‘I don’t rely on DIPs, I think like an underwriter’ – Marketwatch
So, this week, Mortgage Solutions is asking: Has your reliance on the DIP changed since the pandemic and how are you preparing clients for the application process?
Rachel Dixon, mortgage adviser at RH Dixon
I think it depends on the client. If they haven’t been furloughed and they aren’t self-employed, I’ll be fairly confident it will go through as long as they haven’t had a payment break as well.
Where I’m not confident is with the self-employed. They can pass a credit check but ultimately, it’s down to the underwriter’s discretion.
What I’m forewarning now with the self-employed is I won’t place a case unless they’ve got one month’s bank statement showing a normal level of earning. After discussing it with underwriters, I think they look at it more positively than not having any income and basing it on previous earnings.
A dentist I had a conversation with had returned back to work but not at normal levels. I told him ‘you’re looking for a mortgage bigger than what you have, tell me why you’re a good credit risk’.
So, he had to explain to me, I told him why he wasn’t and then he understood it. What he was earning was less than his usual salary, which was what he was declaring.
So while clients might pass a DIP and credit check, an underwriting decision is a completely different thing.
I advise any clients that it’s an underwriting decision. I say, ‘you might have passed it, but this is why you might not get it’.
I try to think like an underwriter. My trust in a DIP is a 50/50 split now but I would have been more confident about it at the start of the year.
Rob Gill, managing director at Altura Mortgage Finance
If I’m honest, my view on DIPs changed in 2016 after the Mortgage Market Review. I started to tell clients from then that they weren’t as robust as they might think.
I haven’t changed my mind for three or four years, let alone since the pandemic.
When I speak to clients, I tell them the DIP is based purely on the information I give a lender as they don’t check any documents at that stage.
As they are carrying out increasingly detailed underwriting – underwriting which they won’t do until we submit a complete application – the DIP has become less and less worthwhile.
I tell them, in theory, I could get you a DIP right now that will let you borrow £1m based on made up figures – which I’d never do – and you’ll have the piece of paper that says you can borrow the money.
But as soon as we submit documents to back it up, it’ll fall apart quickly. It’s an extreme example but it helps them understand.
I lost trust in DIPs when lenders put more stake in affordability, started looking at documents and it became harder to marry the figures together with the paperwork.
To get a robust agreement you have to go through at least a level of underwriting and submit paperwork the underwriter can examine to base their decision on.
The information we provide before a DIP is pretty solid. As long as we do our job as brokers correctly and work with lenders, the quality of DIPs can remain high.
I’ve been used to working carefully before that and will continue to do so.
Iain Sillett, mortgage and protection adviser at Right Mortgage UK
It depends which lender you go to because some have changed how they do things.
Our company does a lot of mortgages for the self-employed so now, a lot of the underwriting questions that would normally be asked post-DIP are being asked prior.
That means it’s more likely to be declined but it’s better because at least you’re not going all the way through to a full application.
For instance, Coventry Building Society are automatically referring applications and coming back to ask questions. Some lenders aren’t so you lose confidence in the ones not asking questions upfront.
It’s completely case-specific now. It’s almost like starting afresh, everything you thought you knew in a post-Covid world doesn’t exist anymore.
I think customers are losing confidence as well. I had one client who was a nurse and their overtime wasn’t accepted.
But it’s good for us because it means more people need intermediaries and someone with the time to source the mortgage for them.
It can be bewildering to do a DIP based on what you know and what you see on criteria platforms but knowing there still could be something that isn’t mentioned anywhere.
Not all changes are communicated.
I don’t try to reassure clients; I try to give them the whole picture and be very levelheaded. I ask as many questions that an underwriter might ask and point out what could potentially be an issue.
It’s just trying to manage their expectations. I’ve always taken that attitude with my clients anyway but more so now.
‘A personable service means putting ourselves in our client’s shoes’ – Marketwatch
As lenders become more risk adverse and speculation of house price crashes circulate, this can heighten uncertainty among clients, especially for those who were ready to purchase or remortgage and now feel unable to.
So this week, Mortgage Solutions asked: In what ways are you adding a more personable touch to your advice, especially for clients who may lack confidence in the current housing market or lending levels?
Anthony Rose, director at LDNfinance
It’s no secret that lockdown has had a profound impact on the UK property market but there is now a sense of positivity emanating from industry media outlets that the UK housing market is back on its feet – and they’re correct.
As a result, we are providing our clients with a personal, bespoke service to ensure they are confident and in control at every stage of their property financing journey.
Each client has a dedicated expert adviser to hold their hand throughout the process in order to secure the best rates and products as the market landscape is changing daily.
Giving the client the correct advice and providing them with a number of options to ensure they have full transparency and clarity regarding the mortgage process.
Many lenders are now providing brilliant rates and returning to – and in some cases, bettering – mortgage products as the market has begun to bounce back; it can be very difficult for buyers to navigate the noise in the quickly evolving market, and so our expert advisers do the hard work for them by researching the opportunities available and presenting them with products which they may have otherwise overlooked.
We also to keep our clients abreast of the latest developments within the market.
Also, we’ve seen how the initial trepidation clients felt during lockdown to invest in property convert to enthusiasm as our enquiries have grown considerable since the changes in stamp duty last month.
This is particularly true of foreign nationals – most notably in the Middle East and the Far East – as well as first–time buyers and property investors who are keen to take advantage of the tax cuts and historically low interest rates.
Cassie Stephenson, VP operations at Habito
For us, a personable service means really listening to our customers and putting ourselves in their shoes.
We recognise that people don’t necessarily want a mortgage, it’s the home they’re focused on. Part of what makes getting a mortgage so stressful is that really, it’s a means to a very important end – it’s about a person’s future life plans.
Our approach to giving advice has always been that there are no silly questions, which I think in this challenging market is particularly needed.
Right now, we’re really focused on empowering our clients with information.
We’re regularly updating customers around the impact Covid-19 has had on lending timeframes and the withdrawal of certain products or rates, so that we can help them make informed decisions.
For Habito users who aren’t yet in direct advice conversations with us, we’ve created a help centre on our website with all the latest information from the government on viewing homes safely and stamp duty cuts.
We’ve also developed tools such as the mortgage holiday calculator which has proven to be popular with homeowners wanting to get confidence over how much taking a repayment break could cost them.
We’ve also continued to do events, virtually hosting 60-80 landlords each month with special guests to talk through the changes that have been happening in the buy-to-let industry.
Finally, we have our new home-buying service that we launched this year – Habito Plus. This is exactly for customers who want help with more than just the mortgage as it also brings a buyer’s conveyancing needs and surveys under one roof.
Miles Robinson, head of mortgages at Trussle
In the current climate, there’s lots to consider if you’re buying or selling a home.
It’s certainly positive that we’ve seen an increase in mortgage demand in the two months following the market reopening with a 182 per cent increase in first-time buyer applications and a 176 per cent increase in next time buyer applications.
However, with limited mortgage products on the market, stricter lending criteria, higher interest rates, down valuations and an increase in house prices, navigating the uncertain and ever-changing market can be challenging.
During these particularly uncertain times, our advisers are spending more time advising their customers, providing up-to-date practical advice and options available to them.
We’ve built technology at Trussle which helps us to cut down on the administrative tasks and source mortgage products faster, enabling us to spend more time providing our customers with tailored advice to their personal circumstances.
Customers can chat with their qualified mortgage adviser online via email or live chat, or on the phone at a time that suits them.
We’ve also recently introduced a protection team who are offering customers a free protection insurance review, comparing deals from a number of providers and recommending the right amount of cover for each customer’s needs.
Most recently we’ve published a mortgage guide for furloughed workers, detailing which lenders have tightened their criteria and how.
For those who are looking for additional information, our website is full of helpful guides, tips and tools.
‘Product changes are a reminder brokers are not entitled to anything’ – Marketwatch
So this week, Mortgage Solutions is asking: With product changes happening so frequently, do you feel most deals are available long enough for you to conduct business effectively or has your process been significantly disrupted?
Pete Mugleston, managing director, Online Mortgage Advisor
There’s certainly more rate change activity in the market than we’ve seen for a while.
Lenders have been thrown the googly on an almost daily basis with the way the Covid–19 situation evolves, an uncertainty that’s disrupting often long-established policy, forcing a review of risk appetite, and rates across the board.
There are fewer deals, and there’s certainly a raft of customers not moving right now due to loan to value (LTV) availability, but somehow brokers are finding a way, with many busier than they have been for years.
Our doomsday forecast has not yet come to pass – we dropped to 50 per cent of normal business volumes for a short while, bouncing back to 70 per cent of pre-Covid-19 business relatively quickly, and this growth continues week on week.
Whilst it’s true that life would be far easier if deals were available longer, I think most brokers understand this is the water we’re swimming in and are adapting accordingly.
I laugh when I read brokers bashing lenders on LinkedIn, calling them out for not joining the party at 90 per cent. Whilst high LTV has been around for ages, this is a gentle reminder that we are not entitled to anything.
The banks will lend what they want, to whom they want, when they want.
The volatile market has exaggerated things – top brokers are dynamic, they’ll rise to the challenge, find deals when they are available, focus on clients they can help, expand their product offering, and give great advice regardless.
Those who are more set in their ways, however, will be exposed.
Jonathan Clark, mortgage partner, Chadney Bulgin
Product changes have always been a challenge for the busy broker, with some lenders adjusting their rates on a weekly basis and others holding them steady for months at a time.
For obvious reasons, their attitude to risk and appetite for new business have both been a bit changeable recently, and this has led to some rather sudden changes in rates and criteria, which can quickly turn a ‘computer says yes’ decision to the dreaded decline that will ruin our day.
Most deals are available for long enough, but I always explain to borrowers that with the vast majority of lenders, an initial agreement in principle is not a guarantee of a mortgage.
Rather, a lender confirming that they are highly likely to lend to that customer does not mean that a particular rate or product has been reserved for them.
Until recently, we had enjoyed a long period of stable or gradually decreasing rates, so more often than not, a better rate would quickly become available.
What’s changed recently – especially amongst the volatile high LTV area of the market – is the gradually rising rates that lenders impose in an effort to stem the flow of business. tTis is a much harder conversation to have with a client.
Perhaps more now than ever, it’s vital to manage customers’ expectations and explain the entire application process.
I’m now off to set my alarm early so that hopefully, I can reserve some HSBC 90 per cent funds at 08:00 tomorrow.
John Philips, national operations director, Just Mortgages
The period since lockdown has certainly been very challenging for brokers, with lenders coming in and out of the market, restricting availability of higher LTV products, withdrawing products and then relaunching them in a slightly different form a few days later, and so on.
That’s to say nothing of the changing ways in which various lenders have chosen to treat furloughed workers’ income, for example.
This is already beginning to change again as the furlough scheme begins to unwind. It can certainly be bewildering and more than a little frustrating.
Ultimately, though, it’s a broker’s job to help their clients navigate a path through the thickets and get the best deal for them. In a sense, with so much going on, now is the time when brokers can really prove their worth.
An individual borrower, dealing directly with a lender, isn’t going to stand a chance.
From a broker’s perspective, it is really helpful to have someone standing behind you and access to a support network.
If you’ve got backup – whether that’s access to all the latest tech to help do your job more effectively, or just someone you can pick up the phone to and share ideas and information with, that’s a real asset.
Ultimately all processes depend on people, so the process is only as good as the people involved.
‘There is always time to improve productivity and innovation’ – Marketwatch
This week, Mortgage Solutions asked: At a time where we aren’t being stimulated by usual external factors, how do you encourage creativity and innovation within yourself and your firm?
Richard Campo, managing director of Rose Capital Partners
You can always make time for creativity and innovation; it just depends on what is important to you.
For example, I have booked in a weekly meeting with my senior staff, each Friday for 30 minutes, to review the week gone by and what adjustments we need to make, if any.
While we are all very much in the trenches, I am always reminded of that graphic that says: ‘I don’t have time to see any crazy salesman, I have a battle to fight’.
It reminds me that no matter how busy I am, I need to make time to see what I can do more efficiently, as time is our most precious resource.
On a personal level, I try to go for a run and meditate each day – Monday to Friday so I can chill at the weekends.
I find just 10 minutes a day of meditation clears my head immensely and ups my productivity and creativity.
It is so easy to fool yourself that you are too busy to make time for things like that, but if you don’t look after yourself, especially in stressful periods, you often pay the price of working long unproductive days.
I suffered with that really badly when lockdown first happened; my routine was out and I was under pressure so I was working 14-16 hours a day but still didn’t feel productive. Throw in home schooling a seven–year–old and looking after a three-year–old, it was just brutal.
However, I have switched up my routine to have more time for me, and the kids. It’s been a painful few months, there is no doubt about that, but making time to find efficiencies in how I work and recharging my batteries when needed have been essential for me to adapt to the new norm.
Mike Owen, director of compliance and marketing at Diverse Advisers
We have become more hands on since lockdown, in fact, ensuring that the advisers remain motivated and optimistic.
We have stepped up training, particularly in areas we foresee as being in demand as lockdown eases and these will be crucial to the bounce back.
These include, protection, clients refinancing, clients wishing to move and make a fresh start – the stamp duty announcements will help, as will the cut in interest rates.
Equity release and lifetime mortgages have also been part of the agenda and we have provided the advisers with a pathway to introduce cases to specialist brokers.
The biggest concern for all firms has been the downturn in income normally generated from mortgage cases completing. For a number of obvious reasons, March and April were particularly quiet, but we are evidencing an upturn since thanks to desktop valuations and the adaptability of the lenders.
As compliance director, I have also used the time to review and refine the firm’s compliance procedures and prepare for the senior management and certification regime going live in December.
I guess my firm has been fortunate in one respect because we have not had to reinvent the way we operate internally.
Obviously regular face-to-face meetings with advisers and staff have always been part of our working practice, but we have embraced the virtual world since we launched and have always used Zoom as part of the operation.
One of the challenges of lockdown has been the inability for our advisers to conduct face-to-face meetings with clients.
However, we have encouraged telephone and Zoom client meetings, supplementing these with electronic verification.
Chris Hall, mortgage and protection adviser at Mortgage Guardian
I have already been remote for five years so not too much has changed for me.
Moving away from London back home to rural Lincolnshire several years ago meant a slower pace of life.
I used to work in a busy estate agency with people in and out of my office all the time but I don’t have that anymore. I even declined one client who offered to meet from 20 minutes away because it doesn’t work with how my office is set up and I now consider the environmental impact of driving to clients.
For me the pandemic is only difficult because of the lenders’ restrictive product ranges. Everything else is working normally so I come into work every day, keep myself busy and speak to as many people as possible.
I’ve taken on two more guys so my team has got slightly bigger and that’s been keeping me busy when it comes to training them. We also talk over social media, discussing lender changes and the like. We’re keeping our knowledge updated that way and that is keeping us creative.
It’s not such a big culture shock for me.
What I do find is I’m not going out into the local community as much and being part of my local business community is very important for generating ideas.
Although Zoom meetings have become the norm, I miss local networking events and having a chat over a cup of tea with like-minded people.
‘Remote advice will continue until end of year’ – Marketwatch
So, this week Mortgage Solutions is asking: With lockdown easing, are you going back to face-to-face meetings?
Rob Gill, managing director at Altura Mortgage Finance
With an international aspect to our business via our expat clients, Altura has been used to dealing with clients remotely from day one. Internet and video calls via WhatsApp, WeChat, Teams and of course Zoom are all formats our advisers and clients were very used to before lockdown.
Our digital fact-find, electronic know your customer and e-signature software mean we can complete an entire advice and sales process in a secure, compliant manner while still delivering excellent client service.
Pre-lockdown we would still endeavour to meet the vast majority of our UK clients, if only because it’s always nice to meet clients face-to-face. While that hasn’t been possible over the last four months it’s been easy to switch to 100 per cent remote advice.
Clients have been happy to transact accordingly, and relieved to find we’re so well set up to do so.
I expect this trend for remote advice to continue for at least the rest of the year. Very few people I speak to expect to be back in an office before September and even then, only part time.
Where it was most convenient for clients to meet at our City location or their own offices, it’s now the ‘new normal’ to conduct so many activities from the comfort of your own home.
Altura advisers will be flexible to cater to our clients’ needs and preferences, for the rest of the year at least I expect that to mean a high proportion of remote rather than face-to-face advise.
Jo Jingree, mortgage adviser at Mortgage Confidence
I do plan to go back to face-to-face meetings, and have started to offer them to clients, but most clients take the video call option.
I can see that start to change as we become more used to the new normal, but at the moment people are being cautious, which I understand.
If and when I do start seeing clients face-to-face social distancing would be adhered to and I would be happy to use face masks as long they don’t impede communication.
Having said that I expect that video calls will be become more widely used as a more normal means of conducting meetings, not just now but in the future.
However, there will be certain clients who are not so comfortable with it and will prefer to go back to face-to-face when they feel it is safe to do so.
John Philips, national operations director at Just Mortgages
We have not gone back to face-to-face meetings yet and this is unlikely to happen until we are convinced it is absolutely safe to do so.
I’ve been a big cheerleader for doing business face-to-face in the past, and I hope we will be able to get back to that soon, but I’ve been amazed at how well brokers and clients have adapted.
We are always looking to march with the times at Just Mortgages and deploy whatever technology can best help us get the job done for clients.
Social media has been an important tool for some time now, and many of our brokers were already offering video calls before the lockdown, so making that more of a routine thing didn’t come as that much of a sea-change for us.
When we do go back to face-to-face meetings, we will definitely be implementing any safety measures that will protect our brokers and clients from unnecessary risk of infection – including face masks and screens where appropriate.
Understanding of what helps prevent the spread of the disease is changing all the time but the health and wellbeing of everyone involved is absolutely paramount.
Ultimately, until there’s a proven, widely-available vaccine, we are all going to have to get used to doing things a bit differently, maintaining a sensible distance and so on.
I’m confident we can continue to adapt and advise clients every bit as effectively, with or without a face mask.
‘Covid-19 causing the biggest change to lending policies since 2008’ – Marketwatch
A growth in the number of clients with adverse credit was already being forecast, following research from Pepper Money last year.
This week Mortgage Solutions is asking: Could current circumstances see the complex borrower market grow further than predicted and will they be well catered to?
Pete Mugleston, managing director of Onlinemortgageadvisor.co.uk
Since 2009, mortgage lending criteria has progressed without much interruption.
We’ve gone from ultra-restrictive, lending mostly to those in full time employment, where anyone with even a sniff of a late payment was paying nine per cent, to now (pre-Covid) zero hours workers and the self-employed at 12 months, with all manner of heavy and recent adverse credit issues – at incredibly affordable rates.
Still, I’d say the specialist market has been underweight for years, with many customers not even bothering to look at homeownership as they wrongly don’t feel like they’d be eligible, petrified of what a search on their credit file would do to their lives.
The last four months has expedited the changing world of work and lenders are having a tough time establishing the viability of different incomes across business sectors and contract types, particularly with the self-employed.
Add to that a potential rise in unemployment, credit issues, and of course the unseen impact of payment holidays, and you’d credit Covid-19 for delivering the biggest change to lending policy since the Mortgage Market Review, or even, 2008.
We’ve seen this before – whenever it gets tough to find a deal on the high street, the opportunity for specialist lenders grows, and those that can raise the money step in.
The demand will undoubtedly be there, the supply remains unknown.
To me the biggest question surrounds how quickly certainty and confidence returns to the market – all eyes on the vaccine, and the government for this, but I’m quietly optimistic.
Richard Hayes, CEO and co-founder of Mojo Mortgages
In light of recent events, I think it’s inevitable that the complex borrower market will grow. With so many impacted by Covid-19 both, directly and indirectly, I think it’s safe to say UK mortgage lenders will have to respond.
With regards to the impact on a borrowers’ credit history, lenders are faced with the unenviable challenge of determining which borrowers remain credit worthy in a post-pandemic world.
This may remain a challenge for quite some time as fragility is widespread across so many business sectors, with income reduction and loss of work high on the list for reasons why customers fall into default on their credit commitments.
As with the last financial crisis, I think it would be safe to assume we will also see a significant rise in self-employment, which was approximately an increase of ten per cent following the previous crisis.
All this presents further significant challenges to lenders. To ensure this vast cohort of potential borrowers are not ostracised, a review of lending and risk policy will be an inevitability.
How lenders respond to all of this, alongside rising unemployment levels and the uncertain future of house prices is yet to be seen. Though I am sure CEOs of all UK lenders will be asking their teams ‘how do our lending policies become more agile while still mitigating increased risk?’.
One way lenders may respond is to implement a rate for risk models that allows them to price mortgage products relative to the associated risk.
This is already common in other areas of financial services, such as credit cards and personal loans.
Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert
We fundamentally look at clients who have an individual voluntary arrangement (IVA) or had an IVA and we’ve noticed the market has been growing for years.
The growth of this kind of client will increase and in terms of lender choice, I think we will see some new entrants into the market. The only issue will be with funding as specialist areas still don’t have the support of the government.
Rejecting people who have taken a mortgage holiday can push them into a more specialist category, but this is unprecedented.
The government said, ‘don’t worry, make use of mortgage holidays,’ but lenders weren’t prepared. They quickly had to rewrite everything. It was carnage.
As a result, it does raise questions around the perception of these clients now. How will these borrowers be construed; will they be reprimanded? We don’t know for sure.
If lenders can see income coming in but the borrower is on a mortgage holiday, how will they look upon that? For example, I have heard lenders say they will be looking closely at landlords who still have rent coming in while on a payment break.
Because of this, I can see the market being manipulated or changing in the coming months as lenders have to be careful about how they operate moving forward.
Understandably, they are worried also about certain incomes and employment sectors. Lenders will be stringent and looking at individuals on a case by case basis.
‘FCA equity release findings were disappointing but not surprising’ – Marketwatch
Today, the ERC announced it updated its adviser checklist requiring brokers to establish vulnerability in clients and highlight differences between a new and existing plan.
So this week, Mortgage Solutions asked: What recommendations would you make to rework equity release advice and how do you put that into practice already?
Simon Chalk, managing director of Laterliving Now
Having spent over 17 years encouraging self-improvement in equity release advising, the FCA’s published findings come as a great disappointment, but sadly not a surprise.
A lifetime mortgage is a flexible later life, retirement and estate planning tool, requiring the adviser possesses greater knowledge and skills than for that of any other mortgage contract.
Better training and testing are required on mental capacity, vulnerability, estate planning, wills, trusts, the workings of – and interaction with – the social care system, powers of attorney and Court of Protection.
Requiring new and existing advisers to attain a higher competence level, involving an enhanced equity release qualification to Level 4, with examinations on case studies using written essay-style question and answers, would be an improvement.
At Laterliving Now, our advisers are called ‘Laterliving Planners’, emphasising these higher skills and the need to plan for our clients’ futures.
For example, we have all committed to taking a long-term care qualification, are trained on vulnerability, as well as being registered ‘dementia friends’ and ‘friends against scams.’
The introduction of the Later Life Lending Advice Standard from the Society of Later Life Advisers (SOLLA) will go a long way to improving things, as a good adviser will always seek to push themselves further.
It has not previously been in the interests of providers, nor the Equity Release Council, to set the bar higher, yet the FCA has signalled its intent that this needs to change, or it will do it for us.
Andy Wilson, director at Andy Wilson Financial Services
The FCA review provides an up to date benchmark of where my own advice process should be, and it has been useful to test mine against what they are looking for.
Detailed fact finding is vital, and I would like to think I properly address this.
I add a lengthy file note to the more structured fact find document, to detail my conversations with clients, and add relevant ‘soft facts’. I picked up that the FCA would like to see more detail around the words the clients actually used to describe their situation, and their thoughts on various aspects of equity release.
Providing evidence as to why advice is suitable can be easier than proving why other solutions might not be.
I have had to challenge my own wording where other alternatives have been dismissed, and I will need to expand on exactly what the clients said about this. The same is true for those who refuse to make any payments to the plan, even if they appear to be able to afford to do so.
When recording whether the clients have discussed plans with them, it is not sufficient to accept that they did not wish to do so, without questioning why.
Detailing the reason parents have kept their intentions from children will become very relevant once the parents have died. I think advisers must try harder to get the beneficiaries involved at outset.
This is also why the suitability reports need to be detailed as it will not only be the clients who read it.
I am therefore undertaking a review of my own suitability reports, to reduce the length, include some graphics to break up the pages of plain text, review standard paragraphs and change the order of information so the actual product details are placed nearer to the front.
Martin Wade, director of Access Equity Release
Making the equity release qualification a requirement for all mortgage advisers would be a very good first initial step.
Likewise, ensuring the advice process for equity release includes mandatory affordability checks on alternative solutions such as repayment mortgages and retirement interest-only mortgages, alongside a more in-depth knowledge of pensions.
More detailed product awareness and improved later life financial planning, discussed earlier in life would most certainly help.
Advisers should have a solid understanding of mortality, the cost of care, inflation and the physical ageing process. This would assist the ethical adviser in ensuring clients are counselled wisely about the years ahead, so they do not overextend themselves.
We need to ensure that retirement planning is knitted together so that all products and assets are assessed and brought into play.
The equity release market presently offers excellent choice and solutions, it is only by ensuring continuous education and CPD by those who are involved at the point of delivery, we can ensure each client has their full range of options available to them explored, included or discounted but used appropriately.
Our advisers will only see two or three clients a week; they invest time during those meetings to fully understand both the clients’ holistic financial position as well as their understanding of equity release.
Each case is then discussed individually with their development manager prior to any solution being recommended and each solution is reviewed again by our compliance department prior to completion for accuracy, suitability and accountability of advice.
Mortgage industry must address and incentivise climate change behaviours – Marketwatch
With no regulation in place to enforce the mortgage market to acknowledge this, some lenders have taken the initiative and reacted to the issue by offering incentivised mortgages, however efforts are not equal across the board.
So, this week, Mortgage Solutions is asking: Do you agree with Mark Carney that the financial market is ahead of the government when it comes to climate change?
Matthew Fleming-Duffy, director at Cherry Mortgage and Finance
What Carney is saying is that investors – primarily hedge funds, not necessarily consumers – are addressing the climate shock we’ll be faced with.
We’re on a train which it’s going in one direction and the only argument is how far is that cliff edge? So, most people are looking to the future and asking where will we see growth and less risk?
It’s sensible for investors to ask companies about their green credentials, that’s within reason. But in terms of consumer products, especially with green mortgages it’s hard to see where this is going to come from.
It’s fair enough to say we need green mortgages and I think there is a mechanism which can allow all mortgages to be green, by encouraging energy efficient improvements for example. A few lenders are already doing this, but it is only a couple.
The government has a role to play but I think we are quite slow in creating these products and encouraging consumers to take them up.
The government is doing the right thing by encouraging where they can and not being too forceful with regulation. As a government, they’re damned if they do too much.
It’s up to the industry to make these changes and incentivise people to move in that direction.
It’s estimated that 17 million homes in the UK need retrofitting so there can’t be blanket action against that, just small changes to encourage people to move forward. So, Mark Carney is right in saying the market is doing it and legislation may eventually follow.
David Hollingworth, associate director of communications at L&C Mortgages
You’d probably have to have been living under a rock not to have been aware that consumers are becoming increasingly aware and concerned about the impact of climate change.
Mortgage lenders have addressed the green aspirations of borrowers for many years, Norwich & Peterborough Building Society offering a range of deals that promised to offset the carbon footprint for example.
Ecology BS remains at the forefront and offers an alternative outlet for anyone looking to fund environmentally friendly purchases or improvements.
More recently we’ve seen Barclays showcase the energy efficiency benefits of new build properties with its green mortgages, Kensington develop its eKo mortgage and Saffron BS join the fray with its Retro Fit mortgage incentivising improvements with a better rate.
There’s therefore a desire from mortgage lenders to look ahead and meet the changing demands of borrowers. We no doubt have some way to go but this spirit of innovation will help deliver the practical financing options needed to complement the aims of individuals and government.
Governments have long made the right noises about the need to make improvements to our energy efficiency but have not always found the answer to how best to practically achieve the necessary change.
The UK has a lot of housing stock that is extremely desirable but not always blessed with the energy efficiency of more modern property.
The Energy Performance Certificate at least helps to highlight where improvements could be made but many of these improvements are expensive and will take time to recoup the investment.
This is where home financing options will be critical in helping homeowners make the changes affordable.
Ashley Brown, director at Moneysprite
The UK is bound by statute to become a net zero carbon emission economy in just 30 years’ time. Which is by anybody’s reckoning no mean feat.
Carney, in his new role as a UN special envoy, as usual has been erudite and concise with his analysis of the challenge faced; needing to move our whole economic model to a more sustainable and environmentally aware approach.
The government has been committed and clear about the need for change.
However, I believe Carney is correct that the financial market is moving faster towards pushing solutions and this goal, whereas the government seems to offer few details on how the journey should be made.
This might not be a bad thing though, the markets may well know best in this instance.
The financial markets know this challenge needs to be faced and are and will increasingly factor in this new vector.
Crucial to good analysis of this new measure of value will be accurate data. Already we are seeing corporates making some climate related financial disclosures, which is a real success for the financial markets.
However, if this is going to move forward in a meaningful way this must become standardised, simple to rate and a mandatory return. Whether this comes via the financial markets or government first is presently moot.
‘It’s sad to decline business I would have completed months ago’ – Marketwatch
This week Mortgage Solutions is asking: As rates rise on high loan to value deals (LTV), are you worried about the financial impact on first-time buyers and low deposit borrowers?
Jo Jingree, mortgage adviser, Mortgage Confidence
It’s a concern because lenders have more power when there’s fewer players in the market and I’ve already seen clients hit by the rate rise. They haven’t been huge, but I think it’s something to keep an eye on.
Like every broker in the country I just want more lenders to come in at 85 per cent LTV and over. When that happens, it will inject more natural competition into the market and increases in rates will be less likely. The sooner that happens the better.
First-time buyers (FTBs) are being impacted and it will affect the property market as well. It’s so difficult to get the right high LTV deal that people are putting plans on hold. If they don’t happen to fit the criteria of the mortgages being offered, then they’re either without a mortgage or go with one at a higher rate.
It’s sad having to decline good quality business that I would have been able to do a few months ago but I have to be honest and let people know that they aren’t suitable for some deals.
I think Help to Buy gets around the issue as the equity loan increases the loan size so this might push more people into shared equity deals.
I finally managed to get one of my clients a deal after a two week battle and the rates went up in the meantime so it’s costing them more. They found their dream home and had been looking for ages so even with the rate increases they didn’t want to pull out.
Some people can be flexible, but others are forced to just go with the rates that are available.
Piers Mepstead, managing director, Financial Advice Centre
Covid-19 has reshaped the mortgage market and subsequently the products available. Lenders react to changes in the market by ensuring their business model protects their investments.
But unfortunately, this disproportionately impacts first-time buyers and those with the lowest deposits.
First-time buyers and renters are facing bigger barrier to purchasing a home. For those renting this often means continuing to pay out high rents in excess of the equivalent mortgage payment and being unable to afford to save for a deposit.
This unfair disparity locks hard working individuals into a seemingly inescapable rental cycle.
Our society is becoming more agile and responsive, but lenders do not seem to adapt their lending criteria to reflect this nor are they responding to the widening pool of customers who fit into the first-time buyer category.
Surely it is time for lenders to catch up to the new ways and to widen their view of a potential purchaser beyond deposit. There are many ways to do this including putting more weight in other lending criteria such as proven history and ability to repay.
This feels familiar to many of us, as lending criteria becomes more restrictive after a seismic shift in the economy, the last time being the credit crunch.
Mortgage professionals and consumers need a robust and modern system of agreeing lending that remains consistent in economic good times and bad.
A system that is both fair to borrowers and encourages and supports FTBs, instead of making them pay the penalty for bad lending decisions of the past.
Louis Down, digital marketing manager at HQ Mortgage and Finance
The 90-95 per cent LTV market is clearly of some concern to lenders at the moment, we’re seeing a lot of repricing and a great deal of lenders pulling out of the space altogether.
We believe the priority has to be ensuring products are available at these LTV ranges, if that means the lenders have to reprice in order to manage their risk then so be it.
That is a far better outcome than withdrawing products altogether which effectively shuts out a huge number of FTBs and inevitably has a knock-on effect on the housing market.
Even with higher rates attached to these products, it’s important to remember that rates have been very low for a long time and what we perceive as “expensive” now should be considered in the wider context.
We need lenders to continue offering 90 and 95 per cent products to customers, but they have to be prudent.
We are confident that the rates are as competitive as they can be, given these lenders would like their share of a large market, but they have to manage their risk and meet PRA requirements and we must respect that.
Looking solely at the personal impact on first-time buyers, one potential benefit is that some people might have to defer their purchase until the economy is improved. By which time they should be in a more stable position and there should be a reduced risk of them becoming unemployed.
‘Online events are far more focused and the content has improved’ – Marketwatch
Instead, with so many events taking place remotely now, all that is usually needed is a working device and the attendee’s undivided attention to bring them into the meeting.
So this week, Mortgage Solutions is asking: Has your attendance at industry events increased now many of them are online and how does the experience match-up to in-person gatherings?
Alan Fitzpatrick, director of lending operations at Habito
I would say so, yes. Over the past few weeks, I’ve been really struck by the quality of resources, meetings and webinars now available online for both peers and customers.
In many ways, I see more connection now than before lockdown came into effect.
Being an online-first business, making the transition to remote working has been pretty seamless.
Some things of course are harder to do remotely but in the main we’ve all been pleasantly surprised by how we and so many of our partners and industry players have adapted to a new and ever-shifting normal.
Some aspects of what we do have actually flourished in a way that we didn’t expect. Our monthly buy-to-let meet-ups, for example, which used to attract audiences of around 40 or 50 to our office in Aldgate, can now reach much larger audiences online via webinar software like Zoom.
As part of the Home Buying and Selling Group – which was responsible for producing the industry–wide guidance to safely reopen the housing market last month – I’ve experienced firsthand how collaborative and aligned this sector can be when faced with big issues and challenges that affect us all.
The coronavirus crisis has forced us all to look beyond geographical location, diary clashes, time constraints and to prioritise the things that really matter, quicker.
Jonathan Clark, mortgage partner at Chadney Bulgin
I’ve receive a lot of invites to various industry events and like most people, have to carefully pick the ones to attend that I feel will be worthwhile, and justify what will usually be at least a half day away from the office.
You then have the various awards dinners that seem to have multiplied in the last few years, usually involving an evening in London that rarely gets you back home before midnight.
Obviously, these have all changed very suddenly in the last three months, with most events being cancelled for 2020 and only some of them being replaced by online or virtual equivalents.
For me, the number of such invites has declined, as organisers appear to be struggling to recreate these with appealing content.
Despite the obvious convenience and flexibility of meeting online, for me they are just not a substitute for the face-to-face meetings that I welcome the return of, hopefully in 2021.
However, like many things, I expect them to look and feel very different post Covid-19.
Matthew Hillyer, associate director at Largemortgageloans.com
There has been a plethora of content shared by industry voices since the onset of Covid-19.
Industry events have played a part, but there have also been numerous informative videos, articles and group seminars from lenders which our team have found incredibly useful.
It’s also been fantastic that we can keep up with pre-planned training sessions without having to travel, as we would often normally do.
Canvassing the team, we are all in agreement that smaller events are preferable to mass meetings.
Large gatherings have their place, but interaction is limited, and these events therefore become more of a listening exercise, which is perhaps less helpful than a two-way communication.
As a specialist mortgage adviser, we are always looking to the finer details and ordinarily this means lots of face-to-face meetings with lenders.
Nothing can replicate being in a room together, but keeping online meetings smaller means the atmosphere is more intimate and there is more opportunity for direct conversations, meaning the subject matter is often more relevant and tailored to our needs.
Martin Wade, director at Access Equity Release
Stripping away travel, prep and the faff that often accompanies meetings at any level, we can now be far more efficient in how we spend our time.
For some unknown reason, meetings always seem to be scheduled in hour blocks and there is obviously no discernible reason for this.
Physical meetings with external visitors and even with internal work colleagues often lose 10 per cent or even 20 per cent of their time to pleasantries and water-cooler chit chat.
This appears to happen less so with online events.
We tried to introduce Skype calls internally about two years ago and failed miserably, there was zero interest, so we gave up. But now, the online meeting is undoubtedly here to stay and there are massive savings in terms of time and travel costs.
Also, our attitude has changed enormously. We are all evaluating what is and what is not important.
Leisure and family time for many has increased, and we like it. I have certainly found that online events and meetings are far more focused, content and delivery has already improved over the last three months.
There is no better way to quickly establish rapport and friendship than in person but for the day-to-day purpose of getting stuff done, online events work extremely well.
There is room for improvement of course, we don’t need to fill time and should be happy to cut meetings short if they have served their purpose.