‘Clients are not an interruption of our time’ – Star Letter 23/10/2020
The first came from Arron Bardoe, replying to the article: Four vital questions to ask that will improve your advice firm – Howells
Bardoe said: “While I appreciate the sentiment of the message, I feel it should be balanced against the basic attraction of using a broker, which is the human touch.
“Many of us are fed up with robot chats; press options 1-10 when calling a bank; and cut and paste auto responses. People buy from Amazon for price, ease and speed; but more importantly they tend to be used for most low value items.”
“A mortgage is different, as it is a complicated product and for most people their largest single expenditure,” Bardoe added.
Technology has its place
Bardoe continued: “There is some merit in elements of self-serve, as we for example get clients to fill in a mini fact find before our initial chat, but otherwise they appreciate the broker taking care of everything.
“We complete the applications forms with their baffling questions, we sit on hold to Optima for an hour to get an almost robotic service, we help them complete forms and the like.”
He added: “It is true that an automated email would save me one hour each month when contacting my renewals, but I find about half of them need a personal message and not just a standardised text. For example, how is the new baby, is your son home from university or did the wedding go as planned?
“These small touches show a real connection with them and hence a client’s relationship with their broker will be stronger than with Amazon. Amazon only has loyalty while its prices are competitive, but its customers – not clients – would and do happily shop elsewhere regularly.”
Bardoe said: “We should not stop embracing and exploiting technology, but it should not be used to reduce our personal contact with clients, but instead to make their lives easier in dealing with us.
“As we have all been taught, they are not an interruption of our time.”
Avoiding the blame game
The next comments were in response to the article: How brokers can show lenders the solutions to get cases through
Robert Drury kicked off the discussion, saying: It was refreshing to read this article and see Reuben’s comments on how building up a great communication with a lender helps to gain the right outcome for a client.
“Too many times in the last six months I have read articles which seem to pitch the broker against the lender when we should be working together during unprecedented times.”
He added: “Let us not fall into a blame culture but instead actually try to by civil, courteous and grateful for the assistance we are often offered. I for one find that a simple thank you or an acceptance of a situation, whilst offering an alternative view on an application, can reap dividends.
“Last year I was fortunate to have excellent service from both the smaller lender – Leek Building Society – but also the larger Nationwide Building Society and found both their mortgage department and their business development managers (BDMs) most helpful. This then led to further assistance on follow up cases during the year.”
Stuart Phillips said of the same article: “The problem is the communication. Those clients were lucky they had a dedicated broker, willing to put the time in to find a lender willing to have that conversation.
“With over 50 smaller lenders like Ipswich, these cases can seem like a huge commitment of time and effort and when you are paid only on successful outcomes. How many brokers would have moved onto an easier case?”
He added: “Unavailable BDMs, poor criteria documentation, lack of access to underwriters and long hold times with lenders.
“The present system is not making it easy for brokers to get to the right lender to even have those conversations.”
Platform ups rates and Newcastle BS adds 80 per cent LTVs – round-up
The deal at 60 per cent LTV with a £999 fee now has a rate of 1.66 per cent while the option with a £1,499 fee is at 1.58 per cent.
Both 70 per cent LTV products have rates of 1.78 per cent while the 80 per cent LTV product has a rate of 2.24 per cent.
All mortgages are available for house purchase and remortgages and rates are effective from 23 October.
Newcastle Intermediaries launches two 80 per cent LTV products
Newcastle Intermediaries has added two 80 per cent LTV mortgages to its offering.
The two and five-year fixed rate products are available borrowers who are purchasing a home or remortgaging.
The two-year fixed has a rate of 1.89 per cent up to 80 per cent LTV. An early repayment charge (ERC) of two per cent applies for the first year, before lowering to one per cent in the second.
The five-year fixed has a rate of 2.29 per cent and is also available at a maximum LTV of 80 per cent. An ERC of five per cent applies in the first year, and this decreases by one basis point each year until it reaches one per cent in the final year.
Both mortgages have product fees of £999 to pay and allow 10 per cent overpayments per year.
John Truswell, head of intermediary mortgages at Newcastle Building Society, said: “We’re pleased to be introducing a further two competitive 80 per cent mortgages to our current offering to increase product options for brokers and their clients.”
LendInvest reports record number of bridging apps in Q3
It remained open as usual throughout the lockdown and continued to process existing and new loan applications.
Lendinvest already reported increases in signed applications during the first half of the year, but Q3 exceeded those numbers with a 58 per cent growth on total signed applications compared to the previous quarter.
Justin Trowse, director for bridging at LendInvest, said: “It’s been a tremendous quarter for new short-term lending business at LendInvest.
“Our pipeline is a record to date, and with the completion levels increasing month on month, we can only see this trend continuing into Q4 as property professionals seek to capitalise on the stamp duty land tax holiday ahead of its current withdrawal date in spring 2021.”
Leanne Smith, sales director at LendInvest, added: “The team has worked tirelessly over the past six months not only allowing us to remain open for our brokers and borrowers throughout lockdown, but also ensuring those customers received the highest level of service throughout this time.
“Call volumes and new applications are at the highest we’ve ever experienced and bridging packaging has improved materially for us internally.”
“With new systems and processes constantly being reviewed to manage and improve turnaround times, I am confident that we will be able to meet the increasing demand for property finance over the next couple of months while maintaining the high service levels we currently are,” she said.
Paragon and UTB fund residential developments – round-up
Paragon Bank has provided a £1.6m development finance loan to Hockley Developments to convert a care home into 26 residential properties.
Millbeck House in Nottingham, will comprise of one and two-bedroom properties with and is expected to be completed in May 2021 with Help to Buy available and 10 year new build warranties on completion.
Alan Forsyth, managing director at Hockley Developments, said: “From the first phone call with the team at Paragon, I felt the service provided was right for us at Hockley Developments. The team has been very efficient and straightforward to deal with and has always been available when required.
“The team has always been quick to meet us on site and understand our business; we felt valued as a client very quickly. We have enjoyed working with Paragon and will hopefully continue to do so as we look to grow over the next five years.”
Anil Sehmi, Paragon’s Midlands-based regional relationship director, added: “It is great to be able to support with funding for this scheme as it aims to bring more much needed housing to the East Midlands, particularly suited to first-time buyers with the availability of the Help to Buy scheme.
“Over the past few months, it has been our priority to support both new-to-bank and existing clients, so we are looking forward to hopefully continuing our relationship with Hockley Developments.”
United Trust Bank
United Trust Bank (UTB) has agreed to fund £4.6m to a development of houses and bungalows near Milton Keynes, Buckinghamshire.
The project, which will cost £7.6m in total, is situated in the Newton Longville village and part of a joint venture between James Taylor Homes and Housing Growth Partnership (HGP).
This scheme will be made up of 17 three and four-bedroom houses and bungalows.
Philip Kirkwood, property development director at United Trust Bank, said: “SME housebuilders play a vital role in tackling the UK’s housing shortage and UTB is keen to provide the funding to keep them building, despite the economic uncertainty presented by Covid-19 and Brexit.
“As such I’m delighted that we’re supporting this joint venture between James Taylor Homes and Housing Growth Partnership.”
He added: “It’s particularly pleasing that we were able to progress and complete this facility in the midst of the pandemic with all the additional challenges this has brought to all of our businesses.”
How brokers can show lenders the solutions to get cases through
Howard Reuben, founder of HD Consultants, stressed the importance of building a relationship with lenders to help them understand the story behind a case and not approach it like just another sale.
Reuben said as underwriters were likely under pressure due to a change in working habits, brokers had “to be professional and friendly even when things go wrong”.
He added: “Show them solutions, not have arguments. Once this case is gone, you might need them for future cases, so you’ve got to have that relationship.”
Reuben recalled how Ipswich Building Society pulled through for his clients based on the strength of their existing relationship.
The clients were a couple of 36-year-old first-time buyers who managed to save a five per cent deposit. Just before lockdown, they were approved for a 95 per cent loan to value (LTV) mortgage, despite one of the applicants having a blip on her credit score.
He found most lenders would not accept the case due to the credit report, which resulted from one missed direct debit for a water bill which was immediately put down as arrears.
“I had to go to the Ipswich because the case needed to be manually underwritten because of a credit issue with one of the applicants. It was a manual, old school all over the desk, broker talking to the underwriter saying, ‘here’s the story, what are your thoughts’ situation,” Reuben said.
“The wonderful people at Ipswich said ‘not a problem, let’s look at the whole picture. We understand the situation and we’re very happy to proceed with a mortgage application.’”
The case was provisionally approved, before being escalated to the head underwriter and surveyors were able to inspect the property.
The UK went into a lockdown to reduce the spread of Covid-19, and the owners of the property the clients were due to move into did not allow any extra inspections to take place. Furthermore, the sale of the property they were downsizing to fell through, and they were unable to go on viewings to find another property.
A new landscape
Six months after the mortgage offer was initially issued, the landscape of the market had changed and the 95 per cent LTV mortgage Reuben’s clients secured was no longer available.
The transaction chain had moved along with the reopening of the property market but just a week before completion, the offer expired.
“Ipswich honoured [the offer]. They said, ‘we know it’s nothing to do with the clients as the sellers were delaying things. Nothing has changed with their situation’.
“It’s down to the fantastic relationship my company has got with the Ipswich as well,” Reuben said.
He added: “They said ‘we want these first-time buyers to get their home’. They pulled through and I’ve now got a photograph which I sent to the underwriter of the day they moved in with the keys and big smiles on their faces.”
Reuben’s close alliance and constant communication with Ipswich worked in the clients’ favour so that when it came to extending the offer, as he said the society “didn’t bat an eyelid” about doing so.
“They know why I’m recommending them as a lender and their product, we’ve got a really good conversion rate with them as a result,” he added.
He also said it was easier to form these relationships with smaller and specialist lenders as often he knows everyone right up to the CEO.
This also gave Reuben some leverage when a property was given a zero valuation during a case with Foundation Home Loans. He said the surveyor reported the property as having no EPC after they failed to look on the appropriate website.
Foundation Home Loans eventually saw where the surveyor went wrong and put the application through.
Reuben said situations like this could work in the favour of brokers and allow them to show their knowledge in a way that provided solutions.
He said: “It’s all about having an understanding partnership.
“We get positive outcomes because we know what we’re talking about, but sometimes we have to direct surveyors and solicitors to the right outcome.”
“My advice to brokers is respect the bank, give them all the information up front, tell the story. Don’t just fill in fields on a computer because it doesn’t work like that,” he added.
High LTV home movers may have to stay put for now – Marketwatch
However, to continue helping first-time buyers get onto the property ladder, many of the 90 per cent LTV and above mortgages are restricted to this segment of the market potentially leaving low equity home movers and remortgagors with few options.
So this week, Mortgage Solutions is asking: Do you feel your home mover and remortgaging clients at the high LTV tiers have sufficient options?
Payam Azadi, director and partner at Niche Advice
That side of the market is definitely underserved, the issue you’ve got with remortgages especially in the current climate is the lack of products but also the down valuations that are following.
We also saw a big pull back when it came to remortgaging for debt consolidation.
A good few months ago, a lot of the lenders have moved away from that or reduced their LTVs for remortgaging for debt consolidation purposes.
It’s having an effect because clients can’t get access to cheap finance, so it’s a perfect storm for someone who’s indebted.
If people are looking to move, there are a number of lenders who offer products for existing clients with different terms. There are potential alternatives.
Fundamentally, on high LTV deals, the valuation process is the key. Down valuations already happen but because of the margins, the client can usually say ‘okay I’ll just take an 85 per cent deal’. But if they’re already on 80 per cent LTV then sometimes there’s nowhere to go.
The lack of options could affect those who otherwise would have been able to benefit from the stamp duty holiday too.
On the one hand the government is telling lenders to be conservative as there might be a crash coming, on the other they’re saying, ‘go ahead and lend because there’s a stamp duty holiday’.
Chris Sykes, mortgage consultant at Private Finance
There are not many options for these people at the moment unfortunately.
However, a lot of people would consider themselves lucky at the moment. They own their own home and have enjoyed a few years of rates that are likely to be better than you can get a 90 per cent mortgage for these days.
For the remortgage market their current lenders are likely to offer them a retention rate. Nationwide, for example, have a 90 per cent two-year fix for rate switches at 2.79 per cent where their new business two-year fix at 90 per cent is 3.49 per cent.
For home movers unfortunately a lot will have to stay put at the moment and wait until things settle down.
However, if they are moving to a similarly priced property, they may be able to port their current mortgage across.
Mitul Patel, founder of Lemon Tree Financial
Having access to the whole marketplace and good product sourcing software, I don’t think it’s the case that there aren’t enough choices for those who aren’t first-time buyers.
I did some research previously and although first-time buyers have slightly more options, there’s still choice for movers. Maybe six lenders will do home movers compared to eight that do first-time buyers only, so I don’t think there’s much difference.
For those people looking to remortgage, if they’re doing it pound for pound there are options. I did a search today and there’s 176 variables they can have. If you look hard enough there are still choices, slightly reduced but it’s still there.
It is important not to focus on the number of products available but instead, whether they fit the needs of a client or not.
If you’re going for 90 per cent as a first-time buyer, remortgagor or home mover, the fact is you’ve only got 10 per cent cash. They may not have the best rates, but it is what it is.
We will find a product to suit the client’s need at the time.
House prices rise 2.5 per cent in August – ONS
According to the House Price Index, this was up 2.1 per cent on July’s annual increase.
On a monthly basis, this was an uptick of 0.7 per cent, and an improvement on the 0.3 per cent monthly increase seen in August last year.
As transactions typically take six to eight weeks to complete, these figures do not show the impact of the stamp duty holiday which was announced in July and instead reflect the post-lockdown boom.
David Westgate, group chief executive at Andrews Property Group, said: “It’s no surprise average annual house prices in August were up on July, as they will have been driven north by the post-lockdown surge in demand.
“September is likely to see an even sharper upswing in average annual completion values as by that point we will start to see the impact of the stamp duty holiday announced in July.”
Nicky Stevenson, managing director at national estate agent group Fine & Country, added: “Here is official confirmation that the market did indeed get up to a canter over the summer months. The annual rate of growth soared as buyers frustrated by lockdown and lack of space crammed into the market in search of larger properties.
“The question is how long this surge can last, with speculation already swirling that the market is set for a fall. Such predictions are probably premature.”
Price by country
Houses in England were the most expensive on average, reporting a 2.8 per cent increase to £256,000, followed by Wales where prices rose 2.7 per cent to £173,000.
Despite seeing the largest yearly increase of three per cent, house prices in Ireland were the cheapest at an average of £141,000.
Scotland homes remained flat with a growth of 0.6 per cent to £155,191.
ONS said house price growth had generally slowed down since 2016 due to declines in the south and east of England but noted activity seemed to pick up again this year once the property market reopened in May.
Properties outside of London seemed to boost the market as in August, the East Midlands saw the strongest growth with a 3.6 per cent annual surge in price to £202,345.
London and the North West both saw rises of 3.5 per cent compared to last year while the North East saw the slowest growth of 0.2 per cent.
West One parent company Enra completes first securitisation
The transaction comprises a £267.8m portfolio held by West One Loans.
For its initial securitisation called Elstree Funding No.1, Enra said it received substantial demand from pre-placement orders before the deal was publicly launched.
As the group plans to come to market annually as a programmatic issuer, it has held back around £50m of bonds for public sale.
Its programmatic status will mean its bonds are certified from the first issuance, avoiding the need to go through the certification process for each bond, it said.
Overall, the deal was launched and priced within a week.
Emily Gestetner, chief finance officer of Enra, said: “I am delighted to have priced Enra’s first securitisation.
“In a matter of weeks, we have planned and executed a great transaction in challenging market conditions given the backdrop of the pandemic and Brexit.”
She added: “While we are relatively recent entrants to the second charge and buy-to-let markets, our heritage as a specialist lender goes back many years, and I believe the fact we have been trading for over a decade as a prudent, well capitalised and profitable lending business was key to attracting such strong demand for our first residential mortgage backed securities deal.”
Landbay joins Synergy panel
The lender was already on the network’s packager panel but its addition to the lender panel will give Synergy’s brokers access to its range of specialist buy-to-let products.
This will include its products for large homes in multiple occupancy (HMO) as well as products with free title indemnity insurance.
Paul Brett (pictured), managing director of intermediaries, at Landbay, said: “The buy-to-let market has bounced back strongly and HMOs are in particular demand with record numbers of students and a rise in people wanting to live in shared houses as a result of lockdown.”
Piotr Twaits, sales director of Synergy Commercial Finance, added: “Including Landbay on our network panel now ensures our network members also have access to its comprehensive range of products.
“Being able to offer large HMO mortgages at residential pricing will make HMO financing accessible to a wider number of landlords and investors.
“These highly competitive rates are particularly useful at this point in time when some landlords are using the stamp duty holiday to expand their portfolios.”
NatWest pledges to increase number of senior black employees
This was in response to the recent Black Lives Matter protests following the death of George Floyd and builds on the bank’s existing goal of having at least 14 per cent black, Asian and minority ethnic (BAME) employees in its UK senior roles in five years.
NatWest said there was a higher under representation of black staff relative to the working population and its new target aimed to deal with this imbalance.
A colleague-led taskforce, set up by CEO Alison Rose, was established following the protests over the summer to address the under representation of BAME staff and “tackle the barriers” faced by these communities.
The taskforce has also launched a report on racial equality for its customers and workforce which includes its commitments and targets to set a standard for how the bank engages with the BAME community.
The Banking on Racial Equality report included an employee survey and found that while 79 per cent of its workforce believed the bank offered its employees the same opportunities to progress, when broken down by race 50 per cent of its Asian employees and 28 per cent of black colleagues agreed.
The report also detailed a number of actions the bank planned to take such as interview training with a focus on diversity and a potential financial product to targeted to the needs of BAME communities.
Rose said: “At NatWest Group our purpose is to champion potential, helping people, families and businesses to thrive. It is a clear call to action for us all to break down barriers that hold people back, including those challenges that persist for people from Black, Asian and Minority Ethnic backgrounds. I believe we have a substantial role to play in tackling these inequalities.
“I am fully committed to building a culture at NatWest Group that will embrace diversity and inclusivity to allow our colleagues and customers to thrive.”
“At our best, we are an open, inclusive, progressive organisation, but until that is everyone’s experience, every time, we have more to do,” she added.
The taskforce co-leads, Samuel Okafor, Shamraz Begum and Yinka Fadina, said: “We were delighted to be asked by NatWest Group to lead this work so that we can help the bank better understand the challenges our Black, Asian and ethnic minority customers, colleagues and communities face.
“Our lived experiences, like for many others, have always been a part of us. We know what it’s like to be disadvantaged, to grow up experiencing poverty, to have parents who have migrated to the UK and had to endure years of racism.”
They added: “This impact is felt economically, emotionally and mentally by minorities every day. That is why the work of this taskforce matters so much and allows us to put our purpose into action.”