This year is not a typical year though with European regulation looming and a do or die deadline of the 21 March 2016. This dictates that any pipeline business which hasn’t completed by that time must be resubmitted with the new disclosure documents.
With this in mind we have asked our panel of experts if they have seen the Q4 courtship begin and what this looks like or whether there has been a marked cooling off as banks and building societies run down pipelines in preparation for next year.
Andrew Montlake, director at Coreco, says lenders may struggle to hit targets but not through any fault of the Mortgage Credit Directive.
Dominik Lipnicki, director of Your Mortgage Decisions, discusses how conservative criteria and poor service is dampening the last minute rush.
David Hollingworth, associate director, communications London and Country Mortgages, explains how lenders need to go further than just cutting rates to grab extra market share before the end of the year.
Andrew Montlake is director at Coreco
This is the time of year when we usually see excitable lenders grappling for position in order to both finish the year with a bang and build up a pipeline which will start to complete going into January; 2015 is no exception.
There has been no discernible cooling off due to the impending regulations from our friends in Brussels that I can see, but regulation has still had an effect and is the reason why, in the aftermath of MMR, some lenders are still playing catch up.
In fact, the only real reason for targets not to be hit this year is nothing to do with demand from borrowers, as most brokers would seem to testify, but with the fact that lenders’ criteria and affordability calculations have been tight. This has left them with a smaller pool of borrowers to aim at and we have been saying all year that reducing rates will only go so far in increasing business levels.
Service would be another factor, but for some reason we have seen lenders also struggle with this over the past few months and those that get this right quickly will be the main winners in the end of year dash. On the whole, however, we have seen communication and BDM support improve, (to be expected when broker share nudges 75%). But, the key area where most of the uplift in business will come will be in criteria changes.
We have already seen some of this where interest only is concerned, more lenders improving self-employed and contractor offerings, but there is much more to be done. There are still too many potential borrowers feeling disenfranchised and I suspect we will see more changes over the course of the quarter and into next year. I certainly hope so.
Dominik Lipnicki is director of Your Mortgage Decisions
With the possible disruption caused by MCD next year, you could be forgiven for thinking that lenders would be tripping over themselves to lend money. After all, lending targets need to be met and there is no shortage of would-be borrowers.
While the market is healthy, most lenders still want the outdated perfect borrower. Low loan-to-value, plenty of PAYE provable income, at worst middle-aged and of course with an impeccable credit rating. If you fit into that mould, great news, you have thousands of schemes to choose from, but that’s hardly different from this time last year.
We are still seeing record low rates being offered to the right clients and without a doubt it is nice to be able to lower someone’s mortgage payments but for me criteria is more important. We still have far too many people locked into an uncompetitive scheme as mortgage prisoners, the full effect of this really will only be felt once rates rise.
Most lenders are still to embrace temporary contracts, working past the standard retirement age, not to mention interest-only borrowing which for some clients clearly is the right solution.
We are also finding that far too many lenders treat customer service as an afterthought, this is especially damaging at the application process where borrowers rightly expect to be treated with care.
David Hollingworth is associate director, communications London and Country Mortgages
Just as there is an expectation that spring will begin with a flush of new vendors and buyers to market, the autumn often sees lenders refocus on their pricing in readiness for a push toward the end of the year. Although business was brisk in August and far from a summer lull, there are still signs that lenders are intent on attracting more business now.
It remains a competitive marketplace which has already seen rates priced aggressively. Any lender operating on a calendar year target will be very aware that they need to get business through the door now to stand a good chance of it registering on this year’s figures.
Cutting rates are a good way to grab the attention of brokers and customers alike. There’s certainly been a round of rate cuts from lenders in recent weeks. Some of that may be down to the ups and downs of market rate expectation but rates have dropped back quickly, reversing a large element of the edging up in the last few months.
However, there are other product enhancements such as cashbacks being added to increase the product appeal. Halifax has even launched a small selection of semi-exclusive rates that require completion by the end of the year.
It’s no good tweaking rates if you can’t back it up with service though so the mix of product, service and support will still have to offer the right blend to attract brokers.
