So this week, Mortgage Solutions is asking: With product changes happening so frequently, do you feel most deals are available long enough for you to conduct business effectively or has your process been significantly disrupted?
There’s certainly more rate change activity in the market than we’ve seen for a while.
Lenders have been thrown the googly on an almost daily basis with the way the Covid–19 situation evolves, an uncertainty that’s disrupting often long-established policy, forcing a review of risk appetite, and rates across the board.
There are fewer deals, and there’s certainly a raft of customers not moving right now due to loan to value (LTV) availability, but somehow brokers are finding a way, with many busier than they have been for years.
Our doomsday forecast has not yet come to pass – we dropped to 50 per cent of normal business volumes for a short while, bouncing back to 70 per cent of pre-Covid-19 business relatively quickly, and this growth continues week on week.
Whilst it’s true that life would be far easier if deals were available longer, I think most brokers understand this is the water we’re swimming in and are adapting accordingly.
I laugh when I read brokers bashing lenders on LinkedIn, calling them out for not joining the party at 90 per cent. Whilst high LTV has been around for ages, this is a gentle reminder that we are not entitled to anything.
The banks will lend what they want, to whom they want, when they want.
The volatile market has exaggerated things – top brokers are dynamic, they’ll rise to the challenge, find deals when they are available, focus on clients they can help, expand their product offering, and give great advice regardless.
Those who are more set in their ways, however, will be exposed.
Product changes have always been a challenge for the busy broker, with some lenders adjusting their rates on a weekly basis and others holding them steady for months at a time.
For obvious reasons, their attitude to risk and appetite for new business have both been a bit changeable recently, and this has led to some rather sudden changes in rates and criteria, which can quickly turn a ‘computer says yes’ decision to the dreaded decline that will ruin our day.
Most deals are available for long enough, but I always explain to borrowers that with the vast majority of lenders, an initial agreement in principle is not a guarantee of a mortgage.
Rather, a lender confirming that they are highly likely to lend to that customer does not mean that a particular rate or product has been reserved for them.
Until recently, we had enjoyed a long period of stable or gradually decreasing rates, so more often than not, a better rate would quickly become available.
What’s changed recently – especially amongst the volatile high LTV area of the market – is the gradually rising rates that lenders impose in an effort to stem the flow of business. tTis is a much harder conversation to have with a client.
Perhaps more now than ever, it’s vital to manage customers’ expectations and explain the entire application process.
I’m now off to set my alarm early so that hopefully, I can reserve some HSBC 90 per cent funds at 08:00 tomorrow.
The period since lockdown has certainly been very challenging for brokers, with lenders coming in and out of the market, restricting availability of higher LTV products, withdrawing products and then relaunching them in a slightly different form a few days later, and so on.
That’s to say nothing of the changing ways in which various lenders have chosen to treat furloughed workers’ income, for example.
This is already beginning to change again as the furlough scheme begins to unwind. It can certainly be bewildering and more than a little frustrating.
Ultimately, though, it’s a broker’s job to help their clients navigate a path through the thickets and get the best deal for them. In a sense, with so much going on, now is the time when brokers can really prove their worth.
An individual borrower, dealing directly with a lender, isn’t going to stand a chance.
From a broker’s perspective, it is really helpful to have someone standing behind you and access to a support network.
If you’ve got backup – whether that’s access to all the latest tech to help do your job more effectively, or just someone you can pick up the phone to and share ideas and information with, that’s a real asset.
Ultimately all processes depend on people, so the process is only as good as the people involved.