Shawbrook bank has bought specialist lender Bluestone Mortgages in a cash and share deal for an undisclosed sum.
The bank says Bluestone Mortgages has originated over £1.8bn since its launch in 2014, and currently manages a book of over £1.3bn residential loans.
It adds: “The specialist mortgage market is expected to grow substantially over the long term, driven by increasing numbers of people choosing to work for themselves or in sectors where incomes are complex.”
The lender adds that Bluestone Mortgages and The Mortgage Lender brands, backed by its capital base and presence in the deposits market, mean that it is “well placed to meet this growing demand”.
Shawbrook has worked with Bluestone Mortgages since 2017 through a platform lending arrangement.
The specialist lender employs around 90 staff in offices based in London and Sheffield.
Shawbrook chief executive Marcelino Castrillo says: “Bluestone Mortgages is a well-established brand in the UK specialist residential mortgage market, and by bringing the two organisations together, we can use our combined capabilities and scale to offer an even stronger proposition to UK homeowners.”
Bluestone Mortgages chief executive Steve Seal adds: “Shawbrook has been a long-standing strategic partner for many years and joining the Shawbrook Group is a natural step as we continue to grow and develop the business.”
Brokers say the profitable specialist lender sector may see further consolidation.
Riverside Mortgages owner Lewis Shaw says: “First, Barclays bought Kensington, and now Shawbrook is buying Bluestone. It looks as though consolidation in the specialist space may be the shape of things to come, reducing trading costs and increasing profitability in the face of what appears to be significant economic headwinds.
“Hopefully, it means those borrowers who have more complex circumstances can continue to be served, as it’s likely that demographic is about to grow by quite a margin.”
Trinity Finance adviser Amit Patel points out:” Specialist lending will be the growth area in 2023 and beyond, and a very profitable sector to be in which is why we have seen some consolidation in the first few months of this year as lenders try to diversify their product offering to cater to this niche market.
“We may well see further announcements from other lenders as each lender jostles for a slice of the pie.”