Joining Coreco director Andrew Montlake (pictured left) for a debate on mortgage market issues from a broker’s perspective, were Lea Karasavvas, managing director, Prolific Mortgage Finance and Martin Stewart, director, London Money. They said the fight was far from over.
‘a step in the right direction, but lenders – it ain’t the end of the story’
Since the start of the year, the last of the big banks and building societies holding out on rewarding intermediaries for retention business announced they would begin making payments. Santander, Nationwide and NatWest all adopted the industry average payment of 0.20% for retention business.
Podcast host Montlake said: “The battle for retention proc fees has yet to be won. It’s the first step, it’s great that lenders are recognising the work that brokers are doing and they are paying us 0.20% on average, but that is not a proper proc fee. It is a step in the right direction, but lenders – it ain’t the end of the story.”
Karasavvas (pictured right) said currently his business does not charge customers a fee for the adviser’s work if the client remains with the same lender, a decision which could be set for change. “With lower proc fees and being just as labour intensive as a purchase, we need to relook at it,” he said.
Montlake agreed that lenders were undervaluing the work involved. “We have to do the same amount of work [as any other transaction]. We have to prove, beyond reasonable doubt, even more so, that actually staying with the lender is the best option rather than going elsewhere.”
Karasavvas and Stewart were asked what they thought may be some of the threats facing intermediaries this year. Stewart thought retention proc fees may be one of them.
‘don’t turn into a farmer and lose that hunting instinct’
“I think retention proc fees can be a threat in themselves because they can make people lazy,” said Stewart (pictured left). “If you have an embedded value within your business, and I have seen this from an IFA point of view where you build funds under management and get a certain amount of income, you’re not quite as motivated to get out of bed. You have to be careful you don’t turn into a farmer and lose that hunting instinct that we all have as brokers.”
To hear what Montlake, Karasavvas and Stewart think about London’s buy-to-let market, support for mortgage prisoners and the gap between mainstream mortgages and equity release loans, look at the for the full podcast on Mortgage Solutions this week.