Tesco and Bank of Ireland have been the latest lenders to make the move, proving that brokers are now the dominant distribution force in the mortgage market.
But what does the perfect intermediary lender look like in the eyes of a mortgage broker?
Brokers were split about the most important attributes a lender should have.
Payam Azadi of Niche Advice cites lending criteria, the lender’s affordability model, then the rate. “There is no point in having the best products topping the best buy tables out there if nobody can actually get that product,” he points out.
Andrew Montlake, director of Coreco, agrees: “Whilst rate is ultimately of paramount importance, criteria is king, especially in today’s market. In other words, what can a new lender offer our clients that are not catered for by other lenders or can they do better?”
Other brokers looked for reliability, service, and a process that works smoothly.
“There is nothing worse than having issues with a process and not being able to get answers or solutions,” says Matthew Philips of the Age Partnership.
Brokers said they wanted more mortgages that could run into retirement, more choice for the self-employed, interest-only options, higher income multiples, and products without early repayment charges.
Montlake says remortgage products are also crucial: “The obvious answer is a lender that accepts remortgage business under transitional rules, enabling those cut off from the current process access to lending which will help to move the remortgage market.”
Karl Skott of The Mortgage Broker would like to see more lifetime, rather than short-term, base rate tracker mortgages. “The only ‘lifetime’ deals available on the market at present have rates set by the lender, which can put clients off,” he says.
Simply Finance has a specialist buy-to-let division. Managing director Peter Williams said: “For this we would welcome more lenders willing to lend past age 75 if the client profile is strong i.e. healthy pension income and experience as a BTL investor.
“This is similar to our residential wish list. Lending into retirement becoming more and more important because more people are starting to work longer and need a longer term for affordability.”
Brokers were in agreement about what they want from a lender’s business development managers. Adam Lane of London & Country summed up the majority view: “Accurate knowledge and be able to deliver on promises.”
Azadi says BDMs need to know their own lending criteria and be willing to get involved with difficult cases. “Unfortunately, some BDMs are great when everything goes smoothly but missing in action when things are not going to plan,” he says.
Other items on the BDM wish-list were a willingness to contest an underwriting decision and being able to influence the application process if an urgent turnaround is required.
Underwriting was the key thing the perfect lender would do differently from the others, according to brokers.
The ideal lender would have a “human approach to underwriting on a case-by-case basis rather than just computer generated responses to lending,” says Lane.
“Underwriters communicating directly with brokers to discuss issues is always a major plus point,” adds Skott.
Phillips says Virgin Money is setting a great example to other lenders in the market. “They are making commitments to us ensuring that we know what to expect and the level of service they offer to ourselves and our clients,” he explains.
Proc fees should be 0.5% and upwards according to brokers. This would keep any new lender in line with other lenders and be realistic in the market.
Williams says fees should be higher for some cases. “More complex cases – typically BTL and/or commercial – should be commensurate for the work involved so could be anything up to 1.75%,” he says.
