have to have massively competitive products or seal in their distribution to be successful. Existing lenders should be concerned and keep their eye on it.”
Ian Nelson, chief executive of Unity Homeloans, agreed distribution was important for any entrant. “If they’ve got distribution to come to market, there’s reason to believe they will be successful. But part of their format would have to include packagers or networks. I’d be surprised if they all got through, as there’s a lot more to becoming a lender than people realise.”
Andy Frankish, managing director of Mortgage Talk, believed new lenders would be a good thing for the market. “While brokers do have to be careful when recommending unknown brands, it means better choice, more competition and generally better service. Innovative lending is what we need.”
Samantha Bennett, spokesperson for the FSA, said: “We don’t discuss regulated firms and will only do so when it comes to the final stages of completing the application.”
