What is the history behind Mortgage Intelligence?
Mortgage Intelligence started in 1996. The idea behind it was small broker firms cannot afford to spend a lot on advertising. We offered to pool their advertising budget under the Mortgage Intelligence banner and provide leads through a national advertising campaign.
After approaching brokers with the idea, it launched as a start-up with 350 members. Essentially it was just a lead generation service for brokers, but they also had access to a range of exclusive products with a number of lenders. Due to the volume of business, we could offer attractive fees on the exclusive products as well as access to all the core products of the panel lenders.
After six months, we were bought by the Close Brothers Group, an independent merchant bank, and have gone from strength to strength. There are now around 5,000 brokers who are members of the network (on top of the 350 who benefit from the lead generation service) and around 45 lenders on the panel. The 5,000 subscription membership get access to the products, the support desk and the training and compliance packages. They can also now sell non-regulated products ‘ such as personal loans ‘ through the network.
What will regulation mean to the network and the market?
I think it will strengthen our relationship with lenders. Because we look after the brokers with our compliance package, lenders should feel comfortable dealing with our members. I also think it will encourage brokers to join networks like ourselves because we are bigger and have the time to study the implications.
Brokers expect us to be able to help them with regulation and to know what is applicable and how it affects them. Most small broker firms will be able to take comfort from being part of a bigger group.
How would you respond to recent claims that there is a lack of suitable buy-to-let advice?
We have a number of brokers who have decided to specialise in the buy-to-let market. Most are based in the small, concentrated pockets of buy-to-let activity in the UK, and it is now the bulk of their business. From them we have gained some expertise in the area and have developed a lot of market-leading products. I think there is enough advice for landlords on buy to let and what to expect, not just on buy-to-let mortgages. Of the brokers who work in the buy-to-let hot spots, many have grown up with the markets and their own clients. As the market has developed so has their experience. Some areas may experience a dip, but, in general, there is not a lack of advice.
How much of an impact does the media have on the housing and mortgage markets?
The press have a huge effect on the market. Take, for example, the whole issue of mortgage endowments. The press really brought it to the fore and made people aware of the problems.
But they have been hard on the buy-to-let market. They tend to be quite London-focused and some areas, especially London, have been hit hard, but to say the bubble is going to burst is not a true reflection of the whole country. This has had negative effects and we have had clients calling up to query what is happening. People tend to read the papers and take it all on board, which could make predictions come true. There will be a correction, but not necessarily as horrific as frequently predicted.
Having said this, the housing market in general is slightly different. More people have houses than have a buy-to-let property, and while they may read that house prices are unsustainable, they will not do anything as long as their home is still increasing in value. And the calls for a cut in interest rates to rein in runaway prices has not had much impact. The housing market is only a small part of the economy and the frequent predictions of a rise in rates to stem prices do not take this into account. For rates to rise the Bank of England will have to look at the overall economy.
Will higher income multiples expose borrowers to more risk and exacerbate a major correction in the market such as we saw in the late 1980s?
There has been some talk of higher income multiples recently, which has led to worries over affordability problems for some borrowers, but the situation is nothing like it was 10 years ago. Even if income multiples do become more flexible in some situations, it is not the case that lenders have not learnt their lesson. No two people have the same commitments, and so is it right to apply the same strict criteria to someone with a family, debts and two cars, as to a young professional person with no debts and no dependants? People should get different multiples depending on affordability, and we may even lenders become more flexible in the future.
Ben Marquand is deputy editor
