This week Mortgage Solutions asked our experts if they have witnessed this improvement in mortgage completions with clients and what the reasons were for it?
Chris Schutrups, managing director of The Mortgage Hut Group, explains that consumers doing pre-enquiry online research is helping manage expectations.
Andrew Montlake, director at Coreco, notes that lenders have worked hard to improve transparency and assist brokers and customers.
Aaron Frizzel, operations director at MAB Network Partner, Scotland, argues that improvements in broker quality have help customers successfully find mortgages.
Compared to last year’s figures we have seen a 7% increase in conversion rates. There are a number of factors that contribute to this increase.
With such an enormous amount of information available online these days a significant number of clients are doing their research before making their initial enquiry. With the rise in popularity of comparison websites and forums there has been a corresponding drop in the number of customers making speculative enquiries and asking for the impossible dream.
Also, the market is a more competitive than it was. Lenders are a lot more open to different types of clients and different scenarios.
We have seen lenders lower their rates, increase retirement ages and lending multiples. More surprisingly, we have even seen an increase in the amount of lending despite adverse credit ratings for applicants.
There has been a big rise in remortgages. This is mainly as a result of the record low interest rates.
But more home owners are looking at remortgages because they want to lock into these rates before they rise again.
There are also a record number of lenders who will allow a 5% deposit. This opens up the market to a lot more people because saving for a 10% deposit can take some time.
People are able to get on the ladder quicker because they are more likely to look to the bank of mum and dad to help secure this small deposit.
It has been interesting to see the data suggesting that more enquiries are moving to completion and much of this can be put down to several things, not least due to the fact that those people now looking and enquiring for a mortgage tend to be more serious and determined to actually do something.
The number of people just looking and making tentative enquiries seem to have diminished somewhat, coupled with the fact that brokers have improved in their placement of cases.
An increase in remortgage and product transfer cases have also helped to improve the situation.
This means making sure that the right applicant goes to the right lending institution.
As a result of the Mortgage Market Review (MMR), brokers are now doing much more work upfront and gathering more information to make sure affordability and credit scoring is not as big an issue.
Although criteria from lenders changes pretty regularly these days, the information on websites and communication of these changes has improved dramatically.
Combined with the tools available on websites and the quality and knowledge of most business development managers, the way lenders approach their job is also of a higher standard than it once was.
There is still some way to go, however, especially as some lenders could perhaps make it easier for brokers to discuss tricky cases with underwriters directly to help understand the foibles of particular cases.
But there is no doubt we are in a much better place and as long as lenders and brokers continue to communicate and work together, this particular statistic should improve further for the benefit of everyone involved, particularly the customer.
In the main, I would agree acceptance levels are up since 2008, but not noticeably so over the past year or two.
While most lenders have tweaked credit scoring, I wouldn’t go so far as to say lenders have altogether loosened criteria.
The options available to intermediaries however, coupled with client behaviour and, generally being better positioned to be accepted than they might have been a few years ago, would perhaps support an increase.
While low rates are attractive, that’s not a factor which can influence an accept by a lender, but would simply account for an increase in overall volumes.
Locally, Edinburgh house price growth exceeds that of almost any other area in the UK. Despite this, competition for properties is fierce, so again, low valuations aren’t a factor here.
One area which we can influence is that of advisers understanding their client. Comprehensive fact-finding and thorough research increase the likelihood of a pass first time.
Our advisers are extremely knowledgeable and understand their marketplace, and thus match client and lender as appropriate.
This, arguably more than any other reason, would support an increase in acceptance levels from initial enquiry to full application.