Challenger bank Secure Trust enters mortgage market 

Paul Lynam, the chief executive of Secure Trust
Paul Lynam, the chief executive of Secure Trust

Challenger bank Secure Trust is pushing into the mortgage market by offering loans to people who struggle to borrow from the big high street banks, such as the self-employed.

The lender has started a new mortgage business that will be led by Esther Morley, who joined the bank a year ago from specialist mortgage lender Kensington and also previously worked for HSBC and Investec.

Secure Trust, which has struck a distribution deal with Mortgage Advice Bureau, believes it is entering a potentially lucrative market, with the Office for National Statistics estimating that there are 5.5m people in the UK who are self-employed or who work on zero hours contracts.

“There are millions of people looking to get themselves on the property ladder, move home or find a better deal with a new mortgage provider,” Ms Morley said.

“Our offering will serve customers who don’t fit the criteria of traditional lenders. We completely understand the finance problems our customers face and will work in partnership with Mortgage Advice Bureau to ensure we are placing more complex cases easily.”

Secure Trust is one of a host of so-called challenger banks that are trying to take on giants Barclays, HSBC, Lloyds Banking Group, and Royal Bank of Scotland. It is fighting with rivals including Virgin Money, Clydesdale and smartphone app-based Atom to lure customers away from the more well-established banks.

Secure Trust will lend to borrowers who find it hard to secure mortgages with the big high street banks

Secure Trust was listed in 2011 by Arbuthnot Banking Group, which focuses on lending to wealthy clients through its Arbuthnot Latham private bank division.

Arbuthnot originally held a majority stake in Secure Trust following the spin-out but last year sold down its controlling holding. It now owns about 18.6pc.

Paul Lynam, Secure Trust’s chief executive, said: “As one of the most strongly capitalised banks in the UK, Secure Trust Bank is very well positioned to progress our entry into the mortgages market as part of our long term diversification strategy.”

The lender will offer loans of as much as £2m per household. Customers will be able to choose from two-, three-, and five-year fixed rate deals with a maximum loan-to-value of 80pc.

It comes as Secure Trust prepares to post annual results for 2016 on Thursday, with stockbroker Peel Hunt forecasting the bank will report adjusted pre-tax profits of £32.6m, up from £23.9m in 2015.

“Of key interest will be commentary around its entry into the regulated mortgage market and what this means for its growth strategy,”  Anthony Da Costa, an analyst at the broker, said last week. “The group operates with a high level of surplus capital and, in our view, can increase its loan book by 3 times to 4 times by 2020.”