The obstacle means clients above a 50% LTV are obliged to submit cases themselves over the telephone.
A number of brokers have complained to Mortgage Solutions that the ‘filter’ is effectively taking clients away from brokers trying to submit business, and forcing those borrowers to submit the case themselves direct.
Santander’s mortgage distribution director Brad Fordham said: “The control was only ever intended to ensure that historic interest-only mortgage cases had repayment plans.”
He added: “As house prices in London and the South East have fallen slightly over the last 12 months or so, our normal quarterly re-valuation of the back book has unexpectedly pushed some of our customer’s interest only element over the 50% LTV threshold.”
However, the lender said these cases are less than one per cent of its back book.
The way ahead
Fordham said: “While a small number of customers are affected we are looking for ways in the future of allowing as many interest-only customers as possible the opportunity to transact with us via their channel of choice including brokers.”
Santander’s move to begin paying product transfer proc fees in Q1 2017 was warmly welcomed by brokers and predicted to strengthen the relationship between advisers and the lender at the time.
The lender began paying 0.2% product transfer fees for cases submitted through mortgage clubs and networks in March last year and July for those submitted online.
Fordham said the rise of product transfers amongst lenders has been incremental and delivered approximately £50-70m of additional annual proc fee revenue to mortgage brokers.
“Therefore brokers are not ‘losing out’, he said.
“Lender systems will never be ‘perfect’ and as lenders, we are doing everything we can to support the market. Brokers haven’t lost a proc fee, because they are in fact much better off since we introduced product transfer fees,” added Fordham.
The broker view
Andrew Montlake, director, London-based mortgage and protection broker Coreco said advisers should push hard for the rights of the intermediary channel because ultimately, they represent the client.
“However, we need to also remember that lenders are businesses in their own right and have their own internal checks and commercial needs to balance out, so we can’t always have everything our own way. The lender/broker partnership works both ways and sometimes we have to respect decisions even though we don’t always agree with them” he added.
“We have come a long way with lenders in terms of retention and whilst we still have some way to go in terms of achieving uniformity for the amount of work brokers do, we have to understand that this is a big internal battle for many lenders,” he said.
“I have always respected the fact that Santander has always been refreshingly upfront and honest about this and this particular issue is no different. Ultimately clients need to have the choice and it will be them who decide how and through what channel they place their mortgage.”
Greg Cunnington, director of lender relationships and new homes at Alexander Hall, said: “The move to retention via intermediaries from Santander was a huge positive that has been very well received.
“It is great to hear that they will be opening up the ability for all clients to receive advice from the channel of their preference, including an intermediary, for all interest-only clients in the near future as this creates a very client focused outcome and is a very positive move.”