Partnering with a specialist protection adviser will typically increase case sizes – Glod

Partnering with a specialist protection adviser will typically increase case sizes – Glod

 

However, the pandemic has highlighted that it has never been more important to have this conversation. 

It’s possible that the no-win, no-fee legal claims industry may jump on this bandwagon. This raises the potential for a broker to be pursued for compensation based on lack of advice given — if they cannot prove that they had at least one conversation about protection. 

If brokers do mention protection, it is usually life assurance. If they sell a policy then typically it matches the value of the mortgage and costs the client about £20 a month. 

 

Sensitive topic 

It is often better to advise wider cover. Like most things, the cheapest is frequently not the best.  

But if you’re a busy mortgage broker, do you have the time or the experience to look at all the conditions associated with every policy? Can you then explain to a client why a policy that costs perhaps £5 or £10 more each month than the cheapest one is far better for them and the reasons why?  

During the lifetime of the mortgage less than two per cent of people will die. But about 40 per cent will have a serious illness with financial consequences.   

Therefore, critical illness and income protection should be an easier sell. Especially as most younger people are typically more concerned with what happens if they get ill or suffer a serious injury, than if they die — which they rightly consider unlikely.  

This can involve a challenging conversation as you have to bring clients face-to-face with the prospect that they may get seriously ill. Done right, however, and they will be grateful that you have made them aware of how they can be protected.

The other challenge for brokers is keeping on top of all the different products that are available. In the same way that mortgage products change all the time so do protection products, with conditions, illnesses and definitions added or subtracted on an almost daily basis. 

 

Larger case sizes 

If brokers don’t want this sort of conversation though, or don’t have the time to do it properly, they don’t have to.  

Far better to pass it to a specialist protection adviser who can have the difficult conversations. Forming a partnership with such an adviser, the mortgage broker will still get paid.   

For a critical illness cover with a premium of £110 per month, a mortgage broker will typically earn £700.   

With a protection specialist, average case sizes are generally larger because the protection adviser invests considerable time talking about the different protection products available. Sharing expertise with a client usually results in the client being driven by the value of what they need, which is key. 

It’s imperative the client has the cover they need and are driven by the value of cover and not its cost.  

This can only happen if the client truly understands what benefits the cover will afford them and why. 

The pandemic has highlighted the need for good quality protection – particularly critical illness and income protection which are the policies that younger clients are most likely to call on. 

Supporting a client to take on the biggest debt of their lives and not providing them with proper protection advice, particularly at a time of pandemic, just might become the next claims scandal.  

Far better, for the client’s sake and for yours, that they are provided with thorough advice so they are prepared for all eventualities.

Also, this will mean you’re not at risk of receiving that phone call asking why the advice wasn’t provided. Better still, you get paid for making sure they receive it. 

Brokers who stay connected to customers will embed a lifetime of value – McDonald

Brokers who stay connected to customers will embed a lifetime of value – McDonald

 

This challenge has heightened as new business enquiries leave brokers so busy they cannot easily find time to dedicate to existing customers.

It’s completely understandable. In a lot of cases, those customers will automatically return to the broker for obvious reasons: Namely, the customer has a good relationship with the broker, they trust the adviser and know they will do everything to find the best deal.

But even a light-touch approach to managing existing customers will bear fruit over the long-term. This is particularly true for quieter periods, appreciating these times may be rare at the moment.

 

Life-long customers

Why is it beneficial to have a loyal customer base, when a regular flow of new business is coming in the front door?

It’s about trust. 

Should the application hit a problem, for whatever reason, it’s more likely an existing customer will understand – due to their long-standing relationship with the broker – and know they’re doing their best to process the application.

It’s also about knowing your customers. Regular contact allows you to understand your customer’s needs throughout their mortgage term and as their own life situation changes.

They could progress from first-time buyer to home mover to remortgagee. Their needs will change at each stage. They will have requirements for other products throughout their borrowing journey too, with protection and insurance being the obvious two.

There are many tools on the market to help brokers manage existing customers. They enable brokers to handle all of their customer’s financial requirements in one place, including the mortgage, protection and insurance products.

 

Market updates

These systems can be costly and time consuming, but managing existing customers doesn’t have to be.

It doesn’t have to mean maintaining a complex database. Nor need it be a costly exercise of sending out regular mailings.

Instead, it can be based on a cheaper solution. Using one of the major e-mail suppliers you can automate a contact with your existing customers. One option is to give an update on the mortgage market and your company – whatever feels natural to you and your business. Even sending a straightforward e-mail at renewal can be surprisingly effective.

Or, it could be call reminding your customer that their mortgage product is up for renewal and arranging a follow-up meeting. These days, that could be on Zoom or Teams, but equally could be a simple ‘phone call.

The solution brokers arrive at will depend on their own business requirements, size and budget.

Your existing customers are your most valuable customers. Communicating with them in a simple and effective way will help to protect your business over the long run.

Know Your BDM: Chloe Bowden Davies, Pepper Money

Know Your BDM: Chloe Bowden Davies, Pepper Money

 

What locations and how many advisers and broker firms do you cover in your role?  

I cover the North West region, which includes all brokers from Carlisle down to Wolverhampton. 

  

How have you changed the way you establish and maintain a good relationship with brokers in the pandemic?  

I pride myself on always returning calls within a timely fashion and making sure I provide the correct answer to enquiries. This hasn’t changed during the pandemic.  

I frequently do virtual visits with my brokers, especially key brokers and new registrations, to get them up to speed with the Pepper proposition and any changes that we make.  

  

What personal talent/skill is most valuable in doing your job?  

I like to think that I’m very approachable and friendly, and this helps me to build excellent rapport with brokers. 

  

What personal talent/skill would you most like to improve on?  

The ability to push back. I sometimes find I take on things that I don’t necessarily need to get involved in, so I can deliver excellent service to my brokers.  

However, other departments are just as capable of doing this, so I need to learn to let go a little more. 

  

Where would you rather be stuck, in bumper-to-bumper traffic or back-to-back Zoom calls? 

I think a bit of both.  I must admit I can’t wait to get back out meeting all my brokers and building that face-to-face interaction again.   

Zoom will still be needed though and has been a great way to meet brokers in areas of the country we may not get to visit as often as we would like. 

  

What’s the best bit of career-related advice you’ve ever been given?  

Always strive to deliver the best service you can and always push yourself to be better. Never think you know it all because the likelihood is you don’t. 

  

What is the most quirky/unique property deal you’ve been involved in?  

The ones I really enjoy getting involved with are the ones who have had a life event and had lots of issues on their credit file who think they can’t get a mortgage. When I say ‘yes’ they are over the moon and the broker is happy they can help their client.  

It makes it all worthwhile especially if it’s complicated and they think they are stuck. 

  

What has been your lockdown coping strategy?  

Going to our caravan in North Wales on the weekend. During the drive down on a Friday I can feel the stress levels fall away and then I get to relax ready for the next week. 

  

If you were head of the FCA for the day, what would you change about regulation in the mortgage industry?   

I’m not sure I’d change much in the way of regulation, but I’d like to see more done to educate customers about the mortgage options available to them and the benefits of professional advice. 

  

What was your motivation for choosing business development as a career?  

I really enjoy helping people and solving problems. I also enjoy building relationships with lots of different people. 

  

If you could do any other job in the property sector, what would it be and why?  

I would give valuations ago. I think it would be interesting seeing lots of different properties in different areas. 

  

What did you want to be growing up?  

I wanted to be a criminal solicitor and have a law degree, but once I finished university decided that it wasn’t something I wanted to pursue further. 

  

What’s your favourite face mask design/pattern to wear?  

I have lots of different ones each to match a different outfit. 

  

And finally, what’s the strangest question you’ve ever been asked? 

Would you lend on a house made of hay bales… Obviously, that was a no. 

 

The stamp duty holiday deserves more praise than scorn – Murphy

The stamp duty holiday deserves more praise than scorn – Murphy

 

Not so for the housing market, though, as this has remained open for business and has in fact delivered year-on-year growth. 

There were 50 per cent more transactions in Q1 2021 than the same period in 2020, before Covid-19 had made its effects known. This surge in homebuying has without a doubt been fuelled by the government’s stamp duty holiday. 

It’s clear that the holiday’s stated aim has been achieved – it was designed to stimulate activity, and that’s exactly what happened. However, some in the industry have been critical of the tax break, arguing that higher levels of demand drove prices up and cancelled out the savings it delivered.  

While it’s true that prices were probably driven up, the conclusion that the holiday’s benefits have been erased is wrong. What the holiday has done is democratise homeownership by reducing the amount of upfront capital needed to get on the property ladder. 

 

Industry rewards 

For brokers, the holiday has injected huge volumes of business into the market.  

Brokers’ primary aim is to help clients get the keys to a new home, and lowering the financial requirements at the start of the journey has made that task easier. Budgets were stretched further and buying power was increased, and their advisory role was more important than ever in helping clients to get the best deal.  

First-time buyers were some of the biggest beneficiaries, and those most in need of broker advice, so the holiday not only helped them but created more demand for intermediary services. 

 

A case for technology adoption 

That demand has had a similar effect for tech providers, as greater need for advice put broker workloads under strain. In particular, the ability to quickly adopt and roll out a solution became more and more important, and the providers which were best able to do this experienced the best results. 

They key challenge for providers as the sector moves back to normality is to ensure that momentum doesn’t dissipate. Adoption has skyrocketed, but if a drop in demand is brought by the final tapering of the stamp duty holiday progress might be lost. 

What the holiday has done is shown that brokers are receptive to technology when it makes a tangible difference to how well they can do their job and how well their business can perform.  

Therefore, we have to say that its impact has been positive for tech providers, even if their challenge will continue beyond its end. 

That said, brokers and tech providers aren’t the only ones needed to play ball if the benefits of the holiday, and the interesting lessons it has taught us, are to be carried forward.  

The relationship between lower stamp duty land tax and higher activity rates is clear, and if it were to continue in some form, the housing market’s post-Covid boom may become a long-term trend rather than just a flash in the pan.   

 

Know Your BDM: Shami Sharma, Recognise Bank

Know Your BDM: Shami Sharma, Recognise Bank

 

What locations and how many advisers and broker firms do you cover in your role?   

I currently cover all of London and the South East, and at the moment this means I look after approximately 20 firms of advisers. This is likely to expand significantly in the months ahead.   

  

How have you changed the way you establish and maintain a good relationship with brokers in the pandemic?  

Like most people at the start of the pandemic, and particularly lockdown one, I had to adapt to the new working environment where I wouldn’t be seeing advisers face-to-face. It meant using Teams and Zoom, but also using social media platforms to check in with advisers and follow their activities.  

  

What personal talent/skill is most valuable in doing your job?  

It sounds such an obvious point to make, but this is really all about relationship building especially when you are a relatively new bank on the block.  

It’s about ensuring those advisers are fully aware of what you can offer them both professionally in terms of support, but also in terms of the product range and the types of cases where we can help them most.  

In the case of Recognise, it’s about commercial, bridging, professional practice loans, loans for medical professionals, and more recently professional buy-to-let. 

  

What personal talent/skill would you most like to improve on?  

I’m afraid it’s my IT skills – I am certainly not a Luddite and I appreciate how important tech is to the entire process. But occasionally I wish I was an IT whizz. 

  

Where would you rather be stuck, in bumper-to-bumper traffic or back-to-back Zoom calls?  

Definitely the latter. I like getting out to meet advisers and firms, but certainly don’t miss the traffic jams.  

I’ve noticed that as we move forward the traffic gets busier – I think we’ll all make a much more reasoned consideration about the face-to-face meetings we take, whether they are worth spending hours stuck in traffic, or if it’s not simply easier for everyone to carry them out over Zoom or Teams.  

  

What’s the best bit of career-related advice you’ve ever been given?  

Just simply, be yourself. You tend to be a certain type of personality if you’re doing this type of job, and I think if you’re suited to it, then you should be yourself when doing it.  

  

What is the most quirky/unique property deal you’ve been involved in?  

One where the deal had to be delayed because archaeologists were engaged following a discovery of bones when an environmental report was being undertaken. They definitely don’t come round very often.   

  

What has been your lockdown coping strategy?   

Trying to keep as positive as I could possibly be. That’s doubly important when working with brokers and advisory firms because they want to know you’ve the energy and spirit to work their case through in the most positive way possible.  

  

If you were head of the FCA for the day, what would you change about regulation in the mortgage industry?  

Increase the minimum size for an HMO. It sounds such a simple thing, but it would make a considerable difference in our sector and I think could help fill some of the housing gaps we currently have as well.  

  

What was your motivation for choosing business development as a career?   

For me it’s always been about the relationships, making new connections, trying to understand what advisers want and how we at Recognise can be the lender that delivers it best for them. 

  

If you could do any other job in the property sector, what would it be and why?  

I would probably be a property developer, to sit on the other side of the fence as it were and to grow a portfolio. 

  

What did you want to be growing up?  

Bizarrely, it was to be a bank manager. I’ve got the working for a bank part right now that I’m older, although part of me wonders whether that job will become obsolete in the not so distant future.  

  

What’s your favourite face mask design/pattern to wear?   

Either a paisley one or the mod target. Both are classy in my opinion. 

  

And finally, what’s the strangest question you’ve ever been asked?  

Maybe it was the one two questions before, ‘What did you want to be growing up?’ although I think my answer would probably be viewed as just as strange. 

Put in the work with your landlord clients now

Put in the work with your landlord clients now

 

Purchase business in the buy-to-let market was undoubtedly boosted by the stamp duty holiday.

Many landlords have taken advantage of the welcome reduction in upfront buying costs to expand their portfolio.

But as the tax break ends, I expect purchase business to settle back to its pre-pandemic levels. Over the last few years this has tended to be roughly 30 per cent purchase and 70 per cent remortgage.

The shift in favour of remortage business happened as a result of the second home stamp duty surcharge putting some landlords off adding to their portfolios and  reducing the number of first-time investors. That hurdle will be back from October, so, while you might be busy with purchase business right now, you need one eye on the last quarter of the year and beyond.

It’s also entirely possible of course that some landlords with an eye increasing demand for privately rented property may continue to add to portfolios but be aware that it’s possible that we’ll see a shift back to remortgage business dominating buy-to-let lending again. And why not contact your existing client base now to check out their short and medium-term plans?

 

Covid fallout

Your existing landlords arguably need your support more than ever. This is especially true if they’ve been financially impacted by the pandemic.

Landlords were able to take six-month mortgage breaks but, as they move back onto a payment schedule, many will still be dealing with tenants who are unable to pay. And they may still find it difficult to go down the eviction route if that is the only alternative left.

According to the National Residential Landlords Association there are an estimated 840,000 private tenants who have built up rent arrears since lockdown measures began.

Most landlords have been working with struggling tenants to help keep them in their homes, but 60 per cent have lost rental income as a result of the pandemic. Of these, 39 per cent said the losses were continuing to increase.

From a lenders perspective, we are not seeing these losses filter through in mortgage arrears so landlords are clearly being incredibly supportive of their tenants. Given the challenges they continue to face into, it’ the perfect time to get in touch for a review that could potentially stop any mortgage arrears or  credit blips in other areas of their finances. A remortgage or product transfer could come at just the right time.

 

Product boost

Luckily the number of buy-to-let mortgage deals available is at its highest level since the pandemic began impacting the UK economy last March.

There were over 2,300 deals available this March, according to Moneyfacts, but although rates have risen to a two-year high, options still remain very attractive based on historic averages. The average two-year fixed rate available up to 80 per cent loan to value (LTV) has risen from 3.56 per cent in March 2020 to 4.14 per cent this March, for example.

Access to finance is still more limited at higher LTVs, and many landlords need broker support to navigate the current market. Here’s how you can help.

Communicate: Keep in touch with your landlord clients throughout their mortgage deal. There’s no need for overkill but a quarterly ‘hello’ will keep you front of mind. It also gives you an opportunity to see if they have changes in their financial circumstances they want to discuss.

Go in early: Contact them about renewal options well in advance of end dates. Three months used to be standard, but bump that up to five. Many clients’ circumstances will have changed in the last year which could make them more tricky to place. Add in the fact that some lenders are still not back to their usual service capacity and you need to buy yourself some time.

Embrace product transfers: If they’re worried about their remortgage eligibility, your client may be tempted to take a direct product switch. It’s an easy option. But you are better placed to review their mortgages. Contact them early and explain you will source the right deal from across the market, whether from their existing lender or a new one. That’s better for them, and for you.

Share your knowledge: It’s not your place to make decisions about your client’s investment but they may appreciate your sharing your knowledge of changes they need to plan for. This could include the new EPC proposals, the Renters’ Reform Bill or the transition back to pre-Covid Right to Rent checks. Help them see what changes are coming down the line and how their portfolio could be affected.

The last 12 months have been indescribably challenging for all the wrong reasons.

But business has also been booming for many brokers, giving you little time to reflect on your strategy.

Take a step back now and consider what enquiries will look like after the stamp duty holiday ends. And start putting in the work with existing landlord clients now.

 

 

 

 

 

 

 

For the use of mortgage intermediaries and other professionals only.
The information contained in this article is the property of Lloyds Banking Group plc and may not be reused or publicised without our prior permission. The information provided is intended to be for information only and is not intended to be relied upon.
This information is correct as of June 2021 and is relevant to Birmingham Midshires products and services only.
If you do not have professional experience, you should not rely on the information contained in this communication. If you are a professional and you reproduce any part of the information contained in this communication, to be used with or to advise private clients, you must ensure it conforms to the Financial Conduct Authority’s advising and selling rules. Birmingham Midshires is a division of Bank of Scotland plc.  Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ.  Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628

10 ways to make portfolio business easier

10 ways to make portfolio business easier

 

Nearly four years down the line, portfolio business is still more time-consuming than standard buy-to-let for everyone involved – landlords, brokers and lenders.

Submitting these cases involves more work for you and longer processing timelines.

At BM we see a higher proportion of incorrectly submitted portfolio cases than non-portfolio applications. This means more requests for further information before we can progress the case.

That’s why we set up our dedicated Portfolio Support Team in 2019, streamlined our Portfolio Landlord Form and launched a standalone Portfolio Landlord Portal last year to help brokers submit these more complicated cases.

They’ve all helped speed up app-to-offer times but, during the pandemic, given how busy brokers have been, it’s no wonder that we’ve seen errors on portfolio applications creep up again. We asked our underwriters what common errors they’re seeing and how you can get your cases straight to offer:

Here’s what they said:

  1. Choose a lender with a dedicated team

Portfolio lending requires specialist support. There will always be cases where you need to chat through a problem or question with an expert in portfolio lending.

Lenders with dedicated and ring-fenced portfolio experts can better support you with these more complicated cases.

  1. Know your way around the different systems

We know lender systems for portfolio business can be a bit confusing, as different pieces of information need to go to different places. Some lenders have partnered with third party providers to value your client’s portfolio, for example.

With BM Solutions, you need to log into two places. The most important document – the Portfolio Landlord Form – is submitted to our standalone Portfolio Landlord Portal. Other documentation, such as the client’s income, is submitted via BM Solutions Online.

  1. Check the credit file

Get a copy of your client’s credit file upfront. It alerts you to any issues they forgot to mention and means you can check the credit file matches their portfolio information.

One of the first things we need to do is match up the credit file with each of your client’s listed mortgages. If it doesn’t match, we’ll come back to you to clarify before we can proceed.

Cross-referencing the application with the credit file before submission avoids this delay.

  1. Include the residential mortgage

Don’t forget to key the client’s residential mortgage as a commitment.

Lenders need to be able to identify every credit commitment. The BM Portfolio Landlord Form collects information on background buy-to-let properties (both mortgaged and unencumbered), so a residential property needs to be added separately on BM Solutions Online.

  1. Get the documentation upfront

If you ask clients to gather their documentation in advance of your first meeting you have more information to work with when sourcing a product.

Plus you can verify what they’ve said on the application and iron out any discrepancies, before uploading the documents when you submit the application.

This makes it much more likely you will move quickly to offer.

  1. Prove all sources of income

If your client has multiple sources of income – a property portfolio, a job and earnings from self-employment for example – lenders need proof of each.

You need to collect more documentation upfront, but it will avoid delays down the line.

  1. Include savings and other assets

Lenders want to see the full picture to assess your client’s application, including unencumbered properties.

Add in the client’s savings and other assets too, so we get a rounded picture of their financial position. Also use the Additional Information section on the Portfolio Landlord Form to share any other information you feel will be helpful for the underwriter. It might make the difference between a yes or a no!

  1. Double check

Double check the case, particularly the details of your client’s property portfolio, to make sure it’s fully up to date.

A delay of days could be prevented by checking addresses and postcodes for example, because we can’t value your client’s portfolio if a digit is wrong on the postcode.

  1. Always explain

There’s usually space on lender application forms for you to explain anything that needs clarification. This is your chance to talk directly to the underwriter, so use it.

For example, where a mortgage is made up of several parts – maybe because the client previously raised capital – leave a note explaining this. It will help us match it more easily to the credit file. This kind of detail should be captured under the Additional Information section in the Portfolio Landlord Form.

  1. Don’t call us, we’ll call you

Don’t call your lender to tell them you’ve submitted an application.

At BM, our dedicated Portfolio Landlord team will contact you within 24 hours. If we need any further information, we’ll be in touch. The same goes if you find out new information that is relevant to the application. You can edit the case online yourself and we’ll let you know if it affects your client.

We want to give you the best service possible, which is why we’ve put in place alternative ways of getting the information you need.

This frees up our phonelines so, when you really need to speak to us, we can answer your questions quickly and comprehensively. If you do need to speak to us, check out the Portfolio Landlord page on our website for details of how to contact our dedicated Portfolio Landlord team.

 

 

 

For the use of mortgage intermediaries and other professionals only.
The information contained in this article is the property of Lloyds Banking Group plc and may not be reused or publicised without our prior permission. The information provided is intended to be for information only and is not intended to be relied upon.
This information is correct as of July 2021 and is relevant to Birmingham Midshires products and services only.
If you do not have professional experience, you should not rely on the information contained in this communication. If you are a professional and you reproduce any part of the information contained in this communication, to be used with or to advise private clients, you must ensure it conforms to the Financial Conduct Authority’s advising and selling rules. Birmingham Midshires is a division of Bank of Scotland plc.  Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ.  Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628

Technology and the human touch will form our future broker proposition – Duncombe

Technology and the human touch will form our future broker proposition – Duncombe

 

Whether it’s swapping the office kitchen for a Zoom call to catch up with colleagues or relying on automated valuation models (AVMs) and desktop valuations over physical reports, we can all recall some change to our use of technology in the last year.  

It’s always been around us and of course, as the digital world evolves, it continues to advance at pace. But the question is, has the forced acceleration and adoption of technology over the last year been a short-lived necessity, or is there a chance that as the world opens up, we’ll continue to take advantage of its benefits and adapt to the downfalls to save time?  

I suspect it’s much more of the latter.  

At Accord, we’ve had a huge year of change as we try to make things easier and more efficient for brokers.  

To keep things moving last year we quickly switched to desktop valuations where possible, and we’ve rolled out new API technology to allow pre-population of data to our system, saving brokers up to 20 minutes per case by removing the need to rekey information. We also added our buy-to-let business to our Mortgage Sales and Origination (MSO) platform, meaning advisers can do both buy-to-let and residential cases with us in one place.  

The latter is the biggest single investment we’ve ever made in our systems to improve the way brokers do business with us, for good reason.  

Just last month we introduced new propositions including top slicing, new build for landlord clients and lending in Scotland. Without MSO this just wasn’t possible.  

 

Adoption leads to development 

And the more that lenders embrace new technology, the more I expect we’ll see exciting propositions come to market to meet the changing and increasing needs of clients, which can only be good news for brokers.  

But it’s not just the big-ticket items. Smaller changes such as streamlining manual tasks with automated bot technology or increasing availability of webchat functions can make significant differences to the experience brokers, and therefore their clients, have.   

Whatever positive technological changes lenders make, we know we’re only one part of the mortgage journey. There’s been digital advancements at other stages too.  

Sourcing systems, aggregators and in many cases, brokers have all taken necessary steps to become more sophisticated, and as a combined force the industry has found ways to streamline the process during what have been some of the busiest months for lending ever seen.  

 

Get on board with digitisation 

However, we recognise that no matter how good we become with technology as an industry, it’s not a standalone solution. It’s important, there’s no doubt about it – it’s even a risk if you don’t or can’t keep up – but it’s hard to imagine that it will ever replace the value humans can add. 

I only see the two complementing each other more in the future.  

The better we all get at using technology, the more time we’ll have to focus on the things that matter. For brokers, having API technology to save rekeying will free up time to spend with existing clients, or generate new leads.  

Likewise with systems such as MSO, the ability to self-serve and keep updated on case progression without chasing updates, all improves experience.  

Meanwhile for lenders, digital assistance can help create a better packaged case, which enables us to assess cases quicker and turnaround offers sooner. Our underwriting team for example, will still be directly accessible, but have capacity to focus on our common-sense lending approach, underpinned by modern, digital systems and software to help brokers secure properties for clients. 

We’ll always continue to look for ways to improve our systems and processes to make things better for brokers and their clients, but we’ll never rely solely on technology – we’ll just use our human touch more wisely, in ways that are needed and that add value, to continue to go above and beyond the expectations of those who do business with us.   

Strong GDP growth indicates slow and steady path for interest rate rises – Maddox

Strong GDP growth indicates slow and steady path for interest rate rises – Maddox

 

MPC members all also backed maintaining the stock of sterling non-financial investment grade corporate bond purchases at £20 billion, and held total volume of quantitative easing at £895 billion overall. 

 

Faster-than-expected recovery

Since May’s meeting, growth in gross domestic product (GDP) globally has been stronger than anticipated. The expected level of UK GDP in Q2 2021 is now 1.5 per cent above what was previously predicted.  

June is expected to be about 2.5 per cent below its pre-Covid Q4 2019 level. A faster recovery has been in large part due to consumer-facing services, as restrictions eased from April onwards. 

Twelve-month consumer price index (CPI) inflation rose from 1.5 per cent in April to 2.1 per cent in May, above the MPC’s two per cent target and earlier than predicted. Inflation is expected to rise further and is likely to exceed three per cent for a short period this year, primarily due to developments in energy prices.  

The MPC predicts that there will be a period of strong GDP growth and above-target inflation, after which inflation will fall back in line. 

The latest unemployment figures from the Office for National Statistics indicate that unemployment has dropped slightly in recent months and stood at 4.7 per cent in the three months to April 2021.  

Also, the number of jobs furloughed under the Coronavirus Job Retention Scheme (CJRS) has continued to drop with 3.6 million jobs furloughed in April, dropping to below two million in May and around 50 per cent of those are on a flexible form of furlough. 

 

Rate predictions 

Forecast in rates (changes rounded to nearest 0.25 per cent) 
Effective Rate  1mth time 3mth time 6mth time 12mth time 2yrs time 3yrs time
Bank of England Base Rate*       

0.250 

 

0.500
2yr Fixed Rate**        0.250  0.500  0.750 
3yr Fixed Rate**  0.500  0.500  0.500  0.750  0.750  1.000 
5yr Fixed Rate**  0.500  0.500  0.500  0.500  0.750  0.750 
10yr Fixed Rate** 0.500 0.750 0.750 0.750 1.000 1.000

* Using OIS Curve 

**Based on the swap curve 

 

With the Bank of England Base Rate currently held at its very low, 10 bps level, the markets have suggested that the rate will remain flat over the next year whilst the economy continues to recover and will then start to rise in two years.  

However, this rise is predicted to be slower than previously expected, with the base rate rising to 25 bps then 50 bps in two and three years respectively. 

Forecasts remain wholly unchanged for the two-year and three-year fixed rates staying flat over the next six months before beginning to rise towards the end of this year.  

The two-year fixed rate is set to increase from 25 bps to 50 bps in twelve months and to 75 bps in two years, and the three-year fixed rate to increase to 75 bps in 12 months’ time and then to one per cent in three years. In respect of the five-year rates, it’s expected that the long-term rate will increase to one per cent in two years. 

 

UK securitisation market 

The UK residential mortgage backed securities (RMBS) primary markets have been a lot more active over the last few weeks with six issuances into the market since mid-May, one from a prime lender and the remainder from the specialist market, including Kensington’s own inaugural green bond, the first Green UK RMBS issuance. 

Year-to-date there have been over £9.7 billion of UK RMBS paper placed into the market. 

FCA ban on GI price walking gifts new service dimension to mortgage brokers – Martin

FCA ban on GI price walking gifts new service dimension to mortgage brokers – Martin

 

Price walking effectively punishes loyal customers, with policyholders paying artificially inflated renewal premiums to subsidise the much lower prices offered to new customers. The Financial Conduct Authority (FCA) ban on it comes into force in January.

The practice has been widespread in the direct-to-consumer (D2C) motor and home insurance markets for many years. The FCA estimates that the insurance industry gained £1.2bn from six million policyholders through price walking in 2018. It predicts that the new ban will save customers £4.2bn during the first ten years following its introduction.

 

Emphasis on value

The ban will level the playing field for the home insurance market. It will make it easier for mortgage brokers to offer customers competitive, but realistically priced, insurance products, carefully tailored to match customers’ specific requirements. In effect, the FCA’s actions offer an opportunity to rebalance this market, ending a race to the bottom on price and moving instead toward an emphasis on products and services that offer real value. 

The ruling also offers brokers new opportunities to contact customers more regularly during the lifecycle of their mortgage, to offer them additional products or service enhancements and to nurture stronger relationships. Brokers and customers will both benefit if brokers are then able to develop comprehensive packages of tailored products and services.

And, if customers are less tempted by loss-leading quotations from the D2C market, it should be easier for brokers to win new business alongside remortgage and product transfers. 

Brokers will be able to draw on sourcing systems, clubs, networks and trade associations operating in GI to help customers find products to meet their needs. Even brokers who don’t normally advise on GI can help their customers to benefit from the FCA’s ruling, by working with distributors and other partners to refer to a suitable provider.

 

New dimension

Customers who shop around every year for the best insurance quotes may be disappointed by the immediate consequences of the FCA ban, which could remove some of the very cheapest deals from the market.

But brokers should seek to explain that the ban will benefit all insurance customers in the longer term, that the cheapest deals are rarely the best choice for most customers, and that the way to ensure the best outcome is to work with a broker who understands the customer’s requirements and will search for products that genuinely meet those needs. 

The FCA’s ruling offers an opportunity for customers to discover that not all insurance policies, services and intermediaries are the same.

It gives the best mortgage brokers a chance to prove their true worth by adding a new dimension to the already exemplary services they deliver – and an opportunity to enjoy significant commercial rewards as a result.