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Number and variety of exclusive mortgage products will rise – Legal and General Mortgage Club

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  • 15/08/2018
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Number and variety of exclusive mortgage products will rise – Legal and General Mortgage Club
Legal and General Mortgage Club’s head of lender relations Danny Belton said brokers will see rising numbers of ‘test and learn’ mortgage exclusives as lenders fight harder for volume and broker attention.

 

Some clear market niches include exclusive products accommodating short-term leaseholds or Airbnb, with only a handful of lenders offering those, like Foundation Homeloans, said Belton.

First-time buyer loans at 95% loan to value (LTV) or above are also worth exploring, he added.

L&G is already offering two 95% LTV loans, the first a two-year fixed rate shared home ownership loan from Buckinghamshire Building Society at 3.89% to £500,000, and a three-year fix family step mortgage from the Marsden at 2.29% to a maximum loan size of £350,000.

Belton added: “Are there enough products out here for borrowers with a deposit of 2% to 4%? We’re not ready for 100% mortgages, but there should be more options in this space. The proof is there, that if you get it right the products can fly,” he added.

Exclusives generally run from four to six weeks with pilots of up to six months and attract funding of £5m to 15m, he said.

L&G is also offering a raft of buy-to-let exclusives, including a two-year discount from Cambridge BS offered at 1.99% up to 75% LTV and a two and five-year short term let product from Foundation Home loans from 2.99%.

“We always start with what the broker community wants and then understand what the lending approach is,” said Belton.

Shaun Church, director at London-based advice firm Private Finance said longer fixed rates with less consequences for switching would be useful given the fact fewer people are moving, despite the implications for remortgage business.

He added: “I’d also like to see brokers being remunerated across a ten-year deal, at say 0.1% a year, allowing brokers to stay in touch annually and build up fees and the value in their businesses.

“A two-year fix is already paying 0.2% over two years. Lenders would get a low LTV but it could work for everyone.

“It hands brokers long-term customers and lenders would have less administration and churn to deal with offering them savings they can pass on to the consumer. If I can get out of bed on 1 January knowing I can rely on trail commission, I can also make plans on staffing and the business.”

Church said he’d also like to see lenders taking a more pragmatic approach to mortgage prisoners trapped because the transitional arrangements outlined in the Mortgage Market Review are not being applied.

“Lenders will always make their money back, ultimately in a worst case scenario, so it would be good to see more realism on low risk cases or a willingness to bend hard and fast rules when a common sense decision could be made,” he added.

Dan Maskell, director at the Finance Planning Group in West Sussex said lender-broker partnerships could be formalised to approach interest-only customers currently ignoring letters from their mortgage provider.

Maskell added: “Too many borrowers are sticking their heads in the sand on interest-only and we have the footfall and the knowledge to help them. I’d also like to see some lender exclusives on buy-to-let stress rates tailored to the South East piloted through the clubs.”

He added that he’d also like to see some product transfer exclusives.

“Customers don’t read emails or letters from their lenders and if customers do a PT direct, they are not receiving advice so this has to be bad for the client. Customers deserve advice.”

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