Pandemic has driven up use of open banking but awareness remains low – Marketwatch
So, this week Mortgage Solutions is asking: Does the higher scrutiny of borrowers’ financial details during the pandemic make a good case for the increased use of open banking?
Jonathan Clark, mortgage and protection planner at Chadney Bulgin
I’ve heard a lot about open banking over the last few years – usually at seminars and conferences where its possible uses and benefits have been highlighted by technology companies.
However, I’ve yet to have a client even mention it to me and I do not bring it up during meetings.
I wouldn’t consider myself to be a luddite, but I suspect that some younger and more tech-savvy advisers would be more comfortable discussing it with their clients, and therefore be more likely to integrate it into their advice process.
We all know how difficult and time-consuming trawling through a customer’s bank statements can be and open banking should be an obvious solution to this.
I also suspect that if done properly, open banking could enable advisers to evidence affordability more accurately on some of their more complex cases, such as where multiple income sources need to be taken into account, with better customer outcomes resulting.
Another area where I could see it being of use is with self-employed customers whose trading levels have normalised after Covid-19, and a prospective lender needs evidence of this by reviewing their last three to six months of trading income, so maybe I’ll give it a go.
Dominik Lipnicki, director of Your Mortgage Decisions
The case for open banking has always been strong but awareness of it is still quite low.
The pandemic has helped to increase the number of people using it – around 2.5m according to recent figures from the Open Banking website.
As more people shift towards digital platforms in many areas of their lives the number of people using open banking should increase.
We should get behind it because it benefits us all.
It is in all of our interests that lenders are able to more accurately tailor-make financial products to suit individual needs. Of course, the data needs to be secure and we must be in control of what can be shared.
Increasingly it is part of the adviser conversation with clients because it helps people to fully access their information, manage their finances and budgets.
Anything that promotes innovation in products and services is welcome and open banking is doing that in financial services. Awareness is growing slowly so it makes sense for advisers to help spread the information to clients so that they can benefit.
In the long-term the application process will become much quicker, more seamless and more transparent thanks to the technology.
Payam Azadi, partner at Niche Advice Limited
The use of open banking is going in the right direction which is a good thing as it makes life easier for the clients. And from a lender’s perspective it’s better for disclosure.
People should be encouraged to utilise it but I’m not seeing a big take up for it still. I just think that comes down to awareness.
So I think it’s more of an education piece. The banks and providers need to give more guidance around open banking and how it’s used. More consumer awareness will enable it to do well and have a higher take up.
And because it’s to do with banking, a lot of people are more comfortable with the app which is offered by their own banks. They might not be comfortable giving information to other banks and systems.
There are systems that have incorporated open banking within the CRM but that’s still a relatively new concept.
I do not bring it up with clients right now to be honest; we just ask for bank statements as required. But it should be encouraged because it cuts down on administrative work for the broker.
But ultimately, the responsibility is with the client.
It would also solve situations where clients don’t disclose all outgoings or income. For example, some will say they have no children but then you will see child benefit statements in their accounts. Or some won’t even realise that child benefits might count as income which will be considered with affordability.
Clients are putting in multiple offers to seal their dream house – Marketwatch
With properties going for more than their asking prices and lenders potentially not providing the cash needed, there is room for buyers to lower their offer – gazundering – after it has been accepted and still obtain the property at market value.
So, this week Mortgage Solutions is asking: With property prices said to be artificially inflated due to demand, have you come across any gazundering recently? Have you seen general misbehaviour during this period of heightened activity?
Niamh Byrne, senior mortgage associate at Financial Advice Centre
With demand vastly outweighing supply, we have certainly experienced a mini pricing boom, bidding battles and inadvertent heartache for many of our clients.
Whilst we are yet to experience a case of gazundering, it is not surprising that this might be more commonplace, particularly when buyers want to protect their interests in a purchase considering “artificially inflated” prices.
Many of my clients are having to bid and offer high on property to stand a chance of success.
And whilst the old adage ‘it’s worth what someone’s willing to pay’ may be used by some, luckily we have the unbiased input from mortgage valuers that bring a purchase price back down to reality – oftentimes with a bump.
I have personally had an astonishing number of down valuations on recent purchase applications, and have worked with my clients, agents and vendors to take a more realistic, longer term view of the house price.
As advisers, we have a responsibility to make our clients aware of the current market conditions and to understand the potentially devastating impact of negative equity. Now more than ever we must encourage our clients to step back and take a longer term view of their purchase.
A mortgage valuer protects the interest of a buyer, as well as a lender and should therefore, not be viewed as a blockade when purchasing; but a potential lifeline to ensure ongoing financial security.
Anthony Rose, director at LDNfinance
We haven’t seen clients acting recklessly, but we’ve definitely seen them acting with a strong sense of urgency.
Clients have more so been caught up in the fervour of the market and desperate to secure the property they want in the face of largely increased levels of competition.
Clients are definitely having to put in offers on multiple properties because they cannot be sure of getting the one they want. It is more so a seller’s market at the moment, so the control is in the hands of the vendor rather than the purchaser.
We’ve definitely seen almost all – if not all – of our clients engaged in a bidding war due to high demands and competition.
We have had numerous clients get gazumped at the last moment who’ve then been required to match a higher bid after their offer had previously been accepted.
The only advice we can really give is to offer the maximum figure the client feels comfortable with in order to secure the property. There is always a risk of down valuations when a bidding war has taken place because the surveyor is working on historical data and may not agree with the figure that was reached.
This is especially a problem when borrowing at higher loan to value because if there is a down valuation, and the client still wants to purchase at the agreed price rather than accept the surveyor’s figure, they have to put in the additional money as cash.
At a lower loan to value however, a down valuation may not actually change what the client can borrow.
Phill Green, CEO and founder of Trufe
I have not seen any bad behaviour from clients; but they are under pressure to put offers in when in some cases, they might want more time to think about whether it is truly the property they want.
This is because of the supposed savings with the stamp duty holiday and because there is more buyer competition.
So we’re seeing people put in much higher offers, sometimes higher than what they are comfortable with, just to secure a property.
Only time will tell how they will feel about that later on and whether there will be any regrets when it comes to refinancing. Especially if there is a bump in the market and the value of the property potentially falls.
They may feel like their property is not truly worth what they paid. Especially if the market slows and rates are higher than they are now by the time they come to the end of their two-year term.
Here, I would advise anyone to only put an offer in that they are truly comfortable with.
Zero hour workers would be a quality pool of business for an innovative lender – Marketwatch
From working habits, to time spent with family, people have realigned their priorities. The same could be said for mortgages and the way they serve borrowers.
So this week, Mortgage Solutions is asking: Have recent months highlighted a need for product innovation that was not available prior to the pandemic? Where do you think the most change is needed?
Chris Hall, mortgage adviser at Mortgage Guardian
There’s a fine line between product innovation and lender criteria so it is difficult for the mortgage broker and lender to sing from the same hymn sheet.
Brokers are busy trying to service the needs of their clients but we appreciate that for lenders, it can take time to bring product innovations to market.
They have to pass regulation and also, lenders are profit-making companies. If it’s too niche perhaps they won’t make money from their innovation.
It’s not a simple question and there isn’t a simple solution.
A big one for me is the change following Brexit. A lot of products are no longer available to those with pre-settlement status but no indefinite leave to remain in the UK.
I’d love to know what the rationale behind that is because those with pre-settlement status will go on to be eligible for indefinite leave.
I was talking to an expat in Portugal who wants to buy investment properties in the UK. The lenders I usually use would not lend to him because he lives in a European Union state, but they would lend if he lived anywhere else in the world.
But I appreciate they have government legislation and regulation to adhere to, as well as their own target market they want to tend to.
There is also room for innovation with first-time buyers, the self-employed and rewarding existing customers with favourable rates when switching or remortgaging.
Howard Reuben, owner of HD Consultants
The required innovation which stands out for many enquiries we receive is the change in the judgement of risk regarding zero hour contract workers.
If a borrower is a standard PAYE employee, the issue of income and affordability assessment is straightforward, and the case usually sails through.
But the notion of a standard employment structure has changed over the last year. Those workers who are on zero hour contracts are the borrowers who need some extra support and more of a sympathetic consideration by the lenders.
Whether zero hour contract workers are looking to remortgage or purchase, we have seen that in the main the lenders still expect at least a year’s worth of experience in the same role, and then an explanation of how long the job might last, too.
This is the double-edged sword, and although the workers are more than willing and able to secure their job and grow a career, the zero hour contract status means that every day is an uncertainty which hangs over them.
This is where a sympathetic innovative lender could win a huge amount of quality business from the pool of qualified, professional and career-oriented workers.
Rupi Hunjan, CEO and founder of Censeo Financial
Those who earn bonus income and commission have been significantly impacted by Covid so that could do with loosening up going forward.
Criteria for the self-employed as well as people who earn bonuses and commission is important because that makes up a large pool of the workforce nowadays. They should not be discarded all of a sudden.
Everyone else has been relatively well served. When it comes to low deposit borrowers, we will have to see how the 95 per cent loan to value mortgage scheme shapes up down the line.
First-time buyers are where all the focus goes, so I would also like to see mortgage providers do more in the shared ownership space and with new-build properties.
First-time buyers are more likely to buy new-build homes but often, the criteria is very hard to meet for them.
If property prices keep going up the way they are now, that could continue to be an issue.
Also, stress testing on a mortgage needs to be loosened. Interest rates are staying low, and everyone says they will continue to stay low; but that’s not reflected in the stress testing.
So borrowers should be tested on a lower rate.
The only intervention the market needs is a long-term housing strategy – Marketwatch
He said decisions would rely on house price increases continuing to surpass income, favourable interest rates and high levels of transactions.
However, it was government policy such as the stamp duty holiday which has led to the arguable overstimulation of the sector.
So, this week Mortgage Solutions is asking: Is there too much intervention in the mortgage and housing market?
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries
As government has continued to support the housing and mortgage market by retaining Help to Buy, introducing First Homes and providing stamp duty reductions, the Financial Policy Committee (FPC) has retained controls over lenders to ensure the market does not overheat.
Controls on loan to income (LTI) and stressing shorter-term rates, whilst frustrating to some, do ensure affordability of individual loans and avoid some concentration risk within lenders.
We are, however, seeing house price inflation defying economic norms as both GDP and employment are constrained.
Those in work with a feeling of continuity are fuelling a housing market where there is a shortage of supply of decent stock for sale with significant pent-up purchase demand.
Indeed, with issues in the flats market, house price inflation may not be quite what it seems as only houses are really being transacted in volume.
What is certain is that with the heat in the current pricing of property it is much less likely that we will see the FPC relax its LTI or stress rate constraints.
If it did, it would feed more demand into what many see as a stretched market, particularly with the concerns over what might be happening with general inflation.
The problems created by market interventions the government introduced to stimulate the economy and provide positive consumer sentiment, need balancing controls from the FPC.
Whilst hard to explain to the consumer who wants their dream home with a mortgage that might cost less than their current rent, longer term market stability is important for us all.
Kate Davies, executive director of the Intermediary Mortgage Lenders Association
The government has provided extensive support to the housing sector since the start of the crisis, which has helped stimulate activity and boost confidence.
However, while this has been done to prevent the market from stalling, the effect has been to boost what was already quite healthy purchase activity.
One of the challenges associated with this recent intervention is how it works within the current regulatory framework.
The affordability and stress testing introduced as part of the regulator’s Mortgage Market Review requires lenders to limit the proportion of lending they conduct at more than 4.5 times an applicant’s income, and the additional three per cent stress test required by the FPC also means those purchasing a home need significant household income to access the funds they need.
IMLA and other trade associations have long argued that these measures may be too restrictive and are preventing quality borrowers from accessing homeownership.
We do know these measures are currently under review and only last week the Bank of England published a blog, in its ‘Bank Overground’ series, which suggested the stress test on borrowing could be preventing as many as two per cent of tenants from being able to buy a home.
It is hard to say whether there has been too much intervention in the market recently, or whether these actions have been a benefit or hindrance.
It takes time to understand the true impact of new policy and we will need to see how the market develops. However, changes could be made to open the door to borrowers who are perfectly good credit risks.
Regulatory changes may finetune the benchmarks above and below which borrowing is possible – but the intervention that the market really requires is a long-term housing strategy to ensure the UK builds more, affordable homes.
Richard Campo, managing director of Rose Capital Partners
Personally, I think the balance on risk and lending at present is about right.
If you have less than a 25 per cent deposit, it isn’t easy to get the lending you want if it is anything outside the most vanilla of applications.
Perhaps that isn’t a bad thing as I well remember the run up to 2007 and the lending market is not even close to what it was back then.
Policymakers need to take into account that we have had five years of suppressed activity in the housing sector largely down to Brexit, and subsequent years of delays and procrastination.
As a result, if you just look at the last six to nine months, yes it looks like a boom. The stamp duty holiday is also masking what real levels of activity are.
If you look at activity levels over the last six to nine years, you see a very different picture as house prices and lending, especially in London and the South East have been particularly suppressed.
This is particularly felt in the high-end market as many properties over £2m are either the same value or less than was the case in 2016. I appreciate that is never going to get any sympathy, but it is a reality.
So to put brakes on the market now will only hamper future and natural growth, which surely should be the aim of any government and regulator?
The move to affordability-based lending, which came out of the Mortgage Market Review in 2014 I feel is right. If we make things too tight, it stifles growth. Too loose, you create a bubble.
So maybe policymakers need to do the hardest thing of all – nothing.
Lenders race to reach remortgage customers first – Marketwatch
Lisa Martin, development director at TMA Club suggested preparing as early as July to maximise on the potential business.
So this week, Mortgage Solutions is asking: Have you started preparing for the large number of mortgage maturities set to happen this year?
Jonathan Clark, mortgage and protection planner at Chadney Bulgin
We make diary notes five months before the expiry of a mortgage product for all our clients, we’ll send an email, write and phone them – we’re quite diligent when making contact.
We wait a couple of weeks after writing, then we’ll email and phone if we haven’t heard back. We don’t hear back from everyone, but we have a high success rate. Some of our advisers have a success rate of over 90 per cent.
Otherwise, it’s no issue because the client wants to renew the rate and we want to secure the business. For us, a good old fashioned diary system has worked best.
However, some lenders are getting a bit more aggressive at targeting those customers themselves. Lenders view them as their customers and of course, we view them as our customers.
So, with some lenders there’s a bit of a race to get to them first.
We don’t categorise our clients in terms of who needs contacting first, but we did do a project last year where we got in touch with all our equity release customers who were on rates of around six or seven per cent.
Even though there was a substantial penalty, we found it made financial sense to remortgage them onto a cheaper rate.
Brokers should also be focusing on remortgaging clients who aren’t already on their books but due to the sheer weight of business at the moment, I understand that it’s not easy.
John Phillips, managing director Just Mortgages and Spicerhaart
We have developed an industry leading approach to remortgages, and the recent increase in quantity has not changed our method.
Our approach ensures our brokers are provided with leads, and our customers are given the best advice possible.
The client servicing team proactively contacts all clients whose mortgage is due to come to an end within six months. Once they have made contact, they will then continue to follow up with the client at regular monthly intervals to ensure they are aware of the options.
This continues right up until the remortgaging date, at which point the client is passed on to the original broker they worked with. When this is not possible, they are referred to one of our experienced brokers.
From here, our broker can provide expert advice and ensure the client is aware of the products available to them.
This approach is the same for all our clients, regardless of age or demographic as we trust our brokers to be able to deliver first-class service for our clients, regardless of their background or their specific requirements.
To attract new business, we have been running a social media campaign for the past three years which is highlighting the importance of remortgaging.
This campaign focuses on ensuring customers are getting the best deal possible, and promotes how Just Mortgages’ team of brokers can help find that deal.
David Hollingworth, associate director, communications at London and Country Mortgages
Looking after existing customers should be a primary goal for any adviser.
The first interaction should only be the beginning, whether it takes place at the beginning of the customer’s home owning journey or further down the line.
Once that customer has secured a deal, they have a clear point in time when they will need to revisit their deal to be sure that they will still achieve the best ongoing value.
As a result, we have a commitment to contact that customer at the right time to discuss the options.
Dealing with maturities now carries a broader range of options, given lenders are much more on the front foot in looking after their borrowers with product transfer deals.
Advisers clearly offer customers the best of both worlds by providing an important safety check on retention compared with the rest of the market.
In addition, they can offer more holistic advice such as trimming back the mortgage term to cut the long-term cost of the loan.
However, with lenders more proactive with their customers, there is even less room for adviser complacency and the hope that customers will do the leg work and simply come back could be a false one.
Re-contacting a customer really should be the culmination of a more continuous programme to keep in touch, so that they are aware of the benefits of a review and are fully expecting to hear from the adviser that helped them get the current deal in the first place.
Sounds easy, but with such a big year of maturities and a busy market it will need to remain a key area of focus and communication to customers, existing and new.
It is a mystery why lenders insist on hard footprints for DIPs – Marketwatch
Along with the welcome update that NatWest would not produce hard footprints for broker submitted cases, unless they progressed to a full application, the search for suitable mortgages in the ever-changing environment appears to be a trickier landscape to navigate.
So this week, Mortgage Solutions is asking: Are you having to produce a significantly higher number of DIPs for each case?
Andy Wilson, director of Andy Wilson FS
We are not performing significantly higher numbers of DIPs, but this reflects the initial research we have always carried out to make a lender recommendation.
Using mortgage lending criteria tools such as Knowledge bank and Criteria Hub help create the shortlist, and then Mortgage Broker Tools allows an affordability check. The lender business development managers (BDMs) can also be useful here if there is any doubt.
Once all of this is complete, we can submit the DIP to the recommended lender with a good degree of certainty it will be accepted – and most cases are, first time.
Where cases are declined, it will often be down to undeclared credit file issues. There can be disparities between the data stored across each of the credit file platforms.
This means that sometimes using the wrong one misses adverse data stored on another. Also, the dark arts of credit scoring can be steeped in mystery and kill an application, with usually no appeal.
However, we rarely have to submit more than two DIPs as a result. Needing to submit three would be a very bad day.
This is no different to our normal ways of working, and getting it right first time is always the intention, instead of taking a punt that a lender might just take the case.
It has long been a mystery to me why lenders would insist on leaving a hard footprint. Mortgages are not like unsecured credit, where a significant number of credit arrangements can be entered into on one day and allowing different providers to see recent activity becomes more important.
The lenders who use soft footprints still create a hard footprint if the case comes in as an application that fits their risk profile, so it shouldn’t matter how many other DIPs have been requested.
A high number of DIPs may just be that the adviser hasn’t been doing the initial research thoroughly enough.
Adam Wells, co-founder of Lloyd Wells Mortgages
It’s great news that NatWest has swapped to a soft footprint. It’s definitely one of my favourite lenders due to their good service, competitive products and flexible criteria.
Having a soft footprint is just another string to its bow.
Before we produce a recommendation and proceed with a decision in principle, we ask for as much of the client’s documentation as they can provide.
This also includes a copy of their credit report.
We believe we offer our clients a level of service they don’t get elsewhere and due to this our DIPs usually go through without a problem.
The most important thing for our clients is getting them a positive result and if we have any doubts we will involve the lenders as much as possible, as early as possible.
The biggest problem we have at the minute is down to how underwriters are assessing affordability and how this doesn’t always coincide with what the affordability calculators suggest.
We’ve also had issues with BDMs not understanding their own criteria.
Just this week I’ve had an issue with a gifted deposit that a BDM confirmed wouldn’t be a problem, only for it to be an automatic decline at DIP. Luckily the client had several options, and we were able to proceed elsewhere.
It’s generally the same big high street lenders that cause the same issues and I’ve found other brokers have had similar issues. Ultimately, it just means we are less likely to recommend these lenders in the future.
Akhil Mair, managing director of Our Mortgage Broker
When it comes to a DIP, most lenders already offer soft footprints upfront – both for residential and buy to let.
However, we double check beforehand in case they’ve changed their stance, because we don’t want a DIP to end up being a hard search. Then we apply accordingly.
Prior to that, as part of the fact find we try to understand what the client’s expectations are in terms of rates and fees, then we do a deep dive into their credit profile.
What we do now is, if a client has a county court judgement (CCJ) or missed payment, we ask them to download their credit file. That circumvents us placing a case with a high street lender who may or may not accept defaults.
Sometimes the credit report shows one thing, and the lender picks up on another thing, so it gets referred for further checking or declined.
If it is declined and we are confident it fits the lender’s criteria, we’ll pick up the phone, ask why it’s been declined and go through the credit report over the phone or send it to them for review as different details and timeframes are analysed.
We do sometimes produce multiple DIPs but we try to minimise it so it’s done once or twice and we can work smarter. If we keep producing DIPs, it means we’re throwing mud at the wall and hoping it sticks.
Because of the way the market is, lenders have increased appetite for certain levels of credit score. Many want clean histories with no blips in six years, let alone 24 or 36 months.
You pay for what you get, if you want low rates hovering at one per cent, you’d need a really clean credit profile.
Being human and accessible on social media works but brand reputation must be preserved – Marketwatch
However, appearing too human can result in errors and missteps which threaten to damage a company’s image.
So this week, Mortgage Solutions is asking: To what extent do you consider social media as part of your brand? How does it affect what you post?
Dominik Lipnicki, director of Your Mortgage Decisions
Social media has increasingly played a large part in our personal as well as business lives.
Platforms such as LinkedIn, Facebook and Twitter now form an integral part of our company’s PR strategy, both in terms of client acquisition and communication.
While it is difficult to quantify the exact return on investment when it comes to social media, many of our clients rightly expect us to have that presence and looking into the future, this form of communication will only become more important.
The firm’s social media accounts obviously will be run very differently to a personal account and strategy is key — understanding the desired message and having someone on hand to respond to any comments or messages is vital.
Even when posting as a company, we need to be engaging. People are unlikely to follow an account that only tries to advertise or sell its services.
The various platforms have their own uses and design features.
Twitter is great to react to news, engage in conversations with clients and the industry. LinkedIn can be fantastic at making contacts with advisers and others within the mortgage world.
It’s important to remember, however, that our clients may engage only on one platform, therefore our exposure needs to be as wide as possible.
Many of our clients are acquired by way of the internet, hence social media and online reviews by clients form a vitally important part of our strategy.
We pride ourselves on being easily approachable for our clients through whatever channel they feel comfortable using and we are always keen to explore new ways of being even more accessible.
Martin Stewart, director of London Money
The way business is developing, if your company is not on social media, and using it to the best of your ability to leverage your personal and corporate brand, then you are in danger of being washed away in a tsunami of engagement.
Social media is a minefield in many respects and a continual learning curve as to what will work and what won’t. It is never an exact science but you can learn the mechanics quite quickly.
The issue needs to be attacked early on; the discomfort of social media comes from the nervousness of using it.
Our posts differ depending on the platform because it is important to understand which platform suits your personality best and make sure your audience understands you, which then helps them understand your message.
We have and continue to build our business rapidly with the use of various social media.
There is no other way that a small business can compete with the big players free of charge and we like to encourage all our brands to use social media at every opportunity.
The biggest change we have seen over the past 12 months is the crossover between work and personal social media.
It is now rapidly becoming the cult of personality and in any noisy environment it is important to stand out.
Those who show the human side of themselves, as well as the corporate side, will do very well in the months and years ahead.
James McGregor, director of Mesa Financial
As a growing business, social media presence is a huge part of our brand.
This is one of the key elements to growing our business and it contributes in so many ways. We try to add as much value as possible with our content, while also showcasing our expertise.
This has a huge play on what we post. We always have in mind how our brand will be represented with every post. You cannot be complacent with your brand reputation.
Our posts vary significantly depending on the platform. On LinkedIn, storytelling posts gather a lot of traction. People like success stories.
We post visual content on Instagram, such as large properties or development sites, so people can see exactly what areas of business we are advising on.
Twitter is a great tool for business news and introductions. We have built a large following of brokers and developers there, growing the network that we do business with.
Facebook is the preferred platform for some clients and we have received great reviews there.
Social media massively affects our company, from recruitment through to client acquisition.
We have recruited three of our advisers through social media posting. It also helps to boost brand awareness with lenders.
I mostly use social media for business purposes.
I rarely post in my personal profiles. I’m not sure you can truly separate your social media from your professional life, so if I post online, I will always consider how this post will reflect our brand.
Without BDMs, it is difficult to make ‘out-of-policy’ cases fit – Marketwatch
With more experienced brokers tending to source suitable products on their own, some BDM visits may be more welcome than others.
So this week, Mortgage Solutions is asking: Would being visited by certain BDMs less frequently still be productive for you?
Phill Green, founder and director of Trufe
BDMs are really important because they help clarify a broker’s thinking around a particular case. They’re a great conduit between a real life situation and how to make that case stand up.
However, one of the reasons you might put less cases through certain lenders is the specialism.
Not every case goes to high street lenders and those that are adverse specific, with complex incomes or commercial come along less frequently.
Here, the broker’s knowledge might not be A1 so engaging with a BDM is vital to bring a case to life.
The idea of giving BDMs more access to larger brokers who use them most does not fit. That just makes the larger broker stronger and the smaller broker weaker.
If you look at some of the mortgage broker groups on social media, it’s quick to see which lenders get praise for maintaining service level standards. By putting a BDM service online or making it contact-free makes it ineffective.
Those people generally aren’t trained to the same degree or don’t have the same level of authority to adjust and manipulate information appropriately.
Eventually advisers won’t ring because they get a better service with another lender.
BDMs need to be more accessible. It’s about having the influence to deviate from a black and white process and take something that’s slightly out-of-policy and still make it fit.
In the absence of a BDM, that facility goes.
Rob Gill, managing director of Altura Mortgage Finance
I’ve had an interesting experience; I came from a larger company being Coreco where there were BDMs all the time.
At least one a day, sometimes more than one at the same time and they’d be visiting 20-odd brokers, stay for a cup of tea and use our offices.
When I started Altura, it was just me. I didn’t have a permanent office and no one wanted to visit as it was just me writing business.
But I found that quite refreshing as I didn’t have people disturbing me because sometimes you might not want to see them.
It’s their job, which is fair enough but sometimes you just want to get on with your job and carry on doing business.
I don’t think I lost a huge amount by not seeing or being visiting by BDMs face-to-face; when I needed them, most of them were still there to talk on the phone and I found that invaluable.
It helps to talk through a case or be reminded of criteria on a lender you might not have used for a while.
If there are issues on anyone’s side a good BDM is worth their weight in gold.
The remote way of things has worked for me with the caveat that it is nice to see people and catch up for a chat, but maybe not every single week.
I’ve met some new BDMs over the last year who I can’t wait to meet but it’s working remotely for the time being.
Ashley Brown, managing director of Money Sprite
I’ve always considered BDMs to be a crucial part of the relationship between any lender and the broker community they wish to engage.
Acting as the grease on the wheel, to ensure criteria is understood pre-application and wrinkles in the processing are resolved in an efficient manner.
Calling some lenders can be a lucky dip.
Will you get the happy, helpful and knowledgeable member of staff who knows the critical underwriting nuances that are seldom on the FAQs of the lender website? Or will it be someone off hand, possibly new or just plain ignorant of their own criteria?
Your BDM is the safety net, to clarify or corroborate information.
It is wholly understandable that lenders will focus most effort on their best performing accounts, it makes commercial sense.
However, I think all brokers will have had that chance snippet of conversation with a niche lender who does something a little different on underwriting, that suits that unusual client situation.
Much as sourcing systems and FAQs are useful in drilling down into criteria, the last few metres of the race are where the BDM shines with intricate detail.
The training aspect BDMs can offer to whole companies is a welcome resource, with much information delivered quickly and precisely.
However, where lender BDMs really shine, is when they are allowed to ‘get involved’ with that problem case or set of complex accounts which seemingly no one wants to understand.
The lenders who encourage this and allow scope for BDMs to be a seamless part of the broking process, are the ones who build most credibility and plaudits from the adviser community.
Some mortgages should give clients carte blanche to be responsible for themselves – Marketwatch
So this week, Mortgage Solutions is asking: If you had the chance to develop a product with a lender, what would it be?
Pete Mugleston, managing director of Online Mortgage Advisor
This might sound controversial – I don’t think everyone needs consumer protection, yet everyone is bound by it. Few discuss the negatives of this, and I’m beginning to question whether we crossed a line a while back and didn’t notice.
Otherwise, our industry is obsessed with ‘best rates’ which creates deep layers of complexity that takes considerable expertise to navigate. While this is mostly amazing and serves 99.9 per cent of people, not everyone cares.
We get thousands of customers every month, stressed, distressed, and scared to death of missing out on their dream home. Most just want the comfort of an affordable deal approved, not hunt around for the cheapest rate going.
Borrowers also lost something when the Financial Services Authority and Financial Conduct Authority stepped in – the option to be responsible for themselves.
I’d design an unregulated, self-responsibility, mega mortgage, addressing certainty and affordability.
A rate-for-risk ‘one mortgage’ approach, where all clients are approved and just given a deal that matches their situation. It might be an eight per cent rate, but if you don’t like it, try to get a better one elsewhere.
And let some people self-certify where credit indicators and loan to value tiers deem that more viable.
I’m not advocating 2007 and everyone having the power to ruin the country, but I do think there are savvy, experienced and sensible borrowers who are fully capable of making choices about the borrowing that suits them.
Then if they default, it’s completely their own doing. The lender takes no responsibility whatsoever and they have no rights to compensation.
Anthony Rose, director of LDNfinance
As holidays abroad remain a distant dream for the time being, the holiday let market has simply exploded.
The opportunity for savvy investors is huge but holiday home interest has grown so rapidly that products have been playing catch up – especially at the top end of the market.
An issue with current holiday let products for high net worth (HNW) clients is the restrictions around how the property is going to be used.
These typically fall into two strict categories to satisfy lender affordability concerns; those using the property as their personal holiday home and renting sporadically, or those primarily operating it as a commercial venture who’d like to stay there occasionally.
But for HNW clients looking to purchase high value holiday homes, these restrictions don’t make much sense.
The pandemic has refocused the fact that HNW individuals are after flexibility.
They don’t want constrictive mortgage criteria that demands they let out the property for no more than a certain number of days a year.
As such, we’d love to see a residential product whereby HNW clients have carte blanche as to how they use the property – their income and wealth structure being more than large enough to sate any affordability worries the lender may have.
It would be aimed at those with a vast wealth profile who want the flexibility to buy a second home and use it as they see fit.
Loans would be for mortgages over £1m and ideally on an exclusively interest-only basis as the property is not their primary residence.
Howard Reuben, owner of HD Consultants
Our core business is in the buy–to-let sector and our clients range from first–time buyers and first–time landlords, through to the experienced portfolio property investors with hundreds of properties.
If we could develop one product, it would be a combination of all of the best features of varying existing products but wrapped up in to one proposition.
With such a focus on tax planning and how much landlord tax has been hit over the last six years, flexible and variable features would be useful for our proactive and entrepreneurial property investor clients.
I would love to see a feature which would enable family members to be added to a flexible, offset, portfolio buy-to-let product. This would also enable succession planning and management or mitigation of the inheritance tax issue.
For the portfolio landlords who can deposit rents straight into the offset savings account, this would reduce the mortgage interest charged as the portfolio balances would offset against each other.
In one stroke we have a product that has helped with tax, cashflow and future estate protection.
The flexibility would also be there to enable quick drawdowns to buy other properties without the need for further fees and time constraints.
Ultimately the product would be a ‘self-lending’ one. A low cost, low tax planning vehicle, enabling some kind of retaliation to the George Osborne devastation that was imposed some years ago.
With a growing rental population and a desire in the property investor industry to support that, we still need the holy grail of all mortgage arrangements.
Brokers have had to be more understanding and compassionate in the past year – Marketwatch
So, this week Mortgage Solutions is asking: Have you had to step out of your professional comfort zone more frequently this year to find suitable solutions for your clients?
Andy Wilson, director of Andy Wilson FS
The pandemic has required advisers to step out of their professional comfort zones in some respects, but for me it was never around the advice I continued to give clients.
The comfort zone I did need to step out of was the normal face-to-face meetings with clients.
I work in the equity release market, and for me, meeting my clients on their own territory, where they are most comfortable, has always been a mainstay of my business.
So, having to resort to providing some aspects of advice by video calls was alien to me, and took a little while to adapt to. Fortunately, family quizzes each weekend soon taught me the capabilities of video calling.
One potentially risky aspect of this was the inability to check whether the client had any vulnerabilities or not.
Were they being coerced by family, in the room but out of shot? Were they feeling vulnerable due to financial pressures, health, grieving or other factors?
I think that sometimes clients on video calls may struggle with the format, and may not be quite as candid about their actual situation, whereas face–to–face allows us to bond with clients better and demonstrate more empathy and consideration.
When it became clear we could meet face–to–face again for work, I arranged this where the clients were comfortable and with appropriate Covid safety measures in place.
I had a couple of meetings in delightful gardens during the summer, and others masked up and coated in hand gel. That was also a change to the process I was comfortable with, but I had to simply adapt like everyone else.
Payam Azadi, partner at Niche Advice
Most of the challenges were around remote working.
Even though we were geared up for it with an existing cloud system, we obviously had a main office that we worked from. So we had to set things up to ensure staff could work in the same way from home.
Beyond this, we’ve got to make strategic decisions about our working practices.
Do we ever want to go back to the office and do our staff? Some people have had kids since the pandemic so that changes things.
We also have to consider downsizing. As well as that, will staff be as committed to the business when working from home or will they think, ‘now I’m working remotely, I can work for any company, not yours’.
We’re still figuring those things out.
With clients, the more challenging parts are when you’re dealing with them and all of a sudden they go quiet. When you finally hear back, they say they caught Covid and have been in hospital, so the mortgage application has to be put on hold. Or they’ve been furloughed.
That’s difficult when you’ve been working on a case for a long time.
Therefore we’ve had to be more understanding and compassionate. Not that we weren’t before but you could have someone self-employed, running a business for 10 years, making lots of money and they can’t get a mortgage.
It’s a sensitive topic to approach because as far as they’re concerned, they’ve paid their dues but now the system is essentially telling them ‘no’.
There are a lot of conversations where I have to gently tell them that I don’t make the rules.
A lot of people feel hard done by, or feel that now their backs are up against the wall they’re not getting the support they should be.
So the challenges haven’t necessarily been due to cases placed, but more about how we deal with telling people that they can’t get the finance they want.
Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert
I’d like to say as advisers we need to encompass all areas. There’s still a lack of good brokers out there who embrace the likes of second charge loans, bridging or short-term finance when looking at refinancing.
For me personally, I haven’t stepped outside of my comfort zone because I’m always looking for alternative solutions for clients. I’ve always been that way.
Where one cap doesn’t fit, I’ll look at other options.
What I have noticed is we have had to be more thorough and our planning has had to be more precise.
Communication has been key – we’re all guilty of not keeping in touch with our old client base. We’ve had to try to keep communication lines open and that’s been at the forefront.
We do this by making sure clients are aware of any new product release as soon as it comes out.
As we specialise in adverse clients, where certain mortgages didn’t fit one month, we’re focusing on getting them back on board as soon as possible. So we’ll make contact when something suitable becomes available.
We have to keep abreast, keep a diary, know where they’re at and keep communicating.
This is especially important where clients are becoming more aware of the market. They are more savvy and switched on about what’s out there.
Where they’ve had more time on their hands too, they can pay more attention to their finances and are happy to take time shopping around.
It’s not a shoo-in anymore that clients will come back to you. We have to spend time to grab them more in advance than usual and talk to them continually.