Challenger Banks Making a Splash as Lending Volumes Rocket

26th Oct 15
Islay Robinson GROUP CEO

Islay Robinson


Islay Robinson

One of the big stories of this week has been the startlingly strong figures released by a host of challenger banks. Challengers have been sending real ripples across the mortgage pool of late, and the market has been further disturbed by the news that Virgin Money now has a market share of 3.5%. Fellow challenger Secure Trust has released similarly healthy figures, boasting a loan book that has tipped over the £900m mark.

With so many deals on the market, consumers are increasingly keen to explore every possible avenue, and challenger banks are seeing their lending volumes soar in line with this increase in demand. Virgin Money lent out £5.5bn in the first nine months of 2015, up 38% on the same period last year. Including repayments, their net lending has almost doubled to £2.6bn. At Secure Trust, new lending is up 93%. It seems challenger banks have the potential to really squeeze high street lenders; at the very least they are cranking up the pressure on their larger rivals.

This news comes in the same week that challenger banks called on the competition watchdog to break the ‘cartel’ of big high street lenders in order to give customers a fairer deal. Giving our clients a true overview of all their options is at the heart of what Enness does. Not all brokers have access to this section of the market, however. To find out what is driving challenger growth and how to access their best deals, read on.

What is driving the growth of challenger banks?

In a move that will put the wind up their rivals, both lenders have recently poached senior executives from rivals to head up their operations. Ian Henderson, formerly CEO of Shawbrook Bank, joins Secure Trust to bolster its mortgage, personal lending and strategy units; Virgin Money has hired George Ashworth fresh from rival lender Aldermore.

Jayne-Anne Gadhia, CEO of Virgin Money, says that year-on-year growth is largely being driven by borrowers cashing in on favourable circumstances for a remortgage. At Enness we’ve been forecasting this increase in traffic for some time. With the base rate rise expected next year, we are entering prime remortgage territory.

As the success of challenger banks makes the market ever more competitive, lenders are relaxing their criteria and dropping their rates to attract borrowers. If you agree that now is the time to remortgage, have a look at our Remortgage Renaissance guide at the bottom of the linked page, or get in touch with Enness for a chat about your personal requirements.

How can I access the best deals from challenger banks?

If your borrowing quest is tempting you down non-traditional routes, it is best to speak to a broker who has access to these lenders. Unlike other brokerages, we have buckets of experience and established relationships with challenger banks. We will never overlook their offerings when scouring the market to secure you the best possible mortgage deal, and this is what puts Enness in a class above the rest.

If you have any questions about challenger banks, remortgaging or the current market, please don’t hesitate to give us a call. We are the best in the business when it comes to providing a whole market perspective and a tailored service to our clients.