Speaking on the Mortgage Solutions mortgage market review masterclass, Chris Pearson, head of intermediary mortgages HSBC, said that you couldn’t compare the current economic situation to the financial crisis.
Kevin Roberts, managing director of mortgage services at Legal and General, said that he had “lots of empathy” with lenders and that the industry had to be careful of “unintended consequences” if 24-hour product notice withdrawals became mandatory.
However, he said that there had been examples of minutes’ worth of notice, informing brokers of withdrawals after the fact and pulling products out of hours that are unhelpful”.
“I get the need for lenders to remain flexible and I think there’s a lot of understanding that we have to be careful what we wish for with unintended consequences. If we force lenders [to give 24 hours’ notice] then there may be fewer fixed rates, less product choice and more caution,” Roberts said.
However, he said that there were things that lenders “can do better”, pointing to one example of a lender who had moved their pricing committee from 3pm in the afternoon to the morning so that decisions around products were made earlier.
“I think lenders can get better at tranche management, yes, they’ve got to manage that, but where’s the scenario planning? Surely if you’re in a pricing committee early in the morning, you might be thinking, well, what happens if so and so pulls their rate and we left at the top.
“There must be a range of scenario plans so that quick decisions can be made as early in the day as possible,” he added.
Roberts also pointed to Nationwide which allowed brokers to book the funds at the decision in principle stage as an example of good practice.
“There is a massive plea there [around product withdrawals] and it’s put a really huge strain on brokers. It’s disrupting their lives,” he said.
Roberts said one broker had told him he was worried about taking holidays in case he missed key rates for his clients, and most brokers were working into the weekends to try and keep up.
“I think, yes, let’s look at some of the structural issues, and I’ve got empathy with what the lenders want to do., but what about some of the operational issues? Can we be making decisions earlier in the day, can we be given as much notice as possible can we do more scenario planning and I think we do need to continue to look at this,” he noted.
‘We are listening, and we do care’
Chris Pearson, head of intermediary mortgages at HSBC, said that as a lender it did not take the decision to pull products lightly and was mindful of brokers when it did so.
“We’re not thinking to heck with brokers, we’ll just pull products. We’ve very much got brokers at the heart of any decisions that we make, and it is not a decision any of us will take lightly,” he added.
Pearson continued that regarding areas that Roberts suggested that lenders needed to look at but a key area was funding.
“We’ve got funding volatility that puts consequential pressure on services. Every lender has different funding models as well, so it’s not quite as simple as a one size fits all, and you need to recognise that.
“Certainly, from our perspective, where we can practically give 24 hours or more, then we will certainly look to do that, but unfortunately that’s not always possible,” he added.
Pearson said that some lenders have been “out in the market with very high value-for-money products”.
“Some lenders have been out there with very tight margins for a week or two but they’re top of the sourcing systems. The reason for this is that we are trying to put good quality and value liquidity in the market for customers and borrowers to take advantage of new business and particularly product transfers, but that does have to come to an end at some point.
“That’s where you get these short notice periods, but sometimes rates have been out there for a week or even two weeks,” he added.
Amanda Bryden, head of Halifax Intermediaries and Scottish Widows Bank, agreed, noting that it would try to “hold rates wherever we can for as long as we can, but it is incredibly challenging”.
She added that Halifax and Scottish Widows Bank had started making operational changes, and other lenders had started to improve their notice periods.
“We are listening, and we do care. No one wants to be thinking that brokers are working late into the evenings or on weekends. We don’t want our people to do that either by the way, we care about our own colleagues. That that absolutely has to be at the forefront of everyone’s minds on the making decisions,” Bryden said.
Communication and engagement are key
Bryden said that “communication is absolutely key” in current mortgage market, when asked how lenders can reassure brokers and customers, and there were “some conversations that we need to have and have them earlier”.
“We need to be thinking about what might customers face, how brokers can face them with customers and be really open with the dialogue.
“We can’t protect people from the harsh realities of the truth, but what we can do is work with people a lot earlier,” she said.
Bryden continued that as lenders they have to make sure they have “tools available that help those conversations”. She pointed to the budgeting tools that it has available.
She noted that there was a large cohort of borrowers coming to the end of their fixed rate deals in the next 18 months and could face a payment shock, and engaging with them early was crucial.
Bryden said that being able to secure a product transfer deal six months ahead of expiry was “great”, but could “critical conversations” be coming earlier.
Whether this is getting people to think about potential lifestyle changes that they can make, and if that is not possible what help they can access from lenders.
“What we found very much when it comes to helping customers that are maybe facing financial concerns, that the earlier that we engage with those customers, the more likely we are to not see them go into absolute dire straits when it comes to their finances. So regular, timely communication and lots of engagement is the key from both sides,” she added.
To watch the video click below. The video features Amanda Bryden, head of Halifax Intermediaries and Scottish Widows, Chris Pearson, head of intermediary mortgages at HSBC, Kevin Roberts, managing director of mortgage services at Legal and General and Graham Sellar, head of business development – mortgages, Santander UK.
