Good things come to those who wait

Being a broker has always been in my blood. My Father was in the industry, and as I grew up I developed a real passion for the workings of the property market.

I left school aged 16, and had my own business at 21. After the recession of the 80s, I relocated to Cornwall, and set up a mortgage broking business with two staff. I took a gamble on using call centres as our main form of marketing – still a relatively new concept. The business steadily grew – at its peak; The Mortgage Group was employing 950 people across four locations. Cornwall has never been considered a hub of business activity, but it was the energy and enthusiasm of the staff that I employed that drove the business on.

At our peak, we were part of a market which had as its main lenders such companies as GE Money, GMAC-RFC, Kensington, SPML, MPLC and others. They were completing business in excess of £1bn a month and over 10,000 cases a month.

In 2004, I decided the time was right to sell The Mortgage Group to GE Finance. This was duly completed, but retirement was not for me. I started The Money Group, based on a similar business model to The Mortgage Group, and focused on the remortgage arena. Expansion of The Money Group has been steady, and at present, it is a case of riding out the economic storm. Although many in the industry had an inkling that the Roman orgy of risk and excess could not continue, I do not think that anyone could have predicted how rapid the downturn has been.

However, during relatively quiet times, it is a great opportunity to prepare for the future and the recovery of the market. We are currently rebranding The Money Group as Think Fresh Start Limited, and have just acquired two businesses in Manchester. We are also expanding our portfolio of services into new areas (the days of ‘sub-prime’ mortgages, which were one of our business areas, are well in the past).

We are also on the hunt for a new call centre premises for 450 staff. Much as we would love to have our main hub in Cornwall, as this was where it all started, there is a lack of available premises in the county at present, so we may have to locate the call centre in Manchester. We will always retain a base in Cornwall though, as this is where it all started. It may seem strange to acquire two companies, and be in the process of setting up new premises for hundreds of staff, but I am extremely optimistic about the future of the housing industry.

At this moment, there is a dormant volcano of potential buyers. Banks are currently risk averse in the extreme when it comes to lending. This comes after a period of reckless lending and a lack of meaningful regulation in the industry. The Prime Minister has been making a lot of noises about forcing the lenders to start lending again – and a happy medium will be reached within the next few months, where banks will begin lending at appropriate levels of risk.
I see house prices dipping another nine percent at most between now and September 2009. I believe that at this point, investors will reach a tipping point, and begin widespread purchases of what they see as property at bargain prices.
Homeownership is still an important aspiration for UK adults. The industry’s task is to ensure continued activity at acceptable levels by harnessing this basic desire, and to ensure that first time buyers are able to gain access to lending.

We may see lending taking place in new and innovative ways, and there are valuable lessons that can be learned from the current problems: lending must be centrally regulated, it must become rules based as opposed to principles based, and there must be a zero tolerance approach (as opposed to relatively paltry fines) for those who flout the rules.

Tony Murtagh is CEO of Think Fresh Start Limited. Go online at www.the-money-group.com