Barclays’ decision to cut its LTI ratio for all cases which had not reached the offer stage earlier this month provoked a furious response from brokers, many of whom contacted Mortgage Solutions to highlight the plight of their clients whose property moves had been jeopardised.
But this is not the first time in recent months that brokers have been left frustrated by lenders changing deals or criteria with little notice, prompting further questions about the quality of the communication between lenders and intermediaries.
Rapid changes in criteria causing broker issues
Peter Stokes, director of Davidson Deem, said that the Barclays move was an example of the “awful” communication that some lenders are guilty of, and bemoaned the fact there appeared to be little empathy in the broker notices for the clients who have had the “rug pulled out from under their feet”.
“Any borrower who had applied with Barclays and now had to go back to the market will get a much worse rate than if they’d gone elsewhere in the first place.”
Andy Wilson, director of Andy Wilson Financial Services, said his firm was dealing with issues caused by rapid changes in criteria, or decisions in principle which were given but then not honoured once the case went in as a full application.
Notice of changes needed
Stokes praised Coventry Building Society for its policy of always providing at least 48 hours notice of changes, and said that most lenders will at least provide some notice ‒ even if only a couple of hours ‒ of changes on the way.
Stokes also suggested that the volume of communication from lenders is a problem. “If you’re dealing with 20-30 lenders, you’re probably getting 15 emails a day from lenders highlighting what their USPs are, or mentioning a tweaked rate. With most of it, you just glaze over.”
He added that brokers often find their rate information from sourcing systems, meaning that emails about new product launches aren’t necessary. “I’ll see those products in the sourcing system ‒ it will either price competitively or it won’t.”
However, giving brokers plenty of notice of withdrawals, especially on higher loan to value (LTV) deals in the current market can prove problematic for lenders.
Andrew Montlake, director at Coreco, said: “It really is becoming exceptionally difficult for brokers and our clients at present, with rate changes and goalposts moving on an almost unprecedented scale.
“However, we do need to bear in mind the implications on a lender of giving loads of notice around a rate pull.
“In some cases a delay of 24 hours can see applications peak massively which puts further enormous strain on a lender already creaking at the seams.”
Alternative methods of communication
Wilson said that quality communication was key to a successful relationship between brokers and lenders, and urged lenders to adopt social media as an alternative way to spread the news of product changes as well as email.
He continued: “Some lenders already do all of this, to their credit, and it definitely helps to manage broker expectations of what is going to be available to their clients and avoid unnecessary frustrations.”
Wilson pointed to emails from TSB informing brokers of a new product which would only be available for one day as an example of good intermediary communication.
However, not all brokers felt TSB’s limited availability was helpful in the current climate.
Stuart Phillips, director at BrokerSense, believes managing demand by rates and price is a better method than offering small windows of availability.
He said: “By making it a lottery you waste brokers’ time, leave buyers clueless as to whether they can secure a property, create doubts in estate agents and generally give poor outcomes for the majority of people.
“Banks have been crying out for an opportunity to raise rates and create a bigger margin, what are the reasons for not doing so?
“Every single broker uses a sourcing system, which is able to quickly show rates on an hourly basis, the infrastructure is already there to communicate risk and supply to brokers.
He added: “I don’t see how it is fair that someone with everything ready for days prior and has submitted a DIP fares no better than someone who starts the process that same day from scratch. At least that way we can manage client expectations…
“So ultimately no I don’t think TSB’s actions are helpful, I get a thousand emails from lenders, I don’t read them all, but I do pay close attention to credit, affordability and price, and the communication about capacity and appetite should come through those well-established channels.”
Montlake agreed that rates could be an effective way of avoiding sudden changes, which are difficult for brokers to manage.
He said: “I have long thought that actually there should be more of an early warning system that lenders put out when they can see they may hit capacity in say a weeks’ time, which would help to mitigate this. Slowly increasing rates well in advance may help rather than a sudden pull and jump up.
“The same can be said of one day “flash sales” from lenders. It is not perfect at all, but it does help to drive more people to brokers as that is the only way they are going to be aware and prepared to get such a rate and it is better to have a little of something than a lot of nothing.”
Pressure of current climate
Jeremy Duncombe, director of intermediary distribution at Accord Mortgages, said that the speed at which the market is having to react and make decisions is putting enormous pressure on communications, but emphasised that brokers need to be able to support their clients and so should be informed of updates ‒ and why they are happening ‒ “in a timely manner”.
He continued: “We have tried throughout all of our communications to be honest and transparent. We have been very open about our reasoning for coming in and out of the market at 90 per cent LTV for example, because we believe it’s important for brokers to know what’s happening behind the scenes and we’ve had positive feedback for taking this approach as there’s an understandable rationale.”
Duncombe added that ultimately it was a question of respect. “If we are open with brokers and give them the information they need to look after their clients, we hope they understand our position and see us as a lender they would like to do business with.”
A TSB spokeswoman said: “We want to support the demand from our customers as much as possible, particularly first-time buyers.
“This temporary re-introduction will allow us to manage our service levels as well as give customers a chance to get their first home.”