Nick Archer, partner, A & M Partnership
Daryl Lay, director, HL Financial Consultants
Barry Hunn, director, Green & Co Financial Services
Paul Carter, principal, Mortgages & Protection For Life
Paul Morgan, director, PJM & Jam Associates
Judith Clayton, adviser, BJB Financial Services
Mark Whitehead, executive member, John Charcol Associates
Accord Mortgages team:
Thomas Hill, business development adviser, Accord Mortgages
Claire Jarvis, corporate account manager, Accord Mortgages
Charlotte Hird, media relations officer, Accord Mortgages
Mortgage Solutions team:
Samantha Partington, deputy editor, Mortgage Solutions (chair)
Owain Thomas, features and contributing editor, Mortgage Solutions
Lisa Frankel, event co-ordinator, Mortgage Solutions
The private dining room, Hotel du Vin, Birmingham city centre
The grand wood panelled surroundings of the private dining room at Hotel du Vin brought together a select group of brokers from across the Midlands to highlight their activity and key concerns in the mortgage market.
Birmingham and the West Midlands is often thought of as a stepping stone from the South East to the North, but while this may fit some impressions it has its own unique issues.
The first concern raised by brokers was a notable trend of nervousness among valuers in the region, with several attendees noting they were starting to see pockets of down valuations which failed to reflect the local market.
It was suggested this might be a knock-on effect of negative press coverage about the wider economy coming from London and the South East, in contrast to local conditions.
“In Coventry, where Jaguar LandRover and the university are booming we’ve had two or three down valuations, totally against what is happening locally,” said one broker.
“They’re talking about what house prices were six, 12 or 18 months ago; they haven’t caught up with the fact that actually in the last three months, they’ve gone up noticeably. They seem very unaware of the local market; it’s very much err on the side of caution, just in case.”
Coupled with this situation is the national issue of demand outstripping supply.
Attendees noted it was particularly acute in many areas of Birmingham where estate agents found properties meeting the asking price and being sold just a day after listing.
On many occasions this was reported to be at the expense of first-time buyers or owner-occupiers, who lost out to landlords with ready access to financing.
As a result, shared ownership and other new build developments are proving increasingly popular and in this regard lenders can be found wanting.
“There’s not enough support for these buyers,” reported one broker, “because in the shared ownership market clients have a lot smaller deposits available as they’ve been renting properties and they’re not saving quite as much.
“So they’ve got small deposits while the new build criteria with many lenders is 80% or 85% loan-to-value, but buyers need 90% or 95%.”
With renting still such a necessary part of the housing market, this led on to the subject of landlords and their understanding of changes to buy-to-let tax, with several attendees noting a shocking lack of awareness by borrowers.
Accidental landlords who had not purchased properties for their investment income were reported to be selling up once being made aware of the tax hike, while the possibility that other landlords would simply not declare their taxable income was also mooted.
But it was generally agreed that most landlords would not change tack until they saw the higher tax in black and white.
How brokers should deal with this situation prompted a spirited debate.
“What I always say to them is go and speak to a tax adviser, because we’re damned if we do, damned if we don’t,” said one broker.
“If we start giving advice and it goes the wrong way we’re going to carry the can. A lot of our clients are considering the limited company route, and I say: ‘yes, you can but speak to a tax adviser or an accountant. I can tell you what the extra costs are going to be if you do a limited company, I can tell you what the extra interest rates and the fees are, but I can’t tell you the tax situation’.”
Working with lenders
Moving on, the discussion shifted to working with lenders, and especially business development managers.
Where the process is efficient and communications are clear, brokers noted they were happier to work with lenders and felt encouraged to consider them for potentially trickier clients.
Being able to access underwriters directly was always seen as a bonus for clarity and understanding what was required.
However, the reverse could also prove true, they warned.
“It does go across all lenders,” noted one broker.
“Some BDMs are great at getting access to underwriters, and coming straight back to the point. Others, all their job seems to be is to escalate and it makes you think sometimes what is the point of that position?
“In the good old days, we could talk directly to the underwriters, obviously we can’t any more, but that’s fine if the BDM is doing their job properly.”
Combined with this was a discussion about the best communication methods between brokers and lenders.
“I think we’re being told as an industry, in every sector really, that people don’t want to talk,” explained one broker.
“Lenders believe that online is how we want to communicate, and perhaps there is a generation coming up that definitely do feel uncomfortable talking on the phone, but that isn’t everybody. Picking up the phone is almost becoming a stigma and lenders are rolling out technology to avoid doing that.”
This was echoed by another attendee, who noted it was often far clearer and much quicker to have a five-minute conversation than to go through live chats which often gave incorrect information.
Finally, the conversation turned to succession planning and bringing new blood into the industry.
All the attendees noted how difficult it was to recruit fresh brokers, no matter their age.
While there was recognition of the importance of regulatory exams, many felt it was too onerous from the beginning for someone who was only going to be in one sector of financial services.
Combining this with the prospect of six-months to be trained and pass exams, largely without pay, proved too big a barrier for most people.
This was followed by calls for lenders, government or the wider industry to get more involved in attracting, recruiting and training new brokers.
“Why would we pay somebody for six months who might pass those exams, who might come on board? Why would we do that?” said one broker.
Another added: “It takes quite a long time to get someone from being a rookie to being experienced as a broker. And I think you’ve got to want to invest maybe six months to a year to get someone up to speed to do the job properly.
“The other side of it is for those of us who have a very large client base, you’re letting them loose on your future. It takes one bad mortgage to screw your reputation. So, it really needs the industry to take on board – first they want to get mortgage broking as being an aspirational career, like banking, and second, coming up with ways in which we can get people up to speed.”
However, the evolution of banks away from financial advice has also caused a problem in the supply of trained brokers.
With most attendees having experience of the corporate channel in some form they accepted that this was unlikely to continue and would make it tougher to find new recruits.