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‘It isn’t the adviser driving two-year churn, it is the lender’ – Star Letter Extra 15/09/2017

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  • 15/09/2017
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‘It isn’t the adviser driving two-year churn, it is the lender’ – Star Letter Extra 15/09/2017
This week Mortgage Solutions and its sister title Specialist Lending Solutions picked the best of the rest of the reader comments from our broker audience in Star Letter Extra.

This week one article prompted a vocal response from the broker community. Here we round up some of the most thought-provoking comments in response to the post: Network chiefs warn ‘poor advice’ and two-year churn throw up Brexit exposure risk.

 

Bright Mortgage Services said:

“I feel very sorry for advisers at JML if they have network bosses telling them that the bosses’ crystal ball is the best and that long-term rates should be advised. Should we forget decent Know Your Client advice or the fact that two year rates have saved the respective clients huge amounts for years and years?

“Rates may well begin a journey upwards, but as mortgage advisers, don’t let us become arrogant enough to believe that we know when and by how much. Clients can either guarantee to pay much more than now, or they can decide that a risk of several increases that may affect them in years three, four or five is a risk considered to be worth taking. In two years, the mortgage will have reduced, savings will have been made, which could be used for over payments or other easing factors.

“Another full review will be possible to change the mortgage term, overpay, borrow extra, move home with the freedom of the whole market rather than being restricted to just one lender’s porting option. Clients should make the final decision, with us providing a sensible conversation. Current inflation and MPC voting may incline us to believe that a rise feels closer than two or three years ago, when the first rise was predicted in the autumn (No, it didn’t happen). One or two rises may happen, but does that make the five-year rates best?

“A fixed rate, generally means that a fully flexible mortgage review is delayed for the fixed term, so no significant changes are possible, unless eye-watering penalties are accepted. Caution should be exercised before herding all clients on to five-year rates. Advisers should have a full discussion with clients, as always.”

 

Derek Compton noted:

“Comments like this infuriate good advisers, as can be seen from the comments already received. Advisers should be enlightening clients regarding the advantages and disadvantages of long and short benefit periods and discussing how these match the individual’s needs, before the client agrees which they want the adviser to progress. All these comments show the writers do this.

“Advisers seem to be being beaten from all sides. The last thing we need is direction on what to advise from network bosses who probably haven’t been out to see a client in years and certainly won’t be held responsible for the instruction they are giving their advisers should it later prove to be wrong and result in a complaint.

“The powers that be should also consider the actions of lenders. I have seen a number of clients who didn’t want to pay for whole of market advice and instead arranged their own mortgage with a high street lender. In nearly all cases, they went down, or were encouraged down, a two-year route.

“Similarly, when I contact my clients for renewals, I find they are being contacted earlier and earlier by the lender I put them with, with change now, no early repayment charge deals and they are invariably attractive two-year low rates. Of course, these communications encourage the no contact, just click selection, so there is no responsibility. For God’s sake, leave the advisers alone to advise.”

 

James Lindon-Travers added:

“Eighteen months ago, when in some cases there was just 0.25% between a two-year and a five-year fixed, clients would often choose the five-year deal as the difference was so small. With buy-to-let business down by 40% across the board, lenders are attracting business by having a rate war and using two-year fixed-rates as the battleground.

“Clients, especially in the South East, tell me that a 0.65% difference is too big to ignore and often go for a two-year deal. So, really, it isn’t the adviser driving two-year churn it is the lender. Mr JLM needs to get back in his box.”

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