The city is famed for, among many things, being home to Ye Olde Trip to Jerusalem which is built into the rocks beneath the castle and claims the hotly contested title of Oldest Inn in England.
However, in the more sober confines of the mortgage world, a notable trend in this part of the country has been a collapse in demand for buy-to-let property purchases.
Instead the vast majority of advice in this sector of late has been on remortgaging, the panel explained.
One broker said it had become such a difficult market to operate in they went so far as to warn off potential entrants.
“If someone phones up saying they are interested in doing their first buy to let, you spend nine of the first 10 minutes explaining why they might not want to do it, as opposed to actually doing it,” they said.
However, another broker noted there was still value for landlords in many parts of the East Midlands, adding: “although it isn’t the cash cow it was, ultimately what are the alternative investments?”
Portfolio concerns
But despite the uplift in remortgage applications there are still concerns about portfolio landlords being able to refinance to new lenders or take out capital from their properties thanks to regulation changes.
“They’re the ones that have gone quiet, that we’re not hearing anything from,” said one attendee.
“They might do a remortgage but they’re not even coming back to say ‘can I remortgage this one and raise another £30,000?’ because in a lot of cases they can’t do it because the rental calculation is not there.”
Another added: “Or they’re sticking with their existing lender because it’s just so problematic to switch them to somebody else, even though the rate is potentially quite a lot higher.”
So while this does present problems, there has been one good point to come out of this situation – the evolution of product transfers.
Product transfer legacy
As data from UK Finance reveals, the product transfer market is larger than expected at a projected £200bn for this year and brokers have been getting more involved in it.
“The only issue I’ve got is if you do a product transfer a couple of times, will your clients come back again?” said one attendee.
“Ultimately does this mean that in five or ten years people will be less inclined to return to their broker because they have kept them with the existing lender?”
One broker replied that they felt they had done more for a client if they had switched them to another lender and got a slightly better rate.
But another participant continued: “I’d reiterate to the client that if I’m keeping them with the same lender this is the best thing for them in their circumstances.
“I tell them: ‘The most important thing is you speak to me again in two years when we’re looking at this again, because product transfer rates aren’t always the best in the market.’
“I highlight what I could have got if their circumstances had been slightly different, so I’m not too worried about losing clients on the back of it.”
To charge or not to charge
This then led on to a discussion about how the value of advice and the perception of charging and paying a fee for a mortgage broker’s service had progressed over the last five years – with the majority of those attending agreeing they now charged a fee.
“Nobody charged broker fees back then, now when we see brokers who don’t charge a fee, we say to them ‘why on earth aren’t you charging fees?’” explained one attendee.
“People expect to pay for something. Customers in my opinion are more likely to pay a broker fee than go to a broker that probably isn’t charging one.”
One broker noted that large corporate advice firms introducing fees had made it easier for smaller brokerages to do so as well.
This was a particularly strong marketing point if the small firm had access more lenders or sectors of the market and has more flexibility in how the fee is applied.
“If the corporate firm is charging £499 with half up front, but I’m charging £350 and the client can pay on completion and pays nothing if I don’t do my job well enough, I think that helps just by itself,” said another.
“Flexibility is important too. If for example it is a quite simple product transfer case, I can do that for free or maybe for £100, because the client has used me before and will come back and use me again in the future.”
Valuation fluctuations
With near unanimous agreement reached on the subject of fees, the often thorny issue of valuations was the next to be tackled by the panel.
It tends to be purchases rather than remortgages which prove the main issue with down valuations, but as one broker noted: “If it’s close enough you fix it, perhaps with a larger deposit or higher loan to value (LTV).
“But if it’s not close enough, there’s no point in challenging it, because you never get them overturned.”
And with rate differences often so tight between one LTV and the next the additional mortgage payment can be minimal.
Others also noted that nuances in valuations could become apparent in a very small area with perhaps just one street varying significantly compared to the rest of a surrounding town.
The frequency of automated valuation models (AVMs) was also raised – particularly with regard to those lenders which make the results available to brokers.
“I just did a product transfer for a guy with a couple of buy-to-lets,” explained one broker.
“I looked at the lender’s automated valuation and told the client if he paid an extra £360 off each mortgage it drops from a 75% LTV deal to a 60% LTV deal and the rate dropped massively.”
But sometimes results are not so positive. How can brokers address concerns about valuation results with clients, particularly if the worst happens?
One broker suggested there was an option which could help the client understand the property they are buying.
“The conversation I had was to ask what level survey did the clients want?” one broker said.
“The difference between a homebuyer report and a basic report was £495 with a lender, so I suggested why not get the homebuyer one done independently and then they can have a bit of interaction with the surveyor.
“They decided to pay £200 to get their mortgage valuation done and then they’re having the homebuyer report done themselves by a surveyor they trust who they can talk to. So it’s just sometimes educating clients.”
Lenders going the extra step
Finally, the ups and downs of working with lenders got pulses racing.
One gripe raised was the practice of lenders failing to reflect the hours brokers work and maintaining rigid nine-to-five office hours for support teams, while another complaint was the practice of flat-out rejections with no detail explaining the reasons why.
However, this brought praise for lenders that do make the extra effort to inform brokers why a case has been rejected and offer potential solutions.
Along similar lines, other lenders have begun checking rejected applications for mis-keyed information and feeding this back to brokers.
But access to underwriters was, as ever, one of the most praise-worthy achievements.
“Speaking to an underwriter is massive because we’re working together,” said one broker.
“As a broker, I underwrite the case. If someone sits in front of me I have to decide if I am I going to waste my time with them or not.
“We as brokers do everything. Sometimes it’s a complicated case so the underwriter will call and you go through the case with them. Then we can see why they’re doing something and we’re all trying to do the same thing to complete the case.”
Our attendees:
Mortgage Solutions
Iain Cartlidge, managing director
Owain Thomas, features editor
Platform
Nicki Jordon, intermediary account manager
Brad Rhodes, corporate account manager
David Winter, regional account manager
Broker panel
Simon Wilkinson, mortgage consultant at Mortgages-Online
Sue Beeston, independent mortgage broker at Mortgages-Online
James Roberts, mortgage and insurance consultant at The Mortgage Company
Paul Gent, managing director of Key Financial Services
Jonathan Raybould mortgage adviser at David James Mortgage Services
Brian Wright, managing director of The Wright Mortgage Company
James Akers, mortgage consultant at The Wright Mortgage Company
Steve Pritchett, mortgage consultant at The Wright Mortgage Company
