Wealth & Finance International - 2021 Fund Awards 15 APR2w2 increase rates where applicable. As a specialist and niche lender to the over 55’s market, the headline mortgage rates offered are already higher than the mainstream market. In terms of the borrower’s ability to pay their mortgage, this is often linked to their pension income, corporate pensions and state pension typically rise with inflation and private pensions can be protected with the purchase of inflation-linked annuities. What are your plans for 2021 and beyond? As we look ahead to our third year as a fund, it is our aspiration to become a market leader within the asset-backed lending sector, attracting further interest from institutional clients. Further capital raising alongside our initial mortgage partner, potentially adding additional mortgage pools or lenders. As a manager, we seek out innovative lenders, who are champions of change and look to revolutionise the way older people can borrow into retirement. Company: Mansard Capital Management Ltd Name: Daniel Mcgonigle Email:
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[email protected] Web Address: www.mansardcm.com Address: Malta Head Office - 2nd Floor, Airways House, High Street, Sliema SLM 1549, Malta Telephone: +44 7887 782429 In September 2019, Mansard Capital Management launched Horizon Plus fund, primarily working alongside a leading UK regulated mortgage lender who specialise in interest-only mortgages to the over-55s market. Established in 2010, Mansard focuses primarily on asset backed credit opportunities, with the flexibility to invest across the capital structure. Horizon plus fund is the firms second credit fund, after Sellar Development Fund was launched in 2014, as a joint venture with Sellar Group, developers of The Shard in London. What are the funds underlying investment? The fund provides capital to the mortgage lender, alongside a leading UK bank that acts as the senior warehouse lender. The lender seeks to originate a pool of interest-only mortgages, issued to people over the age of 55. This type of mortgage is classified by the FCA as a mainstream product, meaning any licensed mortgage broker can offer it to their borrowers. As specialist lenders, they are not hampered by the shackles of legacy credit and underwriting policy, and always put the best interests of mature borrowers first, with products and processes tailored to their needs. How has the fund navigated the Covid pandemic? To launch a fund just as we entered a global pandemic had its challenges, but we have a strong investor base and raising capital via online meetings and webinars thankfully worked very well. We are incredibly proud of what we have achieved, delivering consistent investment returns of 6.65% in 2020 and year to date 7.14% in 2021. This is outstanding performance, when you consider the UK’s mortgage market was practically frozen, for the first half of 2020 due to lockdown restrictions. A time, where limited mortgage applications were being completed, as service providers like estate agents, surveyors and valuers were unable to fully operate. Can you provide an example of a customer of the lender? One thing our initial lending partner is incredibly proud of is their oldest customer to date, who is an 87-year widow who had six months left on her interest-only mortgage and was being pressured by her high street bank to pay back the capital. In real life, this meant she was being forced to sell Best Asset Backed Lending Fund: Horizon Plus Fund her family home of 30 years and move into rented accommodation. She had enough pension income to meet her payments, but that counted for nothing with the bank. Our partner was able to offer her a fixed interest rate for life at a 75% loan-to-value for the full amount requested of £85,000 and she was overjoyed at being able to stay in her home. What is the default or repossession risk within the portfolio? The default rate across the entire UK mortgage market is currently 0.69% as of Q2 2021, with a repossession rate of 0.02%*, the mortgage pool created that we have providing funding too is significantly lower risk as the mortgages have a low loan to value (average 48%), they are primarily residential properties (not 2nd home or buy to let) and the borrower typically has a strong credit rating. We adopt a very comprehensive underwriting process on each borrower, ensuring their income and affordability is assessed at application and stress-tested against future life events, such as death of a spouse and the ability of the last survivor to meet ongoing payments. Since launch, no defaults or repossession have been incurred. *Source: Bank of England, MLAR summary Q1 2021. How do you deal with old aged borrowers if they don’t pay? In the event of a default or repossession, like any other mortgage provider, the lender has the first charge against the borrower’s residential primary residence. The mortgage terms are generally fixed term or fixed for life with the mortgage usually ending on death, sale of property, or moving into long-term care. If the borrower is unable to make the interest payments, it is usually due to a major life event, such as the death of a spouse, terminal illness, or mental health issues (dementia or other age-related illnesses). The originator will work with the borrower, their family, and charities to assist any customers deemed as vulnerable. Are you concerned by interest rate rises? The portfolio being generated is protected using cash flow swaps in order to mitigate risk of interest rate rises. In general, if we saw an interest rate rise, this would be reflected across the entire mortgage market, meaning the originator would Mansard Capital Management Ltd