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‘Lenders must help ensure product transfers are still an advised process’ – Platform London Supper Club

  • 01/11/2018
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‘Lenders must help ensure product transfers are still an advised process’ – Platform London Supper Club
For the latest Supper Club in association with Platform, Mortgage Solutions headed to Taberna Etrusca under St Paul’s Cathedral spire in the heart of the City of London.


Here the debate covered the hot topics of product transfers, the Financial Conduct Authority’s (FCA) mortgages market study and answered the question, how bad really is the London market?

With UK Finance data showing the product transfer market is likely to hit more than £200bn this year, it is provoking much reaction within the broker market – and the Supper Club was no different.

Concerns were raised that lenders might have a perception some advisers were just doing a product transfer without considering the full advice process.

But one attendee noted lenders had a role to play in ensuring the advice process remained a critical part of the journey.

“The problem we have is it’s a huge market but that’s where it can get disrupted,” the attendee said.

“When things go tech-based, for us we need to make sure it’s still an advice process and lenders can help there.

“The number of lenders that don’t allow you to discuss the term or the repayment type, or change this or that means it’s hard to give advice, and that’s bad for the client as well.”

This development of technology and removing advice was combined with concerns about the risk of losing contact with clients, particularly where lenders are being more proactive in engaging them near maturity.

“A lot of people are moving a lot less, instead they are doing home improvements, debt consolidation, so why have lenders not built that into the product transfer process?” another added.

“So they’re losing business from clients doing home improvements. And I worry, some clients are doing it directly with a bank, and then probably six months later calling up and saying: ‘Now I need £30,000’, because there’s no advice given at that point of sale.”


Revenue stream changes

But the change in revenue streams from product transfers is also taking its toll on broker firms with some suggesting the lower procuration fees do not reflect the full work being undertaken.

“The guys still have to satisfy the same level of compliance and a 0.2% proc fee is a liability,” one broker noted.

“I’ve seen it on our bottom line over the last 18 months where we’ve rubbed our hands together with glee when product transfers started to come through.

“But if you look at it, brokers are doing a £100,000 smaller loan with the same lender and are getting paid £200 more than the one that’s just done a larger product transfer. You think, ‘well, they’ve done the same amount of work, apart from drive round the client’s house’.”


FCA conflicted on technology

Another issue animating the mortgage sector is the regulator’s review of the market.

The interim report released in May provided a range of views – some of which have been greeted with surprise and a little disappointment.

Some attendees were concerned that the FCA appeared to be pushing towards more mortgages being completed on an execution-only basis.

This is in contrast to its own Mortgage Market Review which put the emphasis on advice.

“I think there’s a fear in the market and the industry that things are going towards execution-only and I also feel there’s a fear that if you look at the report, that definitely highlighted and pushed execution-only,” said one attendee.

However, others suggested this may be symptom of the regulator struggling with the evolution and development of technology in the sector.

“The FCA is a bit finding its feet around the difference between should we allow technology in, but some people in the FCA equate that with execution-only, which I think is not necessary,” said one.

Technology and execution-only is not the same question; technology is good,” continued another.


Brokers must be more transparent

The much-maligned suggestion of a broker database was also raised with recognition that getting the right broker was important and that customers needed to be able to assess the difference in quality between brokers.

One attendee noted: “I think transparency from all of us to say if we are all of market or not, what the service level is, the type of mortgages we’re particularly good at – that would be good.

“I don’t know what the format is, we probably need a couple of years to figure that out, but it should be easier to find out whether your broker is going to be right for you.

“The theme is right but I think a government-mandated database is the wrong answer.”

The availability of other review websites was also noted, however another broker suggested that the most honest review a broker could get was a referral.


‘I can’t buy anything for £1.2m’

Eventually the conversation made its way to the state of the London housing market – a topic which has been the subject of local and national discussion.

At present the capital is the main drag on the UK market with many boroughs and property types falling in price, according to many data sources.

But how is this being felt on the ground?

“I think the talk of the slowdown in London is a bit exaggerated,” said one attendee.

“Yes, prices have gone down a little bit but I’m hearing anecdotal evidence from clients where they’re saying look, I’ve got a budget of £1.2m, I can’t buy anything for that.

“There’s a lack of houses, there’s a lack of good family houses, even with prices in that area.

“However, there is oversupply in new-build flats which are always the ones that fall first when things go down anyway. So, I don’t think it’s anything – there had been a long stage of prices rising so maybe it’s going to be a little bit of a longer stage of prices coming off,” they added.


Brexit boosting overseas investment

One trend that does appear to be growing is people being more prepared for when they are able to move – with borrowers getting an indication of what they can afford before then going property hunting.

Typically, it is younger adults and couples, potentially with small families who tend to be moving out of more central parts of London to the commuter belts, making these locations popular.

However high prices are keeping many people from buying in the places they are leaving behind.

Instead it is overseas buyers who still remain interested, according to one attendee.

“It’s the Middle East and China. I’ve got quite a few Chinese clients and they are getting stung out there,” the broker said.

“The property prices in Shanghai are monster and have gone massively past London. So the only way for them to get a return and stability of investment, assuming they can extract their money from China which is the big problem, is to buy in London.

“With the pound tanked because of Brexit, it’s a great time for overseas money to flood in, but that’s unlikely to last forever.”


Negative equity nerves

However in contrast, Brexit and the potential for knock-on effects such as negative equity has apparently set first-time buyers on edge, especially when taking high loan to value borrowing.

“I always say alternatively that you’re going to rent and pay someone else’s mortgage for the next 12 months, or instead you could own your own house and it’s still going to be yours,” said one broker.

Continued another: “Even negative equity for a small time is not the end of the world. If your mortgage is 25 years, at the end of the 25 years, you own that property – whereas 25 years of renting, you are still at square one.”

But another added that Brexit and how it would potentially affect the property prices was a common question for first-timers.

“I always ask them if they want to live in the property? If something happens in the market and it does drop, if you want to live in the property, then you stay in it longer and wait until the market recovers, because ultimately it will,” the broker concluded.



Jamie Beer, mortgage and insurance broker at Mayfair Financial

James Carter, owner of Independent James,

Christopher Clack, mortgage and protection adviser at Kingsgate Partners,

Greg Cunnington, director of lender relationships and new homes at Alexander Hall,

Robin Fawke, partner of Hawke Financial

Gary McKenna, mortgage and insurance consultant at Hawke Financial

Adam Moore, director of Moore Financial Solutions

Nicholas Morrey, product technical manager at John Charcol

Katie Parsonage, owner of Kingsgate Partners

Martijn Van Der Heijden, chief strategy officer of Habito



Neil Wyatt, head of distribution – intermediaries at Platform

Richard Daibell, national account manager – intermediaries at Platform

Christian Smith, business development manager at Platform


Mortgage Solutions

Katy Bryant, event assistant at Mortgage Solutions

Danielle Moore, event director at Mortgage Solutions

Owain Thomas, features and contributing editor at Mortgage Solutions


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