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‘Before brokers criticise lenders, imagine if the tables were turned’ – Star Letter 16/10/2020

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  • 16/10/2020
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‘Before brokers criticise lenders, imagine if the tables were turned’ – Star Letter 16/10/2020
Each week Mortgage Solutions and its sister title Specialist Lending Solutions select the top comments from our readers in our Star Letter section.

 

The first was from Andy Wilson, who replied to the article: ‘I hope brokers don’t want lenders to control volume with criteria changes’ – Marketwatch 

He said: “Before brokers criticise lenders too much for trying to manage their service levels however they can, just imagine the tables were turned. 

You’re a broker, but for reasons beyond your control, you can only work three days a week when previously you used to work six days a week.  

He added: Enquiries however are increasing, not reducing. What do you do? Accept everyone, and struggle to keep all the plates in the air at the same time, getting yourself a bad reputation, which in lender terms, would mean do nothing, cross fingers and pray it gets quieter. 

Or cherry pick, and only take the best cases which produce the biggest income or can get through with the least amount of effort, for example, lenders applying criteria changes. 

“Or would you put your fees up to deter all but those who see your value, for example, pricing to manage levels?” 

Find that stressful? Imagine managing a team of more than 100 who are in the same boat,” Wilson said. 

He added: “Were not the same as lenders, but it’s not an easy choice to do anything that adversely impacts our clients – in the same way lenders really don’t want to upset their brokers. 

 

No ideal solutions 

Stuart Phillips added to Wilson’s sentiments, saying: “I agree with John, I think brokers want a stable supply because we don’t control when our clients get an offer accepted. I can tell my clients to find a place in 48 hours or can I ask them to wait until the next tranche of funds is available. 

Andy Wilson rightly says that there are three options, throw open the doors and give poor service, decline arbitrarily or jack up the price until demand meets supply.  

If you have to pick one price is fairest, but none are ideal. 

Phillips said: “I subcontract some work and prices have risen – I dont call it unfair; I just have to decide if that support still represents value.  

Clients can do the same. Buy now and pay more interest for a 90 per cent loan to value (LTV) deal or save until they’ve got 15 per cent deposit. 

Clients can put a number to that and make an informed decision.  

Telling them that they might get it if they are lucky is the very opposite of that and for the life of me, I cannot understand why this is a complex point. Especially since it’s a somewhat level playing field and we all get the same price we have to communicate to our clients,” Phillips added. 

 

Broker job to warn of risks 

Phillips also responded to the article: Without the facts it’s best to ‘keep your mouth shut’ – JLM 

He said: “Keeping your mouth shut seems awfully close to turning a blind eye. 

“I believed that brokers were supposed to give clients advice including the risks and allow them to make informed decisions.  

He added: “If a client is thinking about starting a family you better believe I’m going to be asking them what happens to that plan if house prices fall and they are trapped in negative equity in a house too small for them? 

What I think you miss is the wider impact of lender attitude to risk in future, the repossessions that may result from those highly leveraged and out of work and the seizing up of the market from those who can’t move due to a negative change in circumstances. 

Clients have a right to take risks if they want, but it’s definitely not our place to encourage, Phillips said. 

 

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