July 22, 2008 | posted by Michael Baxter in Banking |

Talking of nerves, one niche player in the mortgage market showed a great deal of nerve recently.

Edeus, which was set up by former HBOS man Michael Bolton in 2006. An auspicious year: 2006 was when the property market was in the midst of a never-ending boom – at least it was never ending if you listened to the property industry, and subprime lending was the new big thing.

The story is about as different now as you could imagine, and that is why Edeus is taking the extraordinary step of encouraging customers to pay off their loans and close their accounts.  If they do comply, there will be an 8 per cent discount and no redemption charges.

Alan Cleary, managing director of Edeus, said: “We need to utilise our capital as effectively as possible to fund our new business ventures.

“Presently, it is proving challenging to do that through traditional channels, such as whole loan trading and the securitisation markets. But Edeus has never been interested in doing things the traditional way. ”

The Edeus deal is being hailed by the company as a win–win situation for the intermediaries who introduced the mortgage customers to the firm in the first place. Customers who want to pay off their loan in the way described, can do so via their intermediary, who then gets the opportunity for a commission on finding an alternative mortgage supplier.

Mind you, one assumes these customers of Edeus will actually find it quite difficult to get an alternative mortgage. If Edeus is so keen to ditch this business, then presumably others will be less than anxious to jump on.

Exiting Edeus customers will also have to pay set up costs with the new mortgage company.

Nerves at the bank may be taut, but frankly, subprime mortgage holders must be finding their tempers are getting frayed too.