Compass booms on rate fears

HIGHER interest rates spell good news for City newcomer Compass Finance, which today unveiled its first set of results since floating on the Alternative Investment Market in March.

The company, which specialises in selling to people who are unable to get the mortgage or loan deal they want from High Street banks or building societies, said higher rates had led to a surge in interest from customers with unusual or problem credit histories.

Chief executive Chris Smith said the company, which provides broking and packaging of secured loans, unsecured loans and mortgages for clients requiring debt consolidation and/or restructuring services, had achieved £155,000 pre-tax profit in the 23 days from listing to the end of its financial first half.

Figures for the interim period as a whole showed strong growth across the board. Shares in Compass Finance, which listed at 48p, were trading at 70.5p in early trading this morning.

Smith said the market for mortgage finance remained extremely healthy and would continue to power ahead, despite higher interest rates.

'We tend to do well when the economy is strong because people borrow with confidence. Likewise, when rates are higher, people borrow because they need to consolidate their loans and that‘s where we come in,' he said.

'It‘s a very competitive market. The days when you couldn't get a High Street bank to give you a mortgage and ended up getting ripped off by the alternatives are long gone. Some of our mortgage deals are extremely competitive even against conventional offerings in the High Street.'

Compass Finance‘s customers range from people with difficult credit histories, including those who have County Court Judgments (CCJs), to the self-employed who can‘t always meet lenders‘ requirements.

'A typical client could be a self-employed builder with a clean credit record. Many lenders want to see three years' accounts and not everyone can provide this,' Smith added.

Compass Finance's results showed strong sales growth for the six months to the end of March, reflecting increased commissions earned on loans sold. The company sold £80.4m of loans in the period, compared with £52m in the same period a year ago.