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Welcome to the Curry Club debate – London

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  • 03/11/2015
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In the last leg of 2015’s Curry Club roundtable, Mortgage Solutions and Leeds Building Society met with London-based brokers to discuss the most pressing industry issues at the Chutney Mary in Green Park, London.

Curry Club guests

  • Rahul Nath, sales office manager, London & Country Mortgages
  • Howard Levy, director at SPF Private Clients
  • David Tinsley, partner, Coreco
  • Emma Garrett, senior mortgage and protection consultant, Start Mortgages
  • Simon Collins, mortgage technical manager, John Charcol
  • Martin Cook, independent mortgage broker, Westminster Wealth
  • Cathy Turner, mortgage manager, Which Mortgage Advisers

Sponsors/hosts

  • Cherie Symons, regional development manager, Leeds Building Society
  • Mark Collar, national intermediary development manager, Leeds Building Society
  • Abigail Jones, intermediary marketing manager, Leeds Building Society
  • Victoria Hartley, group editor, Mortgage Solutions and Your Mortgage
  • Hannah Uttley, senior reporter, Mortgage Solutions
  • Oonagh Sheehan, commercial manager, Mortgage Solutions

Location: 73 St James’s St, London SW1A 1PH

www.chutneymary.com

Restaurant review

Service: 10/10

Food: 9/10

Recommended dish: Afghani Chicken Tikka

Brokers kicked off the debate in London by sharing views on how lenders could improve their mortgage proposition. Attendees were unanimous in the view that service levels were an area for improvement, particularly with regard to processing speeds.

One broker explained that lenders were struggling to deliver on mortgage applications within an adequate time frame. A number of brokers agreed that antiquated systems created problems for many lenders which have been active in the market for a while.

“When you’ve got a system with uploaded documents, it makes the processing a lot faster and more lenders are jumping on that. Even the Halifax have finally given into fax machines. Up until six months ago, you had to fax them everything,” was one such comment.

The pace and volume at which lenders have been cutting headline rates, was named as a barrier to improved service levels. While the number of competitive rates on offer was generally lauded by brokers, some felt that this put lenders under pressure to do more business and as a result were unable to meet the demand that cheaper deals generated.

“The market is trying to move quite quickly. Everyone is under a lot of pressure to do deals, and there’s quite a lot of related let to buys going on and buy-to-let remortgaging in the background, so you need everything to work quite quickly which is stressful,” one adviser said.

Another commented: “I think a lot of it’s to do with pricing. A lot of lenders are pricing themselves so competitively that they get a load of business in and then they just can’t handle it.”

Compliance and training

Referring back to a reader poll conducted by Mortgage Solutions earlier this year, chairperson Victoria Hartley asked brokers whether they recorded calls with customers, after the research revealed that just 15% of 281 advisers kept a record of client calls.

Brokers said that the expense of logging calls had reduced dramatically in recent years, and noted the importance of doing so, not only for compliance purposes, but also to help with adviser training.

“There’s something quite powerful about being able to listen to our own calls with customers. From a development point of view it makes a massive difference, so it has a lot of benefit,” an attendee added.

The group moved on to talk through their biggest frustrations, which many acknowledged was lenders’ selective ‘cherry-picking’ of customers. This generally stemmed from the use of automated processes in underwriting, a problem that could be softened by having an effective business development manager on board.

“Sometimes there are things that are outside lenders’ hands. But it’s good to have a BDM that will fight your corner when they can and challenge any issues that arise,” an attendee said.

“I think what’s important from the lender point of view is that the BDM has a clear process to be able to make any challenges, rather than it just being pinged up to a central inbox. The BDM has to have a set process to follow that means they are backing and understand the case,” another added.

‘The biggest hit of all’

On the subject of harder to place cases, the debate moved on to what appeared to be the biggest topic of the evening – underserved customers. Attendees noted that the market had become overly tough on self-employed customers, who would either have to plan years in advance to obtain a mortgage or remain trapped with their lender.

One broker noted that the rules had ‘gone from one extreme to another’: “Obviously it was too relaxed but now they’ve shut the doors on the self-employed. There are one or two lenders that will take the last year’s figures so there is a bit more flexibility. But yes, that’s the sector that’s had the biggest hit of all.”

Another niche that is crying out for more options for borrowers is limited company buy-to-let products, brokers said. Following the Chancellor’s decision to scrap the higher rate of tax relief for buy-to-let investors from 2017, attendees said possible solutions for these investors were on every broker’s wish list. One broker stressed that the changes could “kill a lot of the market”.

Bank of Mum and Dad

To round off the debate, Victoria asked whether brokers had witnessed any impact resulting from the Bank of England’s decision to place restrictions on lending with loan-to-income ratios at 4.5 times or higher.

The restrictions were ‘hitting the wrong people’, according to one broker, but another added that those affected by the changes – particularly first-time buyers – were still finding ways to come up with the missing cash.

“In all fairness borrowers are still purchasing their chosen property, but what happens is they come back with more cash for their deposit from Mum and Dad. If they can’t get hold of that extra £50,000 then they’ll go back and ask their parents or grandparents. Most of those people aren’t necessarily losing out, not all of them,” they said.

However, when Victoria enquired further as to whether there were people who were genuinely suffering because of lenders’ LTI caps, the response was resounding; “yes, massively”.

 

Top quotes of the evening:

On lenders’ service

“They’re struggling to deliver in an adequate timeframe, not all of them, but some of them.”

On BDMs

“Sometimes there are things that are outside lenders’ hands. But it’s good to have a BDM that will fight your corner when they can and challenge any issues that arise.”

“You can’t just say to someone, ‘the lender has refused the case, but I don’t know why’. Otherwise what’s the point in them using a broker?”

On the buy-to-let tax changes

“Clients are only just realising now and I don’t think we’ve seen the impact of it yet.”

On underwriting

“The small regional building societies have got the open minds because they see margin and not shareholder interest. They’re the forward thinkers.”

“What it narrows down to is that lenders need to move with the times. I think a lot of lenders are too set in the ways of the old days and the old school.”

On interest-only and older borrowers

“I just wonder whether some of these people who may have buried their heads in the sand may be thinking ‘the pension freedoms is my golden ticket now’.”

On equity release

“Should we be running scared of it or should we be preparing for the fact that it may well become more of an option?”

On the self-employed

“They’re mortgage prisoners, they can’t move, what can they do?”

On advice for new brokers

“I think the most important thing for brokers is to understand the basics. Not to get bogged down with criteria, policy, underwriting, just look at the basics. It’s all about service. That’s all it is.”

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