Chris Mason, regional sales manager, Police Mutual
Ben Wakeman, mortgage adviser, BC Wakeman Associates
Ian Scott, mortgage adviser, MWS
Mark Bonshor, director, First Rate Mortgage Advice
Jacqui Griffiths, mortgage adviser, Crystal Finance
Maria Hesson, mortgage adviser, Gateway Financial Services
Niall Whitehouse, mortgage and protection adviser, Midas Financial Planning
Mark Leighton, director, Sterling Financial Advisers
Osmond Blackwood, mortgage and protection adviser, Charles Derby
Adrian Foote, corporate account manager – intermediaries
Warren Cain, senior mortgage product manager
Steve Runter, business development manager
Mortgage Solutions team:
Owain Thomas, features and contributing editor
Lisa Jayne Frankel, event coordinator
The private dining room, Hotel du Vin, Birmingham city centre
There was only one way to begin this edition of the Supper Club debate in association with Platform: how much will the general election’s supply of new housing polices actually change the supply of new houses?
Attendees agreed that very little was likely to move forward in the next few years, especially with Brexit negotiations dominating the political landscape.
“I’m not sure there was enough tangible change to influence the market. Quite frankly I’m not sure we’re taking it seriously enough,” said one attendee.
“I’m not sure things like shared equity and other innovative schemes are present, we need a lot more than we’ve got. If things like Help to Buy come to an end, what’s going to happen then?”
This inaction, attendees feared, would continue to drive many of the problems within the housing market, including lack of supply.
As another broker reported: “It’s a crystallisation of donkeys’ years’ worth of neglect of the housing market.
“There’s tons of first-time buyers, there’s 10 years’ worth of pent-up demand for property, there’s just not enough people selling to satisfy that demand. The local authorities, government and new home builders have all neglected to build entry-level housing which supports that sector of the market. There’s just not enough houses to satisfy the demand.”
Another broker noted this pent-up demand was causing problems with affordability and valuations.
“I get a lot of properties that are going for over the asking price and then you’re getting lots of down valuations as well, which is causing so many problems, especially for people who’ve got small deposits.
“So, if you’ve got a 5% or 10% deposit, you’re pretty much blown out of the water.”
Another participant added: “People are staying in houses for longer and the next-time buyer market is all lend and extend rather than move on, so you’re not opening the first-time buyer type properties.
“From what we see and certainly from customer feedback, first-time buyers are becoming more picky and maybe aren’t willing to compromise in the way that they might need to be to get on the property ladder.”
Estate agents’ smokescreen
Related to this need and demand is how new build purchases are being made and financed. One of the continuing issues within this market is the role of new build estate agents, their in-house mortgage brokers, and relationships to builders.
One Supper Club attendee noted: “It remains a cartel, it always was. I don’t think there’s been any change over a long period. Despite the government’s platitudes on the subject, nothing has changed. It’s very rare that you convert a client who is talking to you about a new build property, because it gets scooped up in that process of ‘You must do it this way or else’ by the agent.”
The oft-quoted defence that new build is a specialism was dismissed by attendees as “a smokescreen”. And there is little hope among brokers for the Financial Conduct Authority’s (FCA) market review.
“I don’t think anything will come of it, it was identified a long time ago, it’s not going to change,” said one broker.
Another added: “It’s interesting that we’ve been flooded with regulation over the last decade and yet the estate agent side of the market remains entirely unregulated; self-governed and just devil may care.”
And this has included some distressing stores for clients caught-up in the process: “I’ve had a lady and she was crying: ‘I wanted to use you, but I can’t because they won’t let me have the house’. She was too frightened not to use their broker,” one broker added.
The subject of retention business has also been a high profile one for brokers this year. With proc fees now nearly ubiquitous, lenders are becoming more proactive at contacting clients directly; a trend which has frustrated some advisers: “What I am a bit miffed about is that a lender will say you can switch your client to one of their rates at three months, but they’ll write to the client at four months before the deal is open to brokers,” said one.
“They say well I can do this for you now, save you all the hassle, save your broker the hassle as well. I’m not happy with that at all.”
There was an understanding that some brokers neglect their clients after completing an initial mortgage and that lenders needed to offer a direct route for those who wanted it.
However, it was the apparent deception with different timings, which angered brokers most: “If lenders want you at the front end, and they do want us at the front end putting all that business to them, then don’t stab us in the back at the back end,” surmised one.
Earlier in the summer, Mortgage Solutions conducted a poll which revealed 40% of brokers did not even have a website for their business.
Despite the expectation for a technological evolution of the mortgage process, most attendees were content not to invest in this area.
“We’ve got a website but nothing ever comes through it. Unless you link it to something that people put into Google when they want mortgage advice, you’re not going to get anywhere online really,” said one broker.
“We just have it because it’s somewhere for clients to go once they’ve seen you. I think face-to-face advice is what people want, anyway, I really do. I don’t think they want to spend five hours on the phone, they don’t want that. They want to speak to someone.”
Another added: “I’ve had an enquiry form on my website for 10 years and can count on two hands how many enquiries have been keyed through – people are nervous at keying their own data through a private website.
“So that’s not worked for me but the phone number on the site tends to, so you’ve got the credibility and then a local number and a first name. You try and make it a bit friendly and then maybe somebody will pick the phone up. But social media perhaps bypasses your website so we’ve been looking at things like business-type Facebook stuff. Maybe the under-40s are going to be down that route in future.”
Mortgages for teenagers
The power of confidence in what to expect, for both customer and broker, was highlighted as being a vital component of the referral process.
But there was also acceptance that adapting to new customers could be a vital pivot point for many brokers.
“Technology is a massive challenge for brokers but it depends on how long you intend to be around for,” explained one attendee. “If you intend to be around arranging mortgages for people who are teenagers now in 15 or 20 years’ time, your company has got to be tech ready for those people. First-time buyers I’m dealing with are 35 or 36 years’ old and they’re suspicious of technology and they still engage face-to-face.
“But my kids are not as suspicious of it, it just comes naturally to them and they will deal with it. If you want to be in the market for those people, then you have to be ready to accommodate the ways that they’re going to interact with you later on. That’s unfortunately stuff that you’ve got to invest in today that you might not see returns on immediately, but it will come,” they added.
And this brought the discussion on to the wider subject of communicating with customers in general. Have there been changes in how people like to hear from their broker? And has this changed working practices at all?
At the moment email and phone calls still dominate: “It’s easy for us to be prescriptive in an email; to tell a customer what’s happening, why it’s happening and what they need to do. And they can look at that in their own time – that’s all they’re looking for.
“Don’t intrude on their life or their job; deliver them what they want really – it doesn’t have to be too fancy, does it?” said one.
But another attendee noted that texting was becoming much more common and effective: “I text a lot of clients because they’ve got their phone at work, and they can just look at it,” said one, while another concluded: “In the last few years, I’ve done a lot more texting than I ever did, I didn’t used to do it at all.”