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‘Brokers will choose between similarly priced lenders based on the BDM’ – Star Letter 07/05/2021

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  • 07/05/2021
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‘Brokers will choose between similarly priced lenders based on the BDM’ – Star Letter 07/05/2021
Each week Mortgage Solutions and its sister title Specialist Lending Solutions pick the top comment from our readers.

 

The first comments came in response to the article: Lenders that cull BDMs do so at their peril – JLM 

Nick Morrey said: “The skill set of a business development manager (BDM) is actually not inconsiderable and their use to brokers for both pre-submission vetting and troubleshooter is invaluable.  

I know some brokers will choose between two similarly priced lenders based on the BDM service that they may need.  

He added: “I am in support of the above article on behalf of brokers everywhere. Lenders have had both a tough and bumper year so to then make culls in their support divisions would be both unfair on individuals who have likely worked very hard from homeoften deepening relationships with brokers who didn’t engage pre-pandemicand harmful to future profits.  

In time, face-to-face visits will return, good BDMs will be at a premium so don’t let go of yours just for a teeny positive blip in profits to mask other failings. They do so at their peril, indeed – and don’t say you weren’t warned. 

An anonymous poster was in agreement, saying: “I concur. At least 50 per cent of the web chat interactions I’ve had have been less than worthless because they wasted my time.  

Whereas being able to speak to my BDM I was on occasion able to persuade them to go outside criteria to place a case for an exceptional client. 

 

Balance lender loss with ERC

The next comment was to the story: Legal & General trials equity release fixed early repayment charges 

Andy Wilson said: “The charging of early repayment charges (ERCs) is to reflect that potential loss to the lender of the client paying the loan back early.  

However, I have long maintained that if some lenders can use fixed ERCs for lifetime mortgages that will charge a maximum of 10 per cent of the loan amount, there is no clear reason why lenders charging gilt based penalties can justify up to 20 to 25 per cent of the loan as a penalty charge.  

Wilson added: “Surely the loss to the lender of early repayment cannot be so different? The fixed charged penalty lenders would suffer massive losses if the real loss was up to 25 per cent of the loan. 

 

High gilt-based ERCs 

He said: “I attended a recent workshop on gilt-based ERCs along with many other brokers.  

None of the three lenders using gilt calculations for their ERCs could offer any solid justification for such high gilt-based maximum penalties, while fixed ERCs as low as five per cent of the loan for five years followed by just three per cent for the next three years are available elsewhere. 

There are two huge criticisms of lifetime mortgages on social media – the potentially huge increase in rolled-up debts due to high rates of interest in the past, and ERCs for those trying to get out of the past high-rate deals now,” he added. 

Wilson said: “The sooner we can start to show the ERC amounts reasonably mitigate some loss to the lender for early repayment, the better. 

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