"With inflation climbing, and the base rate soaring, we stalled. With capital drying up, raising the necessary equity to meet regulator requirements became prohibitive."
Cameron Orcutt, CEO and co-founder of new first-time buyer lender OnLadder, has announced the firm's closure before securing full authorisation from the FCA.
The intermediary-based deposit lender aimed to partner with potential buyers to top up a 5% deposit, helping them onto the property ladder.
Speaking to Financial Reporter in 2022, Orcutt said: "The money that we lend to top up the buyers’ deposit can then be repaid by making low monthly payments over the life of the loan, and using the equity in your home at remortgage or sale of the property to pay us back, reducing the need for buyers to pay out of pocket.
"It works for mortgage lenders too: the loan-to-income and affordability stress tests can make it harder for them to take on high LTV lending, even for those with excellent borrowing prospects. However, if a borrower comes to them with an OnLadder deposit agreement, those issues are avoided."
Speaking today on LinkedIn, Orcutt said: "Years of hard work got us to a point in the first half of 2023 where we had our initial partners in place, but with inflation climbing, and the base rate soaring, we stalled. With capital drying up, raising the necessary equity to meet regulator requirements became prohibitive.
"We were stuck. We tried pivoting, but we were always brought back to the same place. Closure, though heart-wrenching, was the only option."
Orcutt added that "for a young company, debt exposure in a volatile environment can deter investors, showing the need for a model that is resilient to such fluctuations".
He said that "while it's the end of OnLadder, it is the beginning of something else", stating that "in the long term, I am undeterred in my resolve to make an impact in the first-time buyer space".
