Financial services group IFG and GE Capital Woodchester today announced a joint venture to market "specialist" mortgages in the Irish market.
The venture will be created by GE Capital Woodchester acquiring a 50 per cent stake of IFG Mortgages. IFG Mortgages will in future trade as Mortgage Business Solutions (MBS).
While continuing to develop its own mortgage business, MBS will also distribute and package GE's specialist "GEM" product.
The "specialist" mortgage area targets customers who do not fit the criteria laid down by the main lenders despite having strong equity and clearly demonstrated their ability to meet mortgage repayments.
Examples within the specialist category include customers who have irregular income streams and need to professionally certify their incomes, or consumers with some historical impaired debt who are denied borrowings by the main lenders.
MBS will have agency rights to the Irish market for this new product and will further consolidate its position as a mortgage facilitator in Ireland.
GE's entry into the specialist mortgage area follows the successful pilot over the last year of the GEM mortgage.
Analysts see the move as a good one for IFG as it will ease the company's reliance on the highly competitive traditional mortgage business and give its a strong position in the re-mortgaging and non-standard lending market , which is counter-cyclical.
According to NCB's banking analyst Mr John Kelly, having a partner such as GE also provides the business with additional credibility.
"Around 40 per cent of business submitted to standard lenders is turned away, so this will now be passed to GE now. Most of it will be re-mortgages, which will aid IFG's title insurance business," Mr Kelly said. Non-conforming lending represents about 10 per cent of gross mortgage lending in Britain.