Brokers urged not to miss out on wills opportunity ‒ analysis
October is free wills month, where a host of charities offer older people the chance to have a will written without charge, or in exchange for a donation. However, industry figures have suggested that while this is a useful tool for pushing people towards getting their wishes in place, wills should be discussed with clients of all ages, not just the over-55s.
I want my clients to be looked after
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said he always asks clients if they have a valid, legal and up-to-date will, particularly if they have children.
He continued: “If they don’t have one, or it’s really old, then I’ll refer them to a couple of different specialist solicitors that I know well.”
What’s more, Taylor-Barr says there is no commercial tie-in involved here. “It is purely done on the basis that these solicitors have done great work for my clients in the past and I know my clients will get well looked after and a proper job will be done for them.”
Aaron Strutt, product and communications director at Trinity Financial, said his firm lets his clients know that a full protection service is provided, with specialists in place to help with life insurance, income protection and wills.
He continued: “The majority of our clients have life and income protection policies because they would rather pay a relatively small amount each month to ensure they are covered in case something unexpected happens.”
A question of education
Iain Swatton, head of intermediaries at Dashly, said that brokers are well placed to help arrange a will for their clients, often through a simple referral, though suggested that many do not do this, perhaps because the client argues they don’t currently need one.
Swatton added: “The impact of not doing a will is not immediately felt but could have a massive impact on those left behind. Education on why preparing a will is so important and also incentivising the client with no set-up costs can only have a positive impact and ensure clients take the important decisions at the appropriate time.”
Clifton PF appoints new head of bridging finance
O’Neill takes up the post from the start of next month, having worked for the broker for the past four years and is based in Clifton’s Cardiff office.
He will be tasked with overseeing the day-to-day running of the bridging team, as well as help the broker develop tailored client services which cover the various specialist areas of short-term finance.
O’Neill will also oversee the intermediary’s graduate recruitment scheme. The scheme provides would-be advisers with a six-month paid internship, with the aim of them moving onto a full-time contract at the end of that.
O’Neill said he was looking to double the size of the intermediary’s bridging team by the end of the year, adding that bringing in graduate talent provided the opportunity to introduce new ideas, fresh thinking “and an industry that moves with the times”.
He said: “It’s great to receive the recognition for the hard work I have been doing in conjunction with the directors at Clifton in building the Cardiff office into a young, dynamic and fresh thinking brokerage in the specialist finance sector. We would like to think we have a brand identity now and are known for our strong relationships, good conversion rate and top class market knowledge. We aren’t in a rush to expand for the sake of expanding but we are certainly ambitious with our plans. Clifton is a great company to work for and truly believe in rewarding employees who have contributed to the company’s success.”
Buyers won’t care about home energy efficiency without education ‒ analysis
Speaking at the Mortgage Solutions New Homes Senate last week, Andy Mason, head of strategic partnerships and housing at Lloyds Banking Group, noted that energy efficiency was “pretty low down the priority order” for buyers, adding that as an industry not enough is done to sell the appeal of sustainable homes.
This was echoed by a new study from NatWest and IHS Markit which found that the energy performance certificate (EPC) rating of a home is rated as an important factor for a home by just 30 per cent of prospective buyers.
Advisers have argued that there is a lot of work to be done across the industry if this is to change in any tangible way.
Industry action needed
Sebastian Riemann, director of Virtus Private Finance, said he has never had a client enquire or seem to care much about the EPC, but noted that it was up to intermediaries to educate clients about how it can have an impact on the price they pay for their mortgage.
He continued: “The key will be an industry-wide push and the involvement of all players including sourcing systems and criteria hubs. The incentives will also need to be significantly higher for it to have a serious impact. The only concern is the reluctance of some to change their approach and as an industry as a whole we are not always the most proactive.”
Dominik Lipnicki, director at Your Mortgage Decisions, said he was unsurprised that energy efficiency is undervalued by many homebuyers, given that so many are used to properties which are poorly insulated with considerable heat loss.
He continued: “This is of course changing, with global warming in the news more than ever before and with the current huge increases in energy prices, buyers will be more focused on the cost of running their potential new home. Will this trump location, school catchment area etc. for most? Probably not.”
Lipnicki added that the government could do more to spur the “green revolution”, for example by reducing stamp duty for homes with the best ratings or introducing a sellers charge for inefficient homes.
Savings aren’t enough to make borrowers care
Pete Mugleston, managing director of OnlineMortgageAdviser, agreed that while it’s not something that particularly resonates with the current crop of buyers, EPC ratings and energy efficiency is likely to come to the forefront in years to come.
He continued: “Although there are green deals on the market for homes with good EPC ratings, the difference is peanuts. We’re talking a small fraction of a percentage, so this alone isn’t enough to make people care about it.”
Mugleston added that another issue around the green mortgages is that they are often targeted at new builds. “To qualify, the property must be on the EPC register so the mortgage lender can verify it, but that doesn’t normally happen until right at the end and the mortgage will have been offered long before then.”
Carmen Green, mortgage and protection adviser, Xpress Mortgages, acknowledged that until recently EPCs were not particularly something most advisers would think about.
She continued: “The introduction of green mortgages means we as advisers are forced to talk about it with our clients, as we have a potential offering that depends on the EPC rating and energy efficiency of their home, so it’s now part of our conversations.”
Green agreed that education is vital here, with advisers playing a part in encouraging would-be borrowers to look into the EPC rating and sustainability of their homes to understand the potential impact on their finances, and the environment, that would come from a better rating.
Green concluded: “It’s another thing added to the long list of things we have to consider as advisers when making a recommendation, but it’s a very positive step and we are pleased to be able to play a part in raising awareness.”
A nice to have
James McGregor, director at Mesa Financial, agreed it was rare for clients to discuss EPC ratings, and cautioned that it is going to be very difficult to make old properties cost effective to make the relevant changes in order to improve their score.
He continued: “I believe it is essentially a ‘nice to have’ at this point in time as owners save a bit on their mortgage rate as well as some savings on their bills. In the future the design and build of new homes will really push towards this being a big factor as it gets implemented in new homes from the outset.”
September saw mortgage affordability hit 2021 high – Mortgage Broker Tools
Analysis of cases processed through its research platform found that the maximum loan size available to the average customer reached £254,821 in the month. That’s a jump of almost ten per cent on the £234,224 registered in January.
According to Mortgage Broker Tools, the increase has been driven by improved options for first-time buyers. It found that the maximum loan size offered to the average first-time buyer jumped from £230,555 in January to £276,060 in September.
Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, pointed to the level of competition among lenders at the moment which had resulted in far more options for borrowers. This had stretched beyond cutting rates, and into greater choice at higher loan-to-values (LTVs) as well as lenders making changes to their affordability calculators in order to stand out from the crowd.
She continued: “At Mortgage Broker Tools, we’ve also seen the introduction of new ways for first-time buyers to enhance their affordability options, with results that show the benefits of combining an equity loan with a first charge mortgage, and this has certainly helped to boost the average loan size available to this group of customers.”
Toumadj added that while the maximum loan size is now at its highest point this year, the fact that a quarter of cases are deemed unaffordable by lenders highlights the importance of brokers researching the entire market.
HTB appoints Wright head of propositions
Wright joins from Vida Homeloans, where she spent five years, holding roles including head of field sales and corporate sales manager. She was previously national account manager at OneSavings Bank.
Wright will work alongside Louisa Sedgwick, (pictured) who also recently joined HTB from Vida Homeloans as deputy managing director, who is tasked with supporting the lender’s growth ambitions.
Sedgwick (pictured) said this was an exciting time to be part of the HTB story, adding: “I couldn’t be more pleased to be able to bring Sally on board at this exciting stage in our development. Her expertise and experience will play a huge role in shaping our mortgage growth aspirations – more of which will become apparent soon”.
Wright praised the HTB platform and its reputation within the industry.
She continued: “This is a great time to join a team that has such enthusiasm and determination to do more and better for the intermediary market. I have worked closely with Louisa for many years and I know that together we can achieve great things”.
Demand from tenants hit record high
More than a third of those landlords said that the increase in demand was “significant” too, with landlords in the South West (79 per cent) and South East excluding London (74%) seeing the most dramatic demand jumps.
This drops to 54 per cent among portfolio landlords in the capital, with the city also seeing the highest numbers of landlords reporting decreasing demand (16 per cent). However, Paragon argued that prospects remain good for London, given that in the same period of 2020 just 16 per cent of central London landlords reported rising demand from tenants.
Richard Rowntree (pictured), managing director of Paragon Bank, noted that the third quarter of the year is often busy for the private rented sector (PRS) with the beginning of the academic year, graduates starting new jobs, and people turning to the housing market once the holiday season has finished.
He added: “With this seasonal demand added to already high levels of tenant demand, we are beginning to see a shortage of property in certain parts of the PRS, which is leading to rental inflation. The sector needs to expand to meet these exceptional levels of tenant needs.”
Holiday let property viewers ‘becoming more serious’
That’s according to Holiday Cottage Mortgages, which noted that almost three in five holiday let mortgage assessments requested in August last year came from those who were simply browsing. The firm said that these are often staycationers who have enjoyed their holiday so much that they begin to consider the idea of purchasing their own holiday let, and so book a few viewings with local estate agents.
Leigh Glazebrook, office head at Knight Frank’s Stow-on-the-Wold office in the Cotswolds, said: “The sheer demand from buyers in the Cotswolds has never been quite so high. Deciphering between those who are serious about buying and those who are browsing has been extremely difficult at times, particularly when you are trying to be efficient with time and also minimising unnecessary foot traffic in clients homes.”
The broker sid enquiries between August 2019 and 2020 jumped by a whopping 108 per cent.
However, this trend seems to be loosening, with the number of ‘browsers’ contacting Holiday Cottage Mortgages almost halving, while two-thirds of enquiries last month were from those actively pursuing a holiday let mortgage. The firm suggested this demonstrates that the market is becoming more focused and serious once more.
Andrew Soye, founder of Holiday Cottage Mortgages, argued that it was easy to forget that holiday letting was already a growing market before the pandemic.
He continued: “With the recent focus on staycations, significantly more people have experienced how fabulous UK holidays really are and so we’ve seen a step-change in activity that we believe will last. Although international travel is opening up again, our view is that the demand for staycations is likely to remain high and we will see continued growth in the domestic travel sector, which will be very positive for the UK economy.”
Recent data from Moneyfacts found that the number of holiday let mortgages available on the market has more than doubled over the past year, with a host of lenders entering the market, most recently LendInvest.
Hinckley and Rugby launches L&G Mortgage Club exclusives
Club members will be able to access a five-year fixed rate mortgage, available up to 90 per cent loan to value (LTV), at 2.58 per cent with a £199 arrangement fee. The exclusive range also includes a pair of two-year fixed rate mortgages, both available up to 90 per cent LTV and with a £199 arrangement fee.
The first two-year fixed product is priced at 1.8 per cent, but comes with valuation fees, while the other has no valuation fees but borrowers face a rate of two per cent. The valuation fees charged range from £185 to £3,615, depending on the purchase price.
Danny Belton (pictured), head of lender relationships at the L&G Mortgage Club, said that advisers face added pressure to source “competitively priced product options” for their clients given the speculation surrounding a potential base rate increase.
He added: “With this latest raft of exclusives, we expect to help broaden the choice presented to our advice network when placing suitable customer cases. This is certainly a timely and important addition to our proposition and we’re pleased to be offering the discounted products through Hinckley & Rugby Building Society.”
Julie Bourne, intermediary sales manager at Hinckley and Rugby Building Society, emphasised the mutual’s commitment to supporting brokers and their clients, adding: “These products, which are offered up to 90% LTV, will increase the options available to mortgage customers, particularly first time buyers, who want to take the next step as homeowners.”
Sellers overpricing by up to 13 per cent corrected by market
That’s the conclusion of new research from MoveStreets, which analysed data from the major property portals to establish the current average asking price across each region of Britain, versus what prices properties in those areas are actually selling for.
It found that while the average asking price across the portals currently stands at £296,950, properties are selling at an average of £258,464. That’s a difference of almost £38,500, or 13 per cent.
In some areas, this gap is far more pronounced though. In London for example, the average asking price is a mammoth £833,994, yet properties are selling at an average of £494,673, a disparity of 41 per cent. This is ahead of the large gaps found in the South West – 24 per cent – South East – 23 per cent – and Wales – 21 per cent.
By contrast, the study suggests that the most realistic vendors are found north of the border, with a gap of just four per cent between asking prices and transaction prices in Scotland.
Adam Kamani, CEO of MoveStreets, noted that the high levels of demand from buyers and the low levels of available stock had meant that properties “fly off the shelf at pace and for a very good price”.
However, he pointed out that many vendors were being “over-optimistic” with their asking prices, in an attempt to take advantage of the market boom.
He continued: “This can be detrimental to your sale regardless of how the market is performing and can result in months of little to no interest in your home. It’s the responsibility of the listing agent to guide sellers and set these expectations. While some will value a home at a higher price point to win business, a difference of ten to hundreds of thousand pounds above market value is perhaps a little too far.”
The latest study from Rightmove found that asking prices rose by an average of 1.8 per cent in October, with all regions seeing prices hit a new record high.
Broker tech needs more input from advisers ‒ analysis
Recent weeks have seen a succession of developments on the broker tech front, with Mortgage Brain announcing a sweeping rebrand of its product line and Dashly revealing multiple partnerships with advisory firms.
However, while brokers have noted that certain tech systems already in the marketplace do reduce their workload, there is a strong expectation that if technology firms take on board broker feedback, more effective and efficient technology solutions could be introduced.
The best tech is yet to come
Lewis Shaw, founder of Shaw Financial Services, suggested that the best tech for mortgage brokers is yet to be developed, arguing that too often tech firms focus on problems that don’t really exist with “not enough research asking brokers doing the day-to-day job what would make their lives better”.
He called for tech firms to develop systems which allow the real-time monitoring of credit files, which have the ability to fetch bank statements with the consent of clients, or enable brokers to push data via an API directly into lender’s systems from a fact find.
Shaw continued: “The biggest bang for our buck would be systems and processes that speed up and simplify the conveyancing process. I keyed two mortgage applications on Saturday and by Tuesday morning the survey had been carried out and the mortgage offers were issued. However, it’ll now be approximately 12 weeks before they move anywhere due to the archaic and clunky under-resourced conveyancing process. Let’s sort that out before we worry if our fact find can tell us if we need another coffee or not.”
Mark Robinson, managing director of Albion Forest Mortgages, said that there is always a new piece of tech that advocates will say everyone needs, though “most of the time this is just something shiny with a monthly sub”.
He praised Knowledge Bank and Mortgage Broker Tools as systems he regularly uses, but agreed that the big innovations are still to come “with the integration of credit-checking tools like Experian and Open Banking on the horizon”.
A double-edged sword
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, argued that tech in the mortgage market is a “double-edged sword”, with some systems designed to remove the broker from the client journey which risks leaving the client in a worse position.
He explained: “We only have to look at the car insurance and, to a lesser degree, the home insurance market to see how technology taking away the broker has resulted in a ‘cheapest is best’ view of the market, promoting poor outcomes for clients and a ‘race to the bottom’ in terms of cover levels from insurers trying to maintain competitively priced policies.”
However, he praised technology which has been designed to help brokers deliver better client outcomes, pinpointing Criteria Brain and Affordability Brain as “fantastic additions to the broker tool box”.
He continued: “This increase in efficiency is one of the reasons, despite some massive increases in the cost of regulation, we haven’t seen a corresponding increase in cost of providing advice to clients. One has helped to offset the other.”
Joshua Gerstler, owner of The Orchard Practice, also said that Affordability Brain is the tool that saves his business the most time.
He explained: “Rather than having to fill in the affordability calculator with every lender, we just fill it in once on Affordability Brain and it pulls in the results from every lender. This has saved us many hours of time when working with clients whose affordability is tight.”
Is there too much focus on advisers?
Iain Swatton, head of intermediaries at Dashly, suggested that often advisers can only really tell whether technology is adding real value once they give it a go, noting that many tech solutions focus on reducing duplication and speeding up the sales time.
He added: “A more efficient adviser is a good thing for the client but the reality is that the technology is more often aimed at the broker and making their lives better and not necessarily the customer.”