Nationwide introduces soft DIP footprint and improves broker case tracking
The soft credit footprint is a reduction from the hard footprint which would have previously been left on an applicant’s credit file when submitting a decision in principle (DIP).
Now DIPs will not impact the customer credit score, with the hard footprint only applied to a credit record at application submission.
Meanwhile, Nationwide has also updated its new case update and overview pages to give advisers more information and greater detail, which will highlight if the broker needs to act.
Information available includes application details, DIP and offer details, conveyancer details and full product details including reservation date.
Nationwide intermediary relationship director Ian Andrew (pictured) said the lender was focusing on key areas of its process to improve following broker feedback.
“Having a DIP that does not leave an imprint on a credit file at an early stage improves the process both for intermediaries and customers and is something brokers have asked us for,” he said.
Andrew added that the case tracking system and help text changes should smooth the journey for brokers, make case tracking more efficient and reduce unnecessary calls for updates.
Borrowers aware of hard footprint
L&C Mortgages associate director – communications David Hollingworth said: “Borrowers are increasingly aware of the potential impact that a hard footprint could have on their credit score, so the news that Nationwide is shifting to a soft DIP will be well received.
“The changes to the case management tracking tools underline the fact that Nationwide is listening to broker feedback in an effort to evolve and enhance its platform.
“Providing more information online should help limit the need for unnecessary calls, increasing the efficiency for everyone and ultimately giving customers a better overall experience.”
TMA development director Lisa Martin added: “It’s great that Nationwide can now give our clients decisions without leaving a hard footprint on their credit file.
“The enhancements to the case updates page will really help us to keep our clients informed throughout the application process, while it ensures that we, as brokers, are fully engaged every step of the way.”
House price falls spread as growth hits lowest level since 2012 – ONS
ONS figures showed the average UK house price was £233,000 in July 2019, just £2,000 or 0.7 per cent higher than the same period a year ago.
This is the lowest annual rate of increase since September 2012 – when it was 0.4 per cent – and was down from 1.4 per cent in June 2019.
Over the past three years, there has been a general slowdown in UK house price growth, driven mainly by the south and east of England, the ONS noted.
However perhaps more notably, the North East and East of England saw falls in the latest set of results.
The North East saw the steepest falls, down by 2.9 per cent over the year to July, followed by the South East, where prices fell by 2.0 per cent.
This wider slowdown in England was reflected in its average house price rising by only 0.3 per cent in the previous 12 months, which was down from 1.1 per cent in June, to hit £249,000.
Wales and Northern Ireland stay strong
Scotland also witnessed a considerable slowdown, with prices rising 1.4 per cent in the year to July, down from 2.0 per cent in the year to June, with the average house price in Scotland now £154,000.
In contrast, Wales and Northern Ireland continued to see strong growth of 4.2 per cent and 3.5 per cent respectively.
This took the average prices to £165,000 in Wales and £137,000 in Northern Ireland.
ONS head of inflation Mike Hardie said: “Annual growth in house prices slowed to its lowest rate since September 2012, with four of the nine English regions now seeing prices falling over the year.”
The ONS also released its latest data on private rental prices paid by tenants in the UK. Rents had risen by 1.3 per cent in the 12 months to August, unchanged since May 2019.
In England, private rental prices grew by 1.3 per cent, Wales saw growth of 1.2 per cent, Scotland witnessed a 0.9 per cent increase, and London private rental prices rose by 0.8 per cent.
Prices likely unchanged for 2019
Yopa chief property analyst Mike Scott warned this could be the possibility of things to come.
“We now expect that the annual rate of house price growth shown in this report will slow further for the rest of the year, ending the year with house prices virtually identical to the end of last year,” he said.
“However, the economic fundamentals underpinning the housing market remain strong, with low mortgage interest rates, good mortgage availability, low unemployment and rising wages, and we do not expect a UK-wide downturn in house prices while those fundamentals remain in place.”
David Westgate, group chief executive at Andrews Property Group, added: “It’s easy to point all the blame for flat price growth at Brexit.
“While Brexit is clearly a factor, we are also at the end of a natural cycle in the market following exceptional growth between 2011 and 2016 caused by low mortgage rates, high employment, Help to Buy and the post-crisis rebound.
“We have been in a slow correction since the EU referendum result but that’s not necessarily a bad thing for the market in the long term. It had got ahead of itself, especially in London and the South East.
“The irony is that now is arguably the best time to buy and sell. Mortgage rates are ultra-competitive and while prices have dropped off, they are holding up fairly well given the political climate.”
Buy-to-let mortgage rates fall as product numbers continue to swell
According to data from Mortgage Brain there are now 3,859 BTL products on the market from mainstream lenders, representing an increase of 11 per cent compared to a year ago.
This it said was one of the main factors in driving down interest rates.
Bigger falls at longer terms
The sourcing system also revealed some of the biggest savings in the BTL market have been created within longer product terms.
Average five-year fixes at 70 per cent and 60 per cent loan to value (LTV) have fallen by 1.75 per cent and 2.06 per cent respectively in the last three months alone.
Meanwhile the average 80 per cent LTV five-year fixed BTL mortgage is now 3.5 per cent lower compared to 12 months ago, representing an annual saving of £324 on a £150,000 loan.
The average cost of a 60 per cent LTV two-year BTL fix is now 1.9 per cent lower than it was three months ago, with a 70 per cent LTV three-year fix falling by 1.1 per cent.
These falls offer a £144 and £90 saving respectively on a £150,000 mortgage.
Resi rates cheaper
The Mortgage Brain analysis also revealed that the cost of BTL mortgages remains higher when compared to mainstream residential mortgage products.
An 80 per cent LTV five-year fix is more than 16 per cent higher than the same product for a residential mortgage.
However, when it comes to the cost of tracker mortgages, the differences are less, with the cost of a two year 70 per cent LTV tracker being just 4.75 per cent higher than the residential equivalent.
Mortgage Brain CEO Mark Lofthouse said: “Overall the message for the BTL market is positive; especially for investors looking to fix for a longer term.
“The cost of BTL mortgages continue to reach historic lows, with the market remaining competitive given the number of BTL mortgages currently on the market.
“Nevertheless, the market remains clouded by the ongoing political uncertainty, the looming Brexit deadline as well as the weakening economic forecast.”
Landlords on SVRs are ‘nervous about coming forward to remortgage’ – Montlake
However, speaking on Mortgage Solutions Television in association with BM Solutions, the broker said these clients were unaware they could be helped with product transfer deals.
Coreco managing director Andrew Montlake said: “Landords might be nervous about coming forward, because they might have applied in a very different market when things were a lot easier, they might be siting on legacy rates.
“So they are a bit concerned if they put their head above the parapet.”
He noted that the buy-to-let product transfer market had not taken off yet, but it was starting to, although lenders could offer more flexible products as many landlords did not know if they were going to keep the property or sell it.
Phil Rickards, head of BM Solutions, added that the lender did have a lot of customers sitting on the SVR and that it was a great opportunity for brokers and customers.
Sainsbury’s looks to sell £1.4bn mortgage book – reports
On Saturday The Daily Telegraph reported that the supermarket had been in discussions with advisers about a potential sale and that it could recoup an estimated £1.3bn.
It added that exploring the sale was part of a wider review of the financial services arm, which saw profits drop 55 per cent to £31m last year, according to its annual report in June.
Sainsbury’s completed £1.1bn in new mortgage lending in 2018 and its overall loan book stood at £1.4bn, with net interest margin cut by a full 1.1 per cent to 3.8 per cent as the competitive market took hold.
It re-entered the mortgage market in April 2017, having withdrawn its previous offering in 2004.
A Sainsbury’s Bank spokeswoman said that the company would not comment on market speculation.
Such a move would mirror fellow supermarket Tesco which exited the mortgage market by completing the sale of its loan book to Lloyds Bank earlier this month for an estimated £3.7bn.
Will still recommend products
David Hollingworth, associate director communications at L&C Mortgages, noted that it was increasingly hard for lenders to keep up in the highly competitive market.
“They have been extremely competitive in the past, but lenders are finding it hard to keep up with the big banks pushing rates down,” he told Mortgage Solutions.
“Sainsbury’s current two-year fix is 1.6 per cent while HSBC is at 1.24 per cent. They are not pulling out but, it’s just very competitive and hard to keep up in the current environment.”
Hollingworth added that he had not seen a change in rate activity or broker communications from the lender.
“Sainsbury’s has had ambition and is only just a recent entry, but they have been a really good entry and had some excellent rates,” he said.
“We won’t be ruling Sainsbury’s out for product recommendations.
“It brought a very strong and well-known brand, but this market is pretty ferocious and if lenders are too far off on price they can very easily see volume drop,” he added.
Private Finance targets Midlands and North in expansion
Managing director Simon Checkley confirmed the broker firm would also be seeking out other potential regions to establish offices where the opportunity presented itself.
The new office in Shrewsbury will be headed by director Ryan Garbett, who has spent the past six years building the firm’s presence in the area.
He is joined by three colleagues, with scope for up to 20 members of staff in total as the business eyes future growth.
Private Finance said the location of the new office was in easy proximity to additional key local markets including Liverpool, Manchester and Birmingham.
It added that Garbett had witnessed a growing demand for advice on complex and mainstream cases in the area.
Significant local demand
Garbett said: “The success we have experienced in the Midlands and the North West in particular demonstrates there is significant local demand for complex prime as well as mainstream mortgage advice, which has traditionally only been available through London-based firms.
“Our objective is to bring clients together with the growing number of lenders looking to promote themselves in the area.”
Checkley said that being in a position to expand against the backdrop of a sluggish housing market was testament to the business.
“We pride ourselves on the diversity of our lender network, going beyond the mainstream to find the perfect solution for our clients’ varied needs and circumstances,” he said.
“As brokers become increasingly automated, quality human interaction is a key differentiator.
“A local office, staffed by brokers with a genuine understanding of the area, will bring significant benefits to clients. We are looking to establish offices in other regions where the opportunity arises.”
The brokerage is set to celebrate its 20th anniversary in October, having been founded in 1999 by Checkley.
Mortgage brokers using only a handful of lenders ‘on FCA’s radar’ – AMI
The broker trade body noted that firms using such a restricted range of lenders may well come under scrutiny from the regulator.
Speaking at the Financial Services Expo, AMI chief executive Robert Sinclair said he had met firms which had used more than 100 lenders in the last year – “a phenomenal number”.
“I was with the FCA last week, where it cited a range of firms who’d used three lenders in the previous 12 months,” he said.
“Somewhere between the two is probably right.
“But the firm that only uses three is clearly on the FCA’s radar and at some point, when it does look into this market, those firms may well have their heads above the parapet.
“That’s where it becomes quite interesting because the data the regulator now has is so rich and so broad it can define all this quite easily,” he added.
Borrowers defaulting onto SVR
The subject was part of the lender panel debate which also discussed how brokers could improve customer support and retention when clients were approaching deal end.
Sinclair noted that two pieces of market research will be published relatively shortly which would shed some light on the subject.
“One of my biggest disappointments is people who have defaulted onto standard variable rates (SVR) who were introduced by intermediaries and have had no contact from that intermediary whatsoever,” he continued.
“We have to think carefully as a sector about how much we take ownership of that ourselves and how we get better at it. That’s a challenge that sits there.”
When an adviser leaves
Lenders explained their retention contact strategies and agreed that there were still too many brokers who did not maintain contact with clients after completing a deal.
“There is a lot that lenders are doing to support brokers, but, ultimately the broker has got to support what they do on a day-to-day basis,” said Accord mortgages director of intermediaries Jeremy Duncombe.
“We still see far too many cases which are coming direct and that’s not how we want it to be.”
Esther Dijkstra, director of strategic partnerships at Lloyds Bank, echoed this point, adding: “We see a lot of cases where advisers have left firms and then customers don’t know where to go or that relationship has not been maintained.
“So it’s a good thing, at firm level, to decide what do you do when your adviser leaves, where does that customer go?” she added.
System integrations being pushed into next year – Duncombe
The last year has also seen mortgage clubs and networks take an increasingly active role in the space as they seek to make their processes more joined up.
Speaking at the Financial Services Expo, Accord Mortgages director of intermediaries Jeremy Duncombe (pictured) said that lenders were looking at what they wanted to invest. He added that from a broker perspective, it could appear that nothing much has changed.
“On the technology side we’ve heard a lot and not seen a huge amount delivered, so I’m still waiting,” Duncombe said.
“The integrations that people promised would happen in the early part of this year seem to have been pushed into next year,” he added.
This point was echoed by HSBC head of intermediary mortgages Chris Pearson who said the lender was “starting to see a little more movement in third-party fintechs looking at how they integrate with lenders and brokers or networks.
“And there’s still quite a bit more to do on that,” Pearson said.
One Savings Bank sales director Adrian Moloney added that it was a case of lenders making sure they were “backing the right horses”.
Meanwhile, Lloyds Banking Group director of strategic partnerships Esther Dijkstra highlighted that networks and clubs were starting to get involved.
“Looking back 12 months, the incumbent players, some of the mortgage clubs and networks have made huge investments in technology.
“They are buying different parts of technology and they have linked-up more to make it an end-to-end operating model,” she added.
Mortgage advice qualifications to be modernised to support later-life lending
Mortgage Solutions understands that there has been an acceptance across the market that the existing qualifications do not adequately prepare advisers for the market in its present state.
The issue of the two separate regulatory regimes, which divide brokers that have completed only the mortgage advice qualification and those with the lifetime mortgage qualification, has been a significant and growing concern as the later-life lending market has developed.
It appears the Financial Conduct Authority (FCA) is unlikely to change its overall rules but there is an understanding that the exams can be updated to reflect market evolution.
Not as deep or robust
Association of Mortgage Intermediaries (AMI) chief executive Robert Sinclair (pictured) told Mortgage Solutions that the change was necessary and overdue.
“There appears to be recognition across the market that the existing qualifications in both pure mortgage and equity release markets are not as deep or robust as responsive market participants would want them to be,” he said.
“The evolution of equity release products and retirement interest-only (RIO) together with pension freedoms means that there needs to be a review of the existing qualifications not withstanding that the regulator might not be changing the architecture.
“I believe the professional bodies will step up to the plate and make the changes necessary,” he added.
Not fit for modern purpose
The Equity Release Council (ERC) has also been involved in the pan-industry discussions and will be tying its work in with an updated competency framework.
ERC chairman David Burrowes told Mortgage Solutions an update on these subjects was expected to be published in November.
“There’s been really great collaboration across the industry and we’re looking to take that to next step,” he said.
“There is an agreement to broaden the qualifications to be fit for all later life with good progress being made.”
Burrows added that it was seeking to deal with the issue of old dusty qualifications that are not fit for modern purpose and to help new advisers who want to get into the industry and get breadth of understanding.
“It will be linked to our competency framework which will make sure they understand the complexity of the market and whether to advise the client or signpost to somewhere else.
“To know what they don’t know,” he added.
Lloyds asks regulators if they understand execution-only makes lending riskier
Esther Dijkstra (pictured), director of strategic partnerships at Lloyds Bank, explained that the lender had reservations over the push into execution-only from the Financial Conduct Authority (FCA).
Speaking on the lender panel at the Financial Services Expo in London she said: “No doubt there will be some customers who come direct but I agree, it can be quite dangerous for customers to do that.
“And we’ve asked questions to the FCA about does the Prudential Regulation Authority (PRA) recognise that this might increase the risk for lenders taking on more business as execution-only?
“Because brokers can assess and give proper advice, and I think that will remain important because now people’s lives change all the time.
“Yes in a two-year time window you might say a straightforward product transfer is the best, but we know that people might need to capital raise or circumstances change, and then advice will still be the best route.”