‘Without FTBs the whole property market halts’ – Marketwatch
Along with a boost of activity from an otherwise dormant segment, a coinciding lack of mortgages available to first-time buyers resulted in this part of the market contracting by 12 per cent last year.
So this week, Mortgage Solutions is asking: Did you notice a change in first-time buyer (FTB) business last year and how does this influence your plans for these buyers in 2021?
Jo Jingree, mortgage adviser at Mortgage Confidence
I did not see too much of a drop off because I’m in London and first-time buyers still benefitted from the stamp duty holiday. Even though they would have got the discount, in some cases buyers got even more of a saving.
A lot of first-time buyers in London are buying up to £500,000 if not higher.
However, I did have a couple of people say they decided to put purchasing on hold because they felt the property market was getting overheated. They also expected prices to come down this year.
But that wasn’t the majority it was a small handful.
Most people were constrained by deposit, especially where there were almost no high loan to value (LTV) mortgages and for those who were able to raise a larger deposit, the rates went up and are still fairly high.
I had a few people who were quoted before the first lockdown who came back in summer to higher quotes.
They were surprised but still proceeded because if you want to buy a property, you want to buy a property. Rates don’t tend to hold people back too much.
I have since been getting back in touch with people who just couldn’t get a 10 per cent deposit before to say there’s more product availability.
Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert
From March to June, there were enquiries coming from the first-time buyer market. Unfortunately, due to the lockdown and some of the measures taken and a lack of high LTV products, we started to see a weaning off of those.
Then when the stamp duty announcement was made there was another clamour of first-time buyers but that was quickly overshadowed by others in the market.
For the first time in a long while, homeowner enquiries outstripped first-time buyers for a period of about two months.
The issue is, without the first-time buyer market, everything halts. Without them, where does business come from? The chain has to start from somewhere.
Where it’s going to probably change is I can see some upcoming opportunities for landlords. I’ve never seen rates so low for buy-to-let mortgages and that will have another impact on the first-time buyer market.
The first-time buyer market was halted in its tracks in March and I don’t think it’s fully recovered. There are still first–time buyers looking for opportunities but not quite at the deluge that was expected.
I work in the adverse market, so a big area for this year will be debt consolidation, remortgaging and further advance. We’re strategising down those routes.
We’re not alienating first-time buyers but until product availability becomes more apparent things will just run the same course as they did before, especially for the first quarter.
Adam Wells, co-founder of Lloyd Wells Mortgages
With everything that happened in 2020 we did see a reduction in applications across the board.
We still completed plenty of mortgage applications for first–time buyers, but we found that the underwriting was more thorough and the timescales were extended significantly.
First-time buyers play an important part of our business plan and we will continue to focus on this area.
We do a lot of mortgages using the Help to Buy scheme, so going forward this will be for first–time buyers only.
We find that once we have helped a first–time buyer, they will come back to us over and over again. They’re also more likely to use our solicitor recommendations and protection recommendations.
That part of the market is something we really focus on and a lot of our Google ads are already aimed at those getting onto the property ladder.
RIOs in their current form will remain a niche offering – Marketwatch
Between 2018 and 2020, just 2,911 had been sold to borrowers, falling short of the regulator’s prediction that 21,000 would be sold by this year.
Yet, tighter affordability indicates that expecting the product to serve tens of thousands of people in an already small segment of the mortgage market is unrealistic and instead, its success should be based on how well it suits the few eligible customers.
So this week, Mortgage Solutions is asking: Is it reasonable to assume RIOs will only ever serve a small segment of borrowers?
Dominik Lipnicki, owner of Access Equity Release
In their current form, it is perfectly reasonable to assume that RIO mortgages will remain a niche product.
Since their inception, the number of applications has been very low, there are several reasons for this but for me, the main issue is that very few borrowers can qualify for the product due to the requirement of proving income for life, even if a spouse dies first.
Few people have that much disposable income and those that do tend to pay their mortgage off using a standard residential product.
The later life lending market has also changed in the last few years, with many equity release products now offering the ability to pay interest but without the need to prove income and with the flexibility of stopping payments altogether if circumstances change further down the line.
Lastly, adviser knowledge and confidence in a product that they might have never advised on will also be an issue.
Clearly, all advisers must ensure that they keep their knowledge up to date and that they are able to advice on products that best fit their client’s circumstances.
For some, the RIO product falls between residential and later life lending and advisers often specialise in one or the other.
There will of course always be a place for RIO mortgages and innovative lenders such as LiveMore will further expand their proposition. In reality, however, the product will be rarely used as many will choose the equity release route instead.
David Hollingworth, associate director of communications at L&C Mortgages
Retirement interest-only is by definition targeted at a certain sector of the market and that is important to remember when trying to quantify the success of RIO.
Given it’s a product only available to older borrowers and working on the assumption that a good number of us will remain focused on repaying the mortgage ahead of retirement, did we really expect that RIO would be taking significant share overnight?
The regulator clearly saw that there was a need to open up mortgage availability in a market that had become increasingly restrictive for older borrowers post mortgage market review.
That will no doubt have in part been to offer a practical solution to interest–only borrowers reaching the end of their current deal with little chance of repaying the loan.
Being able to offer a mortgage that doesn’t simply postpone repayment by a few more years should help a good deal of borrowers, many of whom will have a solid income and plenty of equity in their property.
RIO isn’t limited to that though and has plenty of potential to grow as the number of available products and lenders increases and public awareness improves.
Newer lenders like LiveMore joining those that have already embraced RIO will only help criteria adapt and improve the understanding of borrowers and advisers alike.
It will never be the right option for everybody but the fact that it opens up an alternative solution for some that could otherwise be excluded from the market should be a good enough reason to view RIO positively and as an area with real potential to grow.
Andy Wilson, director of Andy Wilson FS
The regulator delivered RIO guidance largely on the back of many current interest-only mortgages due to mature over the next 10-12 years where the holders have no means of paying them off other than by downsizing.
RIOs seek to provide a possible solution by allowing a new interest-only loan well into retirement.
One of my main concerns about RIOs is that mortgage brokers can arrange them without having any requirement for them to have experience or knowledge of the later life issues and implications.
Without experience of lending to older people and retirees, it is easy to miss these very important considerations with RIOs.
However, it seems that for some advisers the only real consideration is: can clients afford it now and can we meet the lender’s requirements for affordability, whatever they may be?
Advisers can, of course, shop around to find at least one lender who will make the loan – but to simply make the case fit at all costs surely cannot be right.
One of the alternatives to RIOs is an equity release lifetime mortgage.
I suspect many mortgage advisers looking at RIOs will not be considering equity release alternatives because they think they will lose the client and all of the income on a sale.
While perhaps understandable, this is not treating customers fairly. If instead they forge a relationship with an equity release adviser, they can still be well rewarded for the referral to the satisfaction of both sides.
Mortgage industry should accept stamp duty holiday end – Marketwatch
Because of this, buyers and sellers may have already decided on their position on any future moves.
However, with just under three months to go, professionals in the industry are still hopeful that the government will extend the deadline or give a grace period to progressed transactions.
Depending on the details, this could relieve pressure felt on the industry or make people think they have second chance to benefit from the tax break causing another rush.
So this week, Mortgage Solutions is asking: Would a last–minute stamp duty deadline U-turn cause more chaos in the market?
James McGregor, director at Mesa Financial
We have had enough time for it. To be honest, I think it’s time for the industry to get on with things and accept business has to eventually go back to normal.
The stamp duty holiday has presumably already had its desired side effect of helping the sector to recover. The property market has not been shut down like it was last time so we should be able to get on with things.
If they planned correctly, the buyers who would have been able to benefit from it more than likely have already moved and made their saving anyway.
Their next best bet is probably waiting for after the deadline to see if prices come back down.
We cannot control the other side of things, we can only do our best. We are already telling our clients to make sure they have the money in the bank to cover the costs of stamp duty if it turns out they miss the deadline.
Chris Sykes, mortgage consultant at Private Finance
In my opinion it would depend on the extent to which the deadline is extended.
If the stamp duty deadline is extended by four to five weeks to allow the transactions in progress, that look likely to miss the cut off, to still take advantage of the saving then this would not allow many buyers to complete a new transaction.
So, a shorter extension will probably not have too much of an effect on the market except from saving a lot of wasted money on costs around transactions falling through.
If the deadline is extended by three to six months, then we may well see chaos.
This could be because those who had thought taking advantage of the holiday was not possible will instead wait for any price changes post–stamp duty deadline or those who just missed it in general will rush to take advantage of it and these transactions will need to move forward very quickly.
If we have a more long-term holiday, of six months or longer, then I do not think we will see chaos as people can take a more considered approach on how to take advantage of the holiday and will fuel the market for the longer term.
Anthony Rose, director at LDNfinance
Prior to the national lockdown announced this week, I thought an extension to the 31 March deadline for stamp duty was necessary. Now, I know it is essential.
Government support to the market during the pandemic has been very welcome but removing it on 31 March is arguably more damaging than having done nothing in the first place. A lot of transactions will fall over, and consumers will start to put any plans on hold.
The government should look to extend it until the end of the summer – at least – with a promise to review stamp duty in its entirety at the next budget.
The standard current rates of stamp duty are damaging to all sectors of the UK housing market and reducing this burden will give a boost to the economy and the UK as a whole.
The coronavirus pandemic will have made many of us question where is best to live and in what sort of property. Do we want more room for a dedicated office? Would it be beneficial for families to have more green space?
As such, a government that enables people to execute their decision to move by reducing the stamp duty burden will be making both a very wise political and economic move.
Giving mortgage brokers more control will not speed things up – Marketwatch
So this week, Mortgage Solutions is asking: Do you think brokers could be given more control over certain aspects of the mortgage process? What could be the benefits and downfalls?
Christopher Hall, mortgage adviser at Mortgage Guardian
The more control the broker can have the better. I won’t come down negatively on anything that will speed up processes in a market which is still very much under the influence of the pandemic.
However, like all good tools, these things should be used with caution. We can look at these things positively and negatively. Is it a way of the lender passing on responsibility rather than control? Will it create more work for the broker?
What brokers need are lenders that can take work away from us.
Is the system going to come with all the relevant warnings? Will brokers let clients know that if this doesn’t go through, they might not be entitled to any refund?
I’ve come across stressful cases that have been going on for weeks and weeks and the lenders say they will pull out if the valuation isn’t instructed. When I go back to the client and tell them it’ll cost £400 to get one done, they say ‘no’. They only want to do it with the confidence the mortgage has been approved.
Is this protecting clients? You might get brokers who say let’s just instruct the valuation now. Without relevant warnings in place, the clients might be disadvantaged.
Progress is a positive thing but this could be open to abuse.
Most brokers put their clients first but there are a small percentage who may not and this could result in more complaints from customers.
What we need is faster underwriting, rather than these kinds of tools.
John Phillips, national operations director, Just Mortgages and Spicerhaart
Rather than more control over the mortgage process, most brokers would prefer the current process to be slicker and faster.
That said, it may be useful to share some elements of the process with lenders. The main reason for brokers to get more involved, is to help speed things up.
The move from Pepper Money to allow brokers to book valuations is a positive development as it is clearly designed to help progress cases quicker.
It is, however, unlikely to make a significant difference to the time the overall process takes. The step that takes most time is usually conveyancing, an area that brokers are unlikely to have much direct influence over.
One potential danger in allowing brokers to control more of the process is the potential for more fraudulent activity to slip through the net.
There is a huge increase of attempted frauds due to the pandemic, with forged payslips, P60s and fake identity documents being worryingly common. It makes sense for lenders to stay in control of this side of the process as it can be incredibly difficult to spot.
Lenders have established departments with sophisticated fraud detection teams, so while brokers always play their part, they are unlikely to be able to do so as well as a lender can.
One area where brokers could get more involved is in the credit checking of clients. Most brokers already have systems in place to check their clients’ credit, so agreeing a recognised and trusted system could streamline this process.
In the future, what we may see is technology enabling more efficiency. It will require an increased element of trust between lenders and brokers, but it may result in the effective streamlining of some elements of the process.
Akhil Mair, mortgage specialist at Our Mortgage Broker
We welcome the initiative Pepper Money has introduced.
We have a large number of clients that state they would like the valuation instructed immediately on application because it may be an auction purchase or they have agreed a completion date with the vendors agent to secure a lower offer price, for example.
We do inform the clients that the cost of the valuation is not refundable if for any reason the mortgage lender does not issue a mortgage offer.
Having said that, many lenders are now offering a hard check at the decision in principle stage and this gives the client further reassurance in securing the mortgage first time.
As brokers we appreciate the volume and pressure some lenders are currently facing and as a result, we would welcome other lender initiatives and dialogues to support and provide them with any support we give them to underwrite and provide a decision on the first day of underwriting.
‘Every application is a battle’ but the crisis is driving change – Marketwatch
However, heightened demand continues to put pressure on the sector so although every firm may mean well, there may still be hold ups across the market.
So, this week, Mortgage Solutions is asking: Have you noticed a decline or improvement in processing delays or is it roughly the same since the reopening of the property market?
Pete Mugleston, managing director at Online Mortgage Advisor
Everything is taking ages.
The volume of customer enquiries has increased at the same time as broker workload, and business development managers who were off on furlough have mostly now returned with their phones ringing off the hook, meaning most brokers take longer to get cases placed and packaged.
Lenders have been swamped with business at the same time as ripping up their criteria and underwriting policy, added for some, to work from home productivity issues.
Conveyancing firms have faced the same concerns, exaggerating issues that have always been there – a dump of business can turn a great service bad, almost overnight.
The speed of the increase is often the biggest problem, as people-centric processes are near impossible to scale at the rate needed.
Especially with the number of moving parts, such as delays with surveys – some reporting five-year highs and delays of more than 30 days, searches taking 20 to 40 days in certain areas, and mortgage paperwork, all weighing more pressure on an already fraught turnaround time.
We’ve seen a few examples that show this improving, but one thing is for certain, ever the optimist – it’s not all bad.
I’ve found myself saying this a lot recently – you need a crisis to drive change, and businesses across the whole property sector are having to find innovative ways of keeping up and staying safe.
A new, revived, and more productive market is quietly stitching itself together under the surface, and it’s only a matter of time before we see some breakthrough big wins.
Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert
Many solicitors are still working from home, and many have limited access to online management systems, so processing applications is taking much longer than normal.
The impact of the stamp duty relief and the Help to Buy scheme in its current form ending at the end of March 2021 has caused bottlenecks with cases – case opening times are subsequently being delayed.
So we are advising clients to select solicitors that have capacity to take on board any new cases in this climate and set expectations early with clients.
With regards to the free legals provided by lenders for remortgage cases, we are noticing, more often now than ever, panelled solicitors changing frequently with lenders and other companies being preferred.
We believe it is down to overcapacity for the previously panelled solicitors so lenders are looking at alternatives. The feedback so far from our clients is all seems to be working okay, which is a positive.
We also use broker conveyancing portals to obtain quotes for clients that need it, and we are seeing more ‘red light – near capacity’ warning signs for the conveyancers who are quoting competitively.
In some cases, we are seeing solicitors increasing their prices to ward off new business – similar to lenders’ actions of hokey cokey in the market; one minute being active and interested, then the next minute withdrawing and not able to assist.
I believe this is down to under capacity and over demand.
Adam Wells, co-founder of Lloyds Wells Mortgages
We have noticed a significant decline in conveyancing capabilities.
We understand that everyone is stretched and service isn’t quite where it should be, but conveyancers who are usually very reliable have been causing problems.
I have one specific case with a lender that is in a three-week queue to be assessed by an underwriter. The only way to get the case escalated is for the conveyancer to contact the lender and request an escalation.
The conveyancer in question has taken two weeks to let the clients and myself know that they won’t call the bank as the queues are over an hour. I’m still waiting for them to write a letter on headed paper for me to forward to the lender on their behalf.
Away from conveyancing issues, there are no other specific problems I have faced. We’re seeing a lot more automated valuations which actually speed up the process.
In all honesty, every single application feels like a battle from start to finish currently and I don’t know how anyone would be able to get a mortgage in the current market without the help of a broker.
We need to question the industry’s reliance on government help – Marketwatch
Furthermore, calls for an extension to the stamp duty holiday which has already caused a huge boost to the market suggests government intervention in the property market is sometimes welcomed.
However, input from the sector is often not sought resulting in initiatives such as the Help to Buy scheme not always targeting its intended market, driving up prices and leading to more buyers unable to raise deposits.
More recently, the government went back on its decision for high-rise buildings over 11 metres to require an EWS1 form regardless of whether they had cladding or not, which left many homeowners unable to sell, move or remortgage their properties.
So this week, Mortgage Solutions is asking: Does government intervention benefit or stifle the industry?
Rob Gill, managing director at Altura Finance
Some 13 years on from the collapse of Northern Rock, and the subsequent nationalisation of several major lenders, there’s a strong argument to say government intervention has become essential to the UK mortgage industry.
Schemes such as Help to Buy rumble on and on, and while not direct government intervention in itself, the era of ultra-low interest rates is similarly never ending with base rate at or below 0.75 per cent for coming up to 12 years.
As the Covid-19 economic crises continues to unfold, it’s surely unlikely that government intervention will do anything but increase.
We seem to have swung from one extreme to another over the last decade and a half.
The heady days of pre-2007, ‘light touch’ regulation and Gordon Brown proclaiming we’ve ‘abolished boom and bust’ have been replaced by ongoing schemes, swinging changes in regulation, even more dramatic changes in taxation and billions upon billions pumped into the mortgage and property sectors via the banks and taxation ‘holidays’.
Whether this stifles or benefits the industry isn’t so much the question as what would the industry do without it? There’s a strong argument to be made that, without unprecedented intervention to rescue the banks during the credit crisis, the mortgage industry would have ceased to exist at all.
A more relevant question might be how do we cure the industry, and even the economy, of its reliance on such widespread government intervention?
The solution is likely to take far longer to arrive at than any vaccine.
Richard Campo, managing director at Rose Capital Partners
Recent results have been a mixed bag, as if you just take the Help to Buy schemes, both the equity loan and mortgage guarantee will tell you all you need to know.
With the mortgage guarantee, to my mind, this is everything gone right with how a government can help stimulate business. They offered a guarantee that allowed the return of 95 per cent lending post–credit crunch and when the market stabilised, this was removed.
Clean, efficient and it benefited the industry.
Conversely, when it came to the equity loan, this was extremely problematic as the government had a vested interest in house prices going up.
Hardly the Adam Smith version of free markets.
In the short–term, the benefit is that more transactions happened and faith was restored to the new-build sector. But has this simply stored up issues down the line for people wanting to move?
Has it inflated prices? Time will tell, but this feels more of a long-term stifling that may outweigh the short-term benefit.
The current stamp duty holiday feels very similar to the loan in that on one hand it has stimulated the market. But was it even necessary? Early this year purchase activity was already the highest in many years, so has the holiday simply put petrol on a fire and overly inflated prices which may just correct next year anyway?
This all highlights just how big and complex the property market is, so it is hard to say for sure if government intervention benefits or stifles the industry.
I think it is a bit of both which only highlights the lack of long-term planning that has taken place, which is what a government should really be doing.
Jonathan Clark, mortgage partner at Chadney Bulgin
I don’t believe that the current stamp duty holiday should be extended. 31 March seemed a very long way away when it was first announced – possibly, too far away – and estate agents, solicitors and mortgage brokers have had plenty of time to adapt, even in the current, admittedly very challenging times.
However, I was a fan of the reduced stamp duty land tax threshold for first-time buyers when it was first introduced, and still am, as well as the much fairer, marginal rates that we’re now used to seeing across all purchase prices.
The question of 95 per cent mortgages is a bit tougher – we desperately need such products to be made available as soon as possible to assist first-time buyers and hopefully, this will in turn encourage lenders back into this vital area of the market with similar products.
However, government intervention really shouldn’t be necessary with lender’s products, it should naturally sort itself out once the current excess demand for properties and mortgages subsides.
It does feel as if the government’s plans have backfired a bit here though. The majority of my clients are currently moving to bigger properties, purchasing holiday homes or even buy-to-let properties and many of my first-time buyers have wealthy parents that are able to gift them a 15 per cent deposit – surely not the intended outcome.
Some borrowers regret taking mortgage holidays but can’t be blamed for panicking – Marketwatch
UK Finance figures show around 2.6 million households took a payment holiday. But according to Experian only half of those borrowers suffered a decline in their spare income while a quarter used the scheme to build up a cash reserve. The millions of families who took the first wave of payment deferrals did not know then it could affect their future borrowing chances. That news came later from the regulator.
With the opportunity to apply for a payment deferral extended, now wiser, borrowers’ attitudes to the scheme may have changed this time around.
So, this week Mortgage Solutions is asking: Have you noticed borrowers are more wary about taking a mortgage payment holiday now it’s been said it could affect future lending decisions?
Paul Hampton, mortgage and protection consultant at Approved Mortgage Solutions
In the North East, not many people have taken out payment holidays. The take up was quite low from the beginning as a lot of people kept their jobs and unemployment wasn’t high.
Even in the cases where one party lost their job, usually the other party was still working. So I did not see many people go for mortgage holidays here.
However, I have noticed some of the landlords who took payment holidays out are now regretting it because they have come to apply for mortgages and underwriters are looking at their finances with a fine tooth comb.
They took a payment holiday to boost their cash flow, even if they still had rent coming in, but they now realise that although it does not affect their credit score it can affect future borrowing.
I knew of one who used the cash saved from a payment holiday to invest in further properties, which obviously they were not supposed to do.
When borrowers do that, it can make them look untrustworthy in the eyes of the lender because they wonder why people would go for a particular loan or support when their income has not suffered.
Piers Mepsted, managing director at Financial Advice Centre
Conversations with our clients have changed considerably since the introduction of the ‘generous’ proposal from lenders of a mortgage payment holiday.
Many borrowers were quick to take this up as at the time the future was unknown and it felt prudent to pull in the purse strings where possible. However, many of us as brokers remembered the problems borrowers experienced through taking a mortgage holiday during previous recessions.
By putting ourselves in the lender’s shoes, we see it is their responsibility first and foremost to protect the level of risk and balance sheets. For this reason, we are not surprised to see it could and therefore probably will affect lending decisions in the future, despite the industry reassurance at the time it would not.
We hear time and time again if something sounds too good to be true – it probably is.
Although credit references do not show payment holidays in the same way as mortgage arears, we are seeing questions about mortgage holidays; Covid-related job security questions and extra checks coming up regularly by underwriters.
Underwriters can also see if payment holidays were taken with sight of mortgage statements and the obvious request for recent bank statements.
Knowledge of this pending impact does not seem to be widely known outside of our industry and is not being cautioned by the government or the lending institutes. There was no guidance or caution offered when the flood gates were initially opened for a mortgage holiday instead, they were promoted heavily and easy to obtain.
The role of mortgage brokers and financial advisers in our firm has increased again to give advice in this area and ensure borrowers exercise caution by asking the question that should have been given months ago which is: ‘Is a mortgage holiday absolutely essential?’ and: ‘What other options do you have available?’
Payam Azadi, director at Niche Advice
I’ve seen less people going for them in the last month or so.
Recently it’s been communicated to them that there are consequences so I think now payment holidays are being taken for the right reasons, for people who are genuinely struggling. Before that they might have said: ‘just in case, let’s put a hold on things’.
I think, you can’t blame people because of the panic that was going around, nobody knew what was going to happen, or whether they would still have a job.
People took it as a precaution including a lot of those who were not struggling. I’m still torn because I don’t think you really penalise people.
A lot of people are losing their jobs and it’s out of their control. People that have lower incomes or are more financially vulnerable are being punished. They are in a genuinely vulnerable position and have had to ask for something that’s out of their control.
It doesn’t sit right for it to show on their credit report or have a knock on effect.
The clients are being punished – potentially three or four years down the line – for something that happens now that they don’t have a lot of control over.
There will be some people who say you should have protected yourself with income protection, or other types of protection to be able to deal with shocks. That’s a valid argument but I think what you’re doing is punishing people when they’re at their most vulnerable.
Updates and transparency stop clients feeling excluded in digital world – Marketwatch
And although technology has become embedded in society, many are still unsure about using it and feel more reassured when they have someone to talk to.
With service levels suffering while lenders become swamped trying to deal with requests for mortgage payment holidays, brokers can ensure they provide an ear to any borrowers with concerns.
So, this week Mortgage Solutions is asking: ‘What can brokers do to stop borrowers from feeling isolated and excluded as they are increasingly encouraged to use digital and direct means for mortgage purposes?’
David Hollingworth, associate director at L&C Mortgages
The mortgage and housing markets undoubtedly still have a lot to gain from the benefits that technology and process digitisation can and will bring.
Frustrations around the need to provide the same information more than once and for data to be rekeyed can be eased with system improvements.
Consumers increasingly expect to be able to have the chance to be kept informed through digital platforms. For example, the reassurance that your online shopping is on the way has now reached the point where you know exactly how many stops your driver has to make before they reach you.
Keeping customers aware of what is happening online is therefore likely to be something that is increasingly expected and is felt to be beneficial.
However, that cannot always replace the need for a conversation and reassurance from someone that understands the process. Buying a house and taking on the biggest debt that most of us will ever have is rather different to the purchase of the latest bestseller from your favourite author.
The current market where high demand, lender capacity and rapidly changing underwriting are at play can mean the need for updates can be even higher and being able to deal with customer concerns in the way they prefer is important.
As difficult as it can be when there may be delays and little to update, just being able to reassure the customer is important and can distinguish the service of advisers from a more faceless platform.
We’ve certainly found that customers have appreciated a phone call even when there may be little new to tell them, but it certainly helps remind them that you’re on their side.
Chris Hall, mortgage and protection adviser at Mortgage Guardian
Historically mortgage advisers have done quite well from being the go-to guy or girl within the local community by establishing and maintaining that personal connection with potential clients.
The good word spread, and recommendations flowed when the job was done well.
Business was always done face–to–face whether in the office or in the client’s own home. Networking quite often was done in the pub with a drink in one hand or on the local golf course. Quite often you would bump into your clients while out shopping.
This has always been an accepted way to build trust locally and to make the clients feel included. Many an adviser made a living this way and some still do.
Being part of a community is not dead by any means, but times have changed and business is quite often done on a non face-to-face basis these days. Online and telephone-based advice is popular but is also where a sense of exclusion or isolation can happen whether it is realised or not.
Most of our business comes from outside of the local community so our business is conducted online and via the telephone. We have looked at the client journey from start to finish ensuring that the clients not only receive outstanding service but also feel fully included during the mortgage process.
We look for ways to appeal to new customers. We understand that people do not get a sense of trust from a Google search result, so we have prioritised asking past clients for a review.
Generally, people write from the heart and that echoes the friendly service we always aim to provide. This helps new clients looking for a mortgage adviser.
Above all clients should not feel isolated or excluded as we explain everything as we go through the mortgage process.
Pete Mugleston, managing director at Online Mortgage Advisor
Society has had the kind of seismic mindset shift that doesn’t come along that often, perhaps only ever following such a catastrophic and more importantly, shared, event.
Like it or not, we have changed.
People, particularly the over 50s, who didn’t previously use technology like online shopping or video calls, things that have been around for years, now see the benefits and many are loving it.
Video has long been underused by intermediaries too, I think in part because the technology was so varied in terms of platform and device compatibility.
Now, with Zoom and Teams open to all, things are very different and the mindset of brokers needs to shift too – video offers a platform to deliver a new level of understanding and experience to customers that will help no end with sales, not to mention the potential compliance benefits.
Compare the cumbersome face–to–face visit or a phone call and email with some figures typed out, to a professionally designed presentation, with animations and visuals taking customers on a journey, endorsing you and your business, explaining the level of service and products to a level that was never achievable with words or hand gestures alone.
We’re not telling, we’re showing, in a far cheaper and quicker way, all without asking customers to let strangers into their home.
When you boil it down, rapport tends to be the critical rationale for face-to-face evangelists, a benefit I think has now shrunk beyond any viable value.
Brokers should be allowed to act as client agents after completion – Marketwatch
The financial industry has already made major moves to embrace technology, giving consumers more independence and putting them in control of their finances, including the sourcing of mortgages and payment support.
So this week, Mortgage Solutions is asking: What could lenders do to stop brokers from feeling excluded as services become more digital and direct?
Liz Syms, CEO of Connect Mortgages
The key thing lenders could do is to include something on the letter of completion which declares that the broker is the client’s agent and can act on their behalf ongoing.
This would make everybody’s lives easier. It would help the client on an ongoing basis, would mean that the broker could be kept in the loop and would potentially save the lender significant time as the broker could deal with more mundane questions on the lender’s behalf.
At the moment, many lenders write to the broker to say that a deal is coming to an end and will promote their new rates but cannot tell you which client this is regarding due to General Data Protection Regulation (GDPR).
While all good brokers will keep this client information on file it would be a lot easier if lenders could provide client specifics.
This works for pensions and investments so it should also be possible to work for the mortgage industry.
Over the course of this year, brokers couldn’t even help their clients with payment holidays, because it would have required another client permission letter. This has resulted in backlogs of calls for lenders, with staff working from home often having to answer the most basic of questions.
More and more clients are seeking advice and it is hard for many banks to meet this need.
Setting up an ongoing permission on completion of a mortgage will help to reduce these inbound calls while also keeping brokers in the loop as they can be copied into all outbound correspondence from the lender, providing advice when and where needed.
Andy Wilson, director of Andy Wilson FS
There has always been a concern that mortgage lenders seem to disregard the broker once a mortgage case is completed.
In general terms, we regard the client as ours, and we hope to service the client’s financial needs for many years to come – but the lenders regard the newly acquired client as their own, and market their services to them as such.
They refuse to copy the originating broker in on any form of communication with the client, including letters to offer new products when an initial deal comes to an end. There should be no GDPR issues if a client gives consent at outset.
However, lenders need to maintain healthy relationships with the wider broker community, who account for more of their new business than they can generate themselves.
We thrive on personal service, whereas the lenders thrive on cost and process efficiencies, and technologies that seek to cut out the middleman – the brokers.
Their scant attention to personal service is demonstrated by the reducing number of high street branches and staff, and the move to video calling in branches.
The key to any healthy business relationship is good communication – so, keeping the broker informed, with relevant and up to date information on everything they need to know – products, interest rates, application processing and progress, managing broker expectations and service issues.
The best lenders have realised that the way to stop brokers calling them every five minutes on urgent cases and slowing their processes down is to invest in technology that can email and text case updates regularly, on time and accurately.
Dominik Lipnicki, director of Your Mortgage Decisions
Even in today’s digital age, many clients prefer to use a mortgage advisor rather than go direct to the lender or transact online.
We have seen an increase of product switches over the last few months but that is due to the pandemic, not necessarily because of client preference.
For most, mortgages represent the biggest outgoing, hence borrowers value independent advice and the knowledge that they have explored all options.
Having a healthy intermediary market is also good for lenders as they get fully packaged, placeable cases delivered to them without the cost of client acquisition.
I believe that lenders can do more to work with intermediary firms by working closely with them to ensure that the client journey is as good as it can be.
The difference in the lender’s service standards can be very frustrating. Some lenders are better than others at communicating upcoming rate or product changes and last minute rate withdrawals or post-agreed in principle cancelled cases must be avoided at all costs as they really do dent the adviser’s confidence.
We know that some of the lender’s conveyancers can also fall short of the required standard, with a conveyor belt like approach where quality of service can sometimes come second.
The relationship between an adviser and the client is far more personal and despite digital advances, many borrowers value that link and for me that is here to stay.
Covid-19 is not a reason to speak about protection, advisers should already do it – Marketwatch
And now, with the Covid-19 pandemic making people more aware of their own mortality and the reality of how their lives can change unexpectedly, discussions around preparing for worst case scenarios have become part of the everyday conversation.
So this week, Mortgage Solutions is asking: Has the pandemic changed the way you advise on protection?
Dina Bhudia, managing director and CEO of P2M Asset Management
We already position protection quite early on in the conversation.
I do find clients are more receptive in terms of having the time to think about it because people are working from home and have longer to converse about something personal rather than allocating time to come to our office. And, there is an element of fear as people are scared of Covid-19 and its potentially fatal consequences.
We’ve had people just call us up saying they have been thinking of life cover and critical illness asking to do a quote, even when it’s not mortgage related.
During the mortgage process, I think they just assume it’s part of the process compared to before where they were a little bit reluctant to discuss it.
Everything related to protection including private healthcare has become more prevalent to people because the NHS is under strain, so people want to consider those options.
Also, where people are working from home and not spending on travel, they have more disposable income to spend in this area.
Protection can be easier for mortgage advisers to bring up now because often they can be reluctant to talk about it as it’s a sensitive area. The dynamics of advice change. With mortgages, the client needs you. With protection you are selling a concept.
The problem with sole mortgage advisers is protection can become a secondary conversation. But they aren’t looking at it as a two-step conversation anymore, they are looking at it as one process.
Advisers are also mindful of the future. If mortgage business and applications decrease, they are getting wiser with holistic advising and thinking they have to encapsulate what they can because we don’t know what’s ahead of us.
On a practical level, where advisers aren’t doing face–to–face meetings or seeing business development managers, they can take the time to talk about these things more.
Darryl Dhoffer, mortgage and protection adviser at The Mortgage Expert
We bring it up very early on in the fact find. We don’t just talk to the client about mortgages, we make it very clear that we are looking at a fully protected mortgage.
It’s important we address things very early on. If we left things and then looked at protection later, it can cause complications and delays in the application process.
Everyone knows someone who’s been affected by Covid-19 and knows what impact it had so clients are more receptive to speaking about protection.
There are a lot more questions that need to be asked now too.
As soon as we had the first lockdown and realised the impact of Covid-19, we changed some of the questions we ask during the fact find immediately to fall in line with that. We didn’t delay. Our clients are prepared and we prep them very early on in every stage.
Protection questionnaires are comprehensive so we’ve tried to engineer our questions to be in line with what insurance providers would ask.
Advisers have a duty to bring protection up from the start, pandemic or no pandemic. We’ve always looks at fully protected mortgages from the outset, so our way of working hasn’t changed.
In terms of other brokers, they have a duty if they want to class themselves as fully compliant mortgage and protection advisers and they should bring it up early in the journey.
Covid-19 shouldn’t be the factor for it, they should already be doing it.
Akhil Mair, managing director at Our Mortgage Broker
As we grow older, get married, build families and start businesses, we come to realise more and more that life insurance is a fundamental part of having a sound financial plan.
Depending on your type of policy, life insurance is fairly cheap, which means there’s no excuse not to get coverage now. Plus, over the years, you’ll find comfort in knowing money will be available to protect your loved ones in the event of your passing.
We have always discussed the importance and cost of types of life cover at a very early stage when arranging our clients’ mortgage.
All our advisors ensure they ask the relevant questions at the fact finding stage in order to obtain a clearer financial and cover in place.
In the vast majority of cases, our clients main concern is to obtain a mortgage offer but it’s our duty and reasonability that we provide our clients with relevant life cover and protection quotes in order to ensure they and their families are supported in any circumstance.