Business mortgage

Magellan Homeloans closes its doors

Specialty lender Magellan Homeloans closed its doors to new business today, citing competitive market pressures related to falling interest rates and increasing credit risk.

The lender has said it will honor all unexpired mortgage offers, but will not extend or materially alter any offers issued.

However, it will immediately stop accepting new candidacies and will not advance any policy decisions or pending candidacies.

He added that applicants who paid an administration or appraisal fee to Magellan but did not receive a mortgage offer will be reimbursed for these fees.

There will be no impact on existing customers whose mortgage has ended, all contractual obligations still apply, and their home can be repossessed if they don’t meet the repayments.

A 30-day consultation period will begin for the Lender’s 65 new business employees in its Leatherhead and Birmingham offices.

Employees of third-party customer service providers are not affected by the announcement.

Unbearable pressures

“In response to competitive pressures, the company has recently seen a number of lenders reduce mortgage interest rates and increase credit risk despite rising financing costs,” said Magellan.

“Seeing this as unsustainable, Magellan took this decision reluctantly, after considering a number of alternative options.”

He added that affected applicants should contact their mortgage advisor with whom Magellan will, within the next two weeks, seek to make arrangements for reimbursement of costs.

The status of all affected pipeline cases will soon be updated on the Magellan Hub. If you have any questions, intermediaries should contact Magellan through their regional sales manager, regional account manager or help desk on 0330 335 5777.

Not viable in the long term

CEO Matt Gilmour said, “The competitive landscape has continued to change, mortgage interest rates decline as the cost of funding increases and some lenders are taking on more credit risk despite the volatile economic environment.

“Magellan takes pride in maintaining excellent credit standards while helping clients who have been disqualified by major lenders. However, we do not want to be competitive in a market that we consider unsustainable.

“The determination, commitment and tenacity shown by everyone at Magellan Homeloans has transformed our company into a mortgage lender of which we can be proud. It is with great regret and sadness that the Board of Directors concluded that this was no longer a viable business in the long term. “

Owain Thomas is Editor-in-Chief and Contributor of Mortgage Solutions and Editor-in-Chief of Specialist Lending Solutions. He also has experience in the areas of protection, pensions, benefits and human resources. Owain won two Headline Money Awards and the Protection Review Journalist of the Year award.