Dynamic Credit opens mortgages to institutional investors

The Amsterdam-headquartered asset manager has a new tech platform to connect institutional investors directly with residential mortgage borrowers.

Dutch asset manager Dynamic Credit has launched a new platform offering institutional investors direct access to the residential mortgage market in the Netherlands. Borrowers will be able to apply directly for a mortgage via the online platform, called bijBouwe. 

Dynamic Credit already manages a portfolio of Dutch residential mortgages sourced through the well-established domestic financial advisory network but the new platform will bring its lending network straight to borrowers.

Several domestic pension funds and one other institutional investor are providing the seed investment for bijBouwe. It is open to institutional investors with a minimum initial investment of €100 million to ensure the portfolio includes the correct diversification, PDI understands. 

The firm divides the mortgage market into 12 segments depending on the duration of the loan and the credit risk of the borrower and investors can choose where to allocate their capital. The platform will originate loans up to the regulatory limit on loan-to-value ratios of 103 percent. That cap is reducing by 1 percent a year over the next few years. 

Borrowers using bijBouwe will benefit from competitive rates and quicker decision-making – standard mortgage lenders take six or seven weeks to make a decision while if all information is provided, bijBouwe can process applications in around five days. 

For investors, the platform offers more up-to-date credit risk information by asking borrowers to update their income information once a year. The firm’s historic expertise in analysing mortgage risks also plays in the investors’ favour, Dynamic’s head of credit, Jeroen Spoor, told PDI

“This is a unique opportunity for investors to get customized consumer exposure. We developed a state-of-the-art responsive loan application platform to give instant feedback to consumers. We can also link other consumer loan products directly to investors with our risk-based pricing using prescriptive analytics. What’s important for investors is that the duty of care towards consumers remains entirely with Dynamic Credit,” said Tonko Gast, founder and chief executive of Dynamic Credit. 

The platform will earn money from origination fees and the charges on the servicing of the assets. 

Dynamic Credit has a servicing agreement with Quion which services €40 billion in assets. The firm manages mortgage portfolios for two insurance clients and is also planning to issue a new residential mortgage-backed security in the first or second quarter of 2016. 

Alternative asset manager Dynamic Credit was established in 2003 and historically issued collateralised debt obligations. The firm has offices in New York, Amsterdam and Jakarta. The firm has expanded to include advisory and mortgage-origination services.