Foreign buyers and equity release downsizers top October L&G mortgage adviser searches
Figures from the SmartrCriteria tool, showed that mortgages for applicants with visas was one of the highest search terms among advisers with requests for ‘expats not in UK’ also on the list of top 10 adviser looked for terms.
The data also showed that ‘maximum age’ was the second most searched term suggesting that older borrowers, including those looking to downsize, were also looking to benefit from the Stamp Duty holiday.
The most popular search within ‘maximum age’ was the 71 to 75-year-old range, which increased by 14 per cent. However, the largest percentage increase was for those aged 85 and over, which saw an increase of 38 per cent in searches during October.
Kevin Roberts, director, Legal & General Mortgage Club, said: “Demand from consumers to buy property in the UK shows no signs of slowing and it’s clear that the Stamp Duty holiday continues to drive activity.
“Lending criteria is changing every day and borrowers face a longer mortgage journey as the market continues to adapt to unprecedented demand. Advisers will be key in helping these borrowers and others to cut through the noise and find the best product for their particular circumstances.”
Data from Twenty7Tec suggested the lockdown saw accelerated mortgage searches across residential and buy-to-let markets but James Tucker, CEO of Twenty7Tec, said this actually reflects a drop off ahead of the lockdown as people concentrate on other practicalities.
“Immediately as the lockdown starts, mortgage search volumes begin to rise again. We’ve seen it again and again this year on a UK-wide, home nation and regional level before and just after we enter lockdown. Any drop is then is consistently mirrored by a spike of mortgage search volumes within a day or two of the lockdown beginning.
He said that buy-to-let searches constituted just over 19 per cent of all searches, adding: “Buy to let search volumes have been relatively steady all year and those are converted into ESIS documents more often than residential searches.”
Advisers will shape the evolving role of BDMs
Lenders could move towards having dedicated online BDMs as the lockdown and social distancing restrictions become longer term, Mortgage Solutions Television in association with Skipton Building Society heard.
Speaking in the discussion, Legal and General Mortgage Club director Kevin Roberts noted BDMs will need to raise their game and show how they stand out from the crowd as interactions have increasingly moved online.
“I think the challenge for our BDM community is how do you raise your game, how do you make yourself unique?” he said.
“How are you going to reach everybody in the advice firm and how are you going to stand out?
“So I don’t envy the task of our lender BDMs, I think it’s going to be really tough, but speaking to advisers, they absolutely need it at the moment.”
Discussing how the role will change, Roberts emphasised that brokers “absolutely valued” BDMs, but that there would be an evolution of how they operated, and lenders were already talking about dedicated “Teams BDMs”.
“It needs to be tailored. Some firms may not want lenders coming into their office, they will have their secure bubbles,” he said.
“So BDMs need to take a very tailored approach to each firm and think of what they want. They need to take a creative approach and tailor messages.”
‘Determined by the market’
This was echoed by Skipton Building Society director of business development Paul Fenn who agreed: “It will absolutely be determined by the market.
“Brokers and introducers out there will determine to what degree we move back to face-to-face or we move back to a virtual environment.
“I think it’ll be a mixture, some virtual, some field. Whether you have a complete virtual team, well let’s see where the next few months goes.”
And Skipton Building Society BDM Rachel Hunnisett added: “The BDM position has always been about building relationships and that hasn’t changed. What has changed is the way we do it.
“How much of that do we carry forward – that will be driven by brokers, driven by demand and what the market needs from us.”
Affordability the priority for adverse credit lending – Belton
And he noted that the club had seen a 30 per cent increase in the amount of lending that was being completed with specialist lenders.
Speaking on Specialist Lending Solutions Television in association with Pepper Money, Belton disputed concerns that regulators would be worried this market was drifting towards sub-prime lending.
“Yes we need to be careful as an industry, but I think now the Mortgage Market Review (MMR) rules are well embedded into our industry as to what is the right advice,” he said.
“We’ve got the loan to income (LTI) caps and relative stress testing, so every case is underwritten to a really strong standard now and therefore we’re making sure it is actually affordable, for the right reasons, and lenders are lending to the right customers.
“If they feel the customer is going to be under pressure or potentially threatened by the size of the loan or the repayments that are there, they are not going to lend.
“So I think as an industry we’re in a really strong place because of that, to help these customers sensibly,” he added.
Pepper Money sales director Paul Adams echoed Belton’s comments.
“I agree, affordability is king, hence why with so many specialist lenders the underwriters will want to look at bank statements to make sure there is no stress in terms of their current financial situation,” he said.
“We’re lending to customers who’ve had problems in the past, not problems today, but affordability is at the forefront of all lending decisions.”
One missed payment can result in a CCJ, but borrowers have mortgage options – Pepper
However, he added that despite this borrowers looking to buy a property should not despair as they could still have options open to them.
Speaking on Specialist Lending Solutions Television in association with Pepper Money, Adams noted it could only take one minor incident to create a credit issue such as a County Court Judgment (CCJ).
“The understanding of how you can arrive at a CCJ – most people won’t know that you only need to miss one payment to get a CCJ, so there is a little bit of a lack of understanding,” he said.
“One thing that is loud though, and I think it’s important for the people sat on the sofa to realise is that a good 70 per cent of borrowers who had adverse credit feel that getting a mortgage would be almost impossible or at least very, very difficult.
“I think that’s what we need to do better as an industry to make sure that these customers are seeking advice because getting a mortgage is possible.”
L&G Mortgage Club and Primis make panel additions – round-up
Legal & General Mortgage Club has added Canada Life and Just to its later-life lending panel.
Through Just, members can access lifetime mortgage products which provide an option to pay some or all of the monthly interest, and customers also have the potential to borrow more based on medical and lifestyle conditions.
Canada Life’s range includes lifetime mortgages that can be secured on a customer’s main residence or second home.
The lender also provides solutions where borrowers can choose to make interest payments, service the capital and interest, or let the interest roll-up.
Paul Hopton (pictured), key relationship manager at Legal & General Mortgage Club, said: “We are delighted to announce that Canada Life and Just are the latest companies to join our lender panel.
“Both lenders play a major role in the later life market and their addition to our proposition brings even greater choice to advisers using Legal & General Mortgage Club.”
Primis Mortgage Network
Primis Mortgage Network has partnered with Foundation Home Loans, allowing its advisers to access ranges for residential borrowers with complex criteria and buy-to-let landlords.
Vikki Jefferies, proposition director at Primis Mortgage Network, said: “ From today, our advisers will have access to a wider range of tailored solutions to provide their clients and, ultimately, be better equipped to serve a growing number of ‘non-vanilla’ borrowers.
“We are confident that with Foundation’s extensive proposition, Primis brokers will be able to bolster their own offerings in this area and further support customers, both during and after the coronavirus crisis.”
Grant Hendry, head of national accounts at Foundation Home Loans, added: “The specialist mortgage market has shown great resilience over the past four months and we, as a lender, have had to adapt and evolve accordingly over this period.
“This partnership will help us in fulfilling our ambitious plans for 2020 and beyond, and we are looking forward to working closely with Primis’ member firms to provide much-needed specialist solutions to landlords and those borrowers who are not able to secure residential borrowing via high street lending routes.”
Holiday let and overseas buyer demand growing
Knowledge Bank noted it had seen “a spike in searches for holiday lets” in the buy-to-let (BTL) market in July.
“This has undoubtedly been boosted by the introduction of the stamp duty holiday, and by coronavirus impacting consumer habits, making holiday homes increasingly desirable,” it said.
The trend has also been evidenced by the resurgence of lenders which has seen several re-entering the market during the last month.
However despite this growth, limited company lending remained top priority for brokers researching the BTL market – this was followed by first-time landlords and the requirement to be a homeowner.
For residential searches, Knowledge Bank found the criteria relating to the Covid-19 crisis including temporary maximum loan to value (LTV) and furloughed workers were causing interest.
Self-employed borrowers with one year’s accounts also remained a high priority for advisers.
Overseas investors soaring
Meanwhile, data from Legal & General Mortgage Club found growing interest in the UK property market from overseas buyers, including those with a visa and non-UK residents.
It noted that BTL searches for applicants on a visa have risen by 146 per cent since the confirmation of the stamp duty surcharge for overseas buyers, which will take effect in April 2021.
Criteria searches related to visas were the fourth most searched term by advisers during the first week of June and by 27 July ranked as the most searched term by advisers.
The club said the rise coincided with increased interest from Hong Kong-based buyers as a result of the growing political uncertainty in the territory, and also reflected the incoming stamp duty surcharge and temporary cut.
Dual stamp duty effect
Knowledge Bank lender relationship manager Matthew Corker said: “More people are looking into holiday lets as the desire to travel abroad is falling among UK citizens while Covid-19 continues to impact the travel sector.
“I expect this to become a trend in the coming months as travel bans are enforced and air travel remains limited. Let’s not forget the stamp duty holiday will further encourage consumers to take the plunge.
“Throughout June and July, we have seen indicators that the housing market is moving, and the stamp duty holiday is one of the sources that will provide the economy with the boost it needs.”
Legal & General Mortgage Club director Kevin Roberts added: “Britain’s housing market is bucking the trend and has faced unprecedented levels of demand since reopening in May, and now figures show that a growing number of overseas buyers are also taking interest in UK property.
“Many are now looking to take advantage of the stamp duty holiday while also investing in the market before the two per cent surcharge for overseas customers takes effect.
“There is an opportunity for advisers to support many of these buyers, particularly if they have little to no credit history in the UK,” he added.
L&G Mortgage Club completions dip six per cent as group profits slide
In H1 2019, the value of mortgages arranged by the club was £36bn.
The scale of the housing market lockdown was also indicated as the surveying services arm of L&G carried out 185,000 surveys and valuations during the period compared to more than 250,000 in H1 2019.
Falling lifetime sales
The impact of lockdown and the uncertainty brought about by the coronavirus pandemic also affected the group’s volume of lifetime mortgage sales and annuities.
Lifetime mortgage sales fell year-on-year by 26 per cent from £489m to £362m. Sales of annuities also decreased from £489m to £421m year-on-year.
In its H1 update, the group said global disruption following the outbreak of coronavirus had caused a temporary dip in demand for retail retirement products, but it did not expect this to alter the long-term direction of growth for this market.
The physical restrictions of lockdown, said L&G, had driven it to improve its technology which made it easier for customers to access its products and has seen demand rebound in June and July.
“We are actively seeking solutions to address the needs of the 1.5 million UK workers aged over 50 who report that they intend to delay their retirement as a direct result of the pandemic,” the group added.
Covid-19-related claims and a future provision for such claims has cost Legal & General £80m but it said the “tragically disproportionate” impact of the pandemic on older people has meant a reduction of £32m in the group’s retirement payments.
L&G’s profit after tax slumped by 67 per cent from £874m to £290m year-on-year. Operating profit fell by six per cent from £1bn to £946m as L&G took a £129m hit from the impact of coronavirus.
Despite the blow to the group’s profits, L&G said the business continued to perform resiliently, and reported growth in three out of five of its divisions.
The group will pay the same dividend of 4.93p per share as did it last year.
Nigel Wilson, group chief executive, said: “In H1, Legal & General delivered resilient operating profits, a robust balance sheet and highly relevant products and services. Our ambition is for a similar performance in H2.
“We kept all our employees on full pay, executed significant commercial and investment projects, and continued to provide a reliable service to our customers without any government financial support.
“We are committed to driving forward an investment-led, climate-friendly Covid recovery incorporating the very best aspects of inclusive capitalism.”
Coronavirus highlights need for operational change in mortgage market – Roberts
We are living through a health and economic crisis that is unprecedented in modern times – a once in a century event.
Over the past week we have seen the impact of this crisis on the mortgage market too. Echoing the 2008 Global Financial Crisis, lenders have made thousands of criteria changes and in many cases withdrawn products altogether.
But while it is tempting to draw parallels with the Great Recession, this crisis differs fundamentally from 2008.
What the mortgage market faces today is not so much a credit crunch, but an operational crunch, as providers’ ability to lend becomes more challenging.
It is a crunch which has put the spotlight on the need for our industry to digitalise the mortgage journey too.
The clearest example of this operational crunch is the impact of the lockdown and social distancing on lenders’ ability to conduct physical valuations of properties.
The priority is, and rightly should be, the health of those working in the sector and their customers, making it impossible to safely conduct physical valuations.
This is preventing some lenders from accepting applications from borrowers as they are not physically able to view and value the properties they intend to lend on.
Transforming how we do things
In other instances, providers are still able to lend to customers but are having to limit the number of applications each day, in some cases due to events outside the UK.
These are clearly unprecedented times and the impact goes beyond lenders to the wider mortgage and housing markets.
For estate agents, it means no physical house viewings. For advisers, it could be driving a change in how they conduct meetings and get advice to clients.
To resolve these challenges when we are through this, we will need a conscious effort to drive technology through all aspects of the mortgage journey.
We will need to focus on moving from just optimising existing processes, policies and structures to truly transforming the way we do things.
Legal & General Surveying Services is already having in-depth discussions with lenders about rolling out digital valuations to try and solve the challenges some areas of the market are currently facing.
Adapt to new normal
For advisers, we recognise that the immediate challenge is to keep on top of a rapidly changing market.
Advice is more important than ever for clients and advisers need to be in the know about the latest movements, so the club has compiled a summary of lender updates and stances to help our intermediary partners keep up to date in this fast-moving landscape.
We will get through this. The desire to step onto the housing ladder and own a home is a widely shared ambition in this country.
But in this current crisis and to futureproof ourselves, we will all have to adapt to this new normal to keep the mortgage market moving now and in the years ahead.
L&G Mortgage Club maintains early proc fee pledge to support brokers
It said this was to ease financial pressures and remove exposure to vulnerability around completion dates. Additionally, brokers will still be able to claim procuration fees online through the club’s ClubHub system.
The feature, which was introduced in July, allows members to track the progress of their fees to see if they are pending or have been paid.
This measure is part of L&G’s initiative to ensure advisers can keep businesses “running as smoothly as possible” during the outbreak, it added.
Its Mortgage Support Services (MSS) team will be working from home and will be available to deal with queries over the phone or via the live chat tool.
To keep in line with government advice, spring roadshows which were set to take place in March have been cancelled, however its April and May roadshows are still scheduled to go ahead.
The club said it would monitor the situation closely and any cancelled events would be moved to autumn.
Its field-based relationship managers will only hold face-to-face meetings where necessary, provided both parties have no symptoms of Covid-19 and neither are self-isolating.
Otherwise, staff will be contactable by telephone or email during business hours.
Kevin Roberts (pictured), director at Legal & General Mortgage Club, said: “These are clearly unprecedented times and I want to take the opportunity to reach out to our members about what Legal & General Mortgage Club is doing to help keep advisers’ businesses running as smoothly as possible.
“I am confident that the mortgage market will remain resilient and I want to reassure members that we are here to stay and will continue to do what we can to support you in these challenging times.”
L&G Mortgage Club completes £78bn of mortgages
This figure includes product transfers, and the club was not able to give an exact figure for the value of product transfers completed.
However the club noted that underlying growth excluding product transfers reached four per cent, defying UK Finance’s 1.1 per cent fall for the wider mortgage market.
Kevin Roberts, director of Legal & General Mortgage Club, (pictured), said: “This has clearly been a positive year for advisers who have supported growth in the mortgage market throughout 2019.
“The intermediary mortgage market has continued to grow over the past twelve months and, amid all the uncertainty of last year, advisers have continued to help thousands of borrowers whether they are buying or remortgaging.
“Adding value to our members as well as raising awareness about the importance of advice is central to our objectives as a mortgage club and over the next year, we’ll be launching further initiatives, continually improving and evolving our proposition to help our adviser members deliver a truly holistic offering.”
The club also noted that 6,482 members had registered to use its SmartrCriteria tool.
Roberts added: “It’s great to see that our members are making the most of these services to evolve and grow their businesses, which has clearly been reflected in fact that advisers using the club have supported growth far beyond the wider mortgage market.”