High LTV home movers may have to stay put for now – Marketwatch
However, to continue helping first-time buyers get onto the property ladder, many of the 90 per cent LTV and above mortgages are restricted to this segment of the market potentially leaving low equity home movers and remortgagors with few options.
So this week, Mortgage Solutions is asking: Do you feel your home mover and remortgaging clients at the high LTV tiers have sufficient options?
Payam Azadi, director and partner at Niche Advice
That side of the market is definitely underserved, the issue you’ve got with remortgages especially in the current climate is the lack of products but also the down valuations that are following.
We also saw a big pull back when it came to remortgaging for debt consolidation.
A good few months ago, a lot of the lenders have moved away from that or reduced their LTVs for remortgaging for debt consolidation purposes.
It’s having an effect because clients can’t get access to cheap finance, so it’s a perfect storm for someone who’s indebted.
If people are looking to move, there are a number of lenders who offer products for existing clients with different terms. There are potential alternatives.
Fundamentally, on high LTV deals, the valuation process is the key. Down valuations already happen but because of the margins, the client can usually say ‘okay I’ll just take an 85 per cent deal’. But if they’re already on 80 per cent LTV then sometimes there’s nowhere to go.
The lack of options could affect those who otherwise would have been able to benefit from the stamp duty holiday too.
On the one hand the government is telling lenders to be conservative as there might be a crash coming, on the other they’re saying, ‘go ahead and lend because there’s a stamp duty holiday’.
Chris Sykes, mortgage consultant at Private Finance
There are not many options for these people at the moment unfortunately.
However, a lot of people would consider themselves lucky at the moment. They own their own home and have enjoyed a few years of rates that are likely to be better than you can get a 90 per cent mortgage for these days.
For the remortgage market their current lenders are likely to offer them a retention rate. Nationwide, for example, have a 90 per cent two-year fix for rate switches at 2.79 per cent where their new business two-year fix at 90 per cent is 3.49 per cent.
For home movers unfortunately a lot will have to stay put at the moment and wait until things settle down.
However, if they are moving to a similarly priced property, they may be able to port their current mortgage across.
Mitul Patel, founder of Lemon Tree Financial
Having access to the whole marketplace and good product sourcing software, I don’t think it’s the case that there aren’t enough choices for those who aren’t first-time buyers.
I did some research previously and although first-time buyers have slightly more options, there’s still choice for movers. Maybe six lenders will do home movers compared to eight that do first-time buyers only, so I don’t think there’s much difference.
For those people looking to remortgage, if they’re doing it pound for pound there are options. I did a search today and there’s 176 variables they can have. If you look hard enough there are still choices, slightly reduced but it’s still there.
It is important not to focus on the number of products available but instead, whether they fit the needs of a client or not.
If you’re going for 90 per cent as a first-time buyer, remortgagor or home mover, the fact is you’ve only got 10 per cent cash. They may not have the best rates, but it is what it is.
We will find a product to suit the client’s need at the time.
‘I hope brokers don’t want lenders to control volume with criteria changes’ – Marketwatch
Brokers have suggested lenders make use of pricing strategies to manage business volumes amid speculation they are resorting to delay tactics and suddenly withdraw product offerings instead, causing frustration to the advice process.
So this week, Mortgage Solutions is asking: Why aren’t lenders using price to manage service levels and risk?
Jonathan Stinton is head of intermediary relationships at Coventry Building Society
It’s hard to comment across the market on what other lenders are doing but as for the suggestion that lenders are using delay tactics at underwriting stage, I don’t feel they are doing this or unfairly declining clients.
We’ve seen a lot of change in the marketplace from multiple lenders around the loan to values (LTVs) that they want to operate in and the pricing structures.
Especially for us, we always look forward to try and match our capacity with the products and LTVs we have without breaking service levels. We don’t want to fall into either six or seven-day backlogs. We try to look at the capacity we’ve got and price accordingly with regards to market.
We control flow in our core products, for example at 65 to 85 per cent LTV, then when we want to control volume especially in the 90 per cent space, that’s when you’ll see us having two-day windows.
We do try to use price as much as possible. It’s one of the levers you can pull – I would hope brokers would not be open to changing criteria to control volume.
The benefits of limited tranches is there is a defined period where brokers know they’ve an opportunity to submit a case; they know the product won’t be pulled at very short notice.
I can’t speak for the market but for us, pricing is a very accurate means to control volume. We like criteria to be open and straightforward for brokers, that’s why we would be reluctant to change it frequently.
Lenders are using price as the primary lever as well as product withdrawals on LTV parameters to manage volume.
John Phillips, national operations director at Just Mortgages and Spicerhaart
September has seen record levels of activity at Just Mortgages and this has clearly created a logjam with lenders.
While some lenders have been fantastic supporting brokers to deliver for clients, the issue of demand outweighing supply is being acerbated by bigger lenders leaving the high LTV market.
Lenders are pricing to manage their service levels and risk, with plenty raising rates to help curb the amount of applications they are getting.
The obstruction in the market currently is being caused by some big lenders pulling high LTV products. There are still thousands of clients approaching us with 10 per cent deposits who can clearly afford their mortgage payments and are therefore safe investments and they are currently being blocked from owning a home.
Lenders could solve this issue by pricing for the level of risk associated with a high LTV product.
The existing flash sales of these 90 per cent LTV products are seeing huge demand and selling out within hours of hitting the market but the market needs a stable supply of these products to support current customers.
Brokers are not concerned about service level agreements being stretched, delivering for the client is more important. Timing is not the issue.
We understand lenders are currently managing their levels of risk and high levels of activity, but to deliver for those unfairly being stopped from owning their own, we need lenders to re-enter.
Paul Brett, managing director – intermediaries at Landbay
The market is in constant flux and lenders with older, legacy systems appear to be struggling with the increase in demand and having so many staff working from home.
This naturally leads to delays, but these are unlikely to be intentional.
It has nothing to do with lenders unfairly declining clients but says more about their ability to cope with the challenges that have been put upon them due to the pandemic.
One could argue that artificially inflating prices would be unfair.
What is important is that lenders are completely transparent about their pricing, criteria and service level agreements (SLAs).
At Landbay, it is a matter of pride to ensure we always stay within our SLAs. Occasionally during periods of high volume, we will alter SLAs but we are always transparent so that we always keep our promises to intermediary partners.
Every decision a lender makes is made on an acceptable risk basis.
Each lender has different variables and value systems as to what is low, medium and high-risk depending on their funding and profit margin strategy. This determines where they pitch their products in the market.
Each lender needs to weigh up at any given time how much risk to take, which in turn influences who they lend to and their pricing.
It is right for intermediaries to query and challenge lenders as to their criteria and pricing, if they become indifferent to a lender, that’s when a lender has to really worry.
‘It is a disservice to deny clients a mortgage based on lender distrust’ – Marketwatch
So this week, Mortgage Solutions is asking: ‘Have the lenders you choose to place business with broadened further since the pandemic? Or are you limiting yourself to a few lenders you really trust?’
Nik Mair, managing director of London Mortgage Solutions
Which lender we place business with is driven by who is most suitable for the client and will help them achieve their transactional goals.
Since the pandemic, lenders have become more conservative in their risk assessment and therefore we have seen a contraction in the products available on the market and a tightening in the eligibility criteria.
The main area of contraction has been on the higher loan to value (LTV) product selection. However, in the space of the last month we have seen a couple more lenders grow confidence to lend based on a 10 per cent deposit once again.
This is a good sign, and we hope that more lenders will follow suit in the coming months.
London Mortgage Solutions (LMS) has always placed the client’s best interest at the top of its priority list, which means not shying away from using lenders due to inexperience. No lender is ever overlooked if the product that they are offering is more cost effective for the client.
There is total confidence in the team’s ability to complete adequate research with the lender prior to making a recommendation. This has always been key to building confidence and is no different now.
It would be a disservice to deny any client a mortgage with the most suitable lender based on an individual perceived level of trust.
Due diligence carried out prior to placing business with a lender is and will always be vital for the team at LMS. We ask the right questions at the right time.
Rob Gill, managing director of Altura Finance
We’ve always endeavoured to use a wide and evolving range of lenders and have simply carried on with this approach.
We have established several new lender relationships during lockdown, mainly in the high net worth and expat space.
There are not necessarily any lenders I’m more confident using now, although some lenders have impressed more than others in how they’ve coped with lockdown.
I am not limiting myself to only lenders I trust, although we will certainly emphasise the importance of service when advising clients.
If they have a firm timeframe and we know there’s very little chance of a particular lender meeting it, we’ll have to advise it may not be the lender for them even if the rate and product look more attractive.
Howard Rueben, managing director of HD Consultants
Without a shadow of a doubt there are lenders who have made it so hard for us to process cases, and to continue to recommend them, even if their products and criteria are, on the face of it, the most suitable.
Conversely, we understand that many lenders have stayed in the market with good rates and LTVs, trying to support both borrowers and brokers alike, and it is this group of innovative and robust lenders who should be supported rather than lambasted.
Of course we understand that it’s not just lenders who have suffered in service levels, the conveyancers have also been hit and recently we were quoted 16-20 weeks by a conveyancing firm for a limited company buy-to-let remortgage once a mortgage had been offered.
What the pandemic has highlighted are the poor plans that many organisations currently have in place around business interruption and resumption.
As an independent brokerage, we’re lucky to have access to the widest range of lenders, and so we can select the most appropriate lending solution for our clients, but right now this does mean many brokers are consciously overlooking certain banks and building societies who have caused clients anxiety.
We are also supporting the lenders who have shown their loyalty to us too, including a regional building society who not only continued to honour a 95 per cent LTV mortgage in the pipeline throughout the last few months for a first-time buyer, but also extended the offer when it expired, enabling a very worried and anxious young couple to realise their dreams.
‘Why fix for the long-term to hedge against unlikely rate rises?’ – Marketwatch
Banks are reacting to the unpredictable environment, meaning once circumstances are less risky the rates on these products might change and the gap between the two could widen again.
So this week, Mortgage Solutions is asking: Do you think it’s the best time to lock into a longer rate? Or might borrowers risk missing out on better deals later down the line?
Richard Campo, managing director of Rose Capital Partners
The first thing to look at when assessing whether a two- or five-year product is most suitable, is to understand the client’s objectives.
As that overrides what you may, or may not, think the market may do.
Assuming that is done, we then look at the available market data. While it may seem counterintuitive, two-year deals should offer the best value in the long term.
If you look at two-year swaps and the London Interbank Offered Rate (LIBOR) they are both below the current Bank of England base rate, which indicate rates are more likely to go down than up in the short term – three months to two years to be specific.
Meanwhile over a five-year period, financial markets are only predicting a small chance of a rise.
If you are in the high loan to value (LTV) brackets, keeping the deal short term and reducing the debt as much as possible over that period may well get you a better deal when you come to refinance.
Two huge risk warnings though – firstly, that assumes house prices will go up over two years which may not happen and secondly, financial markets don’t always get it right.
It is a good indication on pricing over the next three, six and 12 months, but beyond that, there are simply too many variables right now to say with any certainty what the future may look like.
However, all logic would point to interest rates staying very low, for a very long time, so why fix in for the long term to hedge against something that isn’t likely to happen?
James McGregor, managing director at Mesa Financial
Our advice on what type of mortgage a client should take really all depends on the client’s personal circumstances.
A lot can happen to your life in five years and we have recently seen some of our new clients pay off some hefty early repayment charges due to being fixed for five years, so it is not always the best option for people even if the difference between two and five years is small.
The product is generally the last thing we will advise on when advising the best mortgage option for our clients.
Having flexibility with your finances is very valuable though and five-year fixed rates do the absolute opposite of this.
Martijn van der Heijden, chief strategy officer at Habito
We’re seeing lots of customers who want to lock in some certainty and low mortgage rates.
With furlough ending next month and being replaced with a new scheme, the government’s Covid guidance changing by the day, and Brexit still looming large – I think that it makes a lot of sense.
Provided you are not one of the 11 per cent now reportedly considering a house move, I do think this would be an excellent time to remortgage or get a new mortgage for longer.
This is especially true if you have less equity, or a smaller deposit.
We’ve just seen the Bank of England row back from suggestions of any fall to a negative base rate, at least in the near future.
And even if that did happen in time, I don’t believe it would translate to lower mortgage rates for consumers.
Products are, for now, still priced at historical lows, at least in the lowest risk category of 60 per cent LTV for salaried customers.
We do see lenders continuing to go cold on higher LTV mortgages, by either withdrawing products or by pricing up in a big way.
Lenders are worried about credit risk, the future of unemployment and house prices, and indeed their own profitability.
So, I don’t see mortgages above 75 per cent LTV getting cheaper or easier to get in the next few months – if a customer can remortgage now for a longer term, it is worth springing to action.
‘Recommending the cheapest mortgage is easy to do and justify’ – Marketwatch
To assist advisers, Mortgage Brain developed a cost column to show the cheapest deals in compliance with this guidance, suggesting a need to point brokers in the right direction.
So this week, Mortgage Solutions is asking: Do you feel confident that you can accurately give advice to comply with the FCA’s cheapest rule?
Andy Wilson, managing director of Andy Wilson FS
It is now relatively easy to identify the cheapest mortgage product for a given set of requirements.
The sourcing platforms and criteria filter applications all combine to provide advisers with powerful research tools. However, an adviser’s experience and knowledge of the real lending world can play just as much an important part of the advice process.
Quite often, there are very good reasons why certain situations lead the adviser to some other product.
How flexible is their underwriting on properties that have some issues – asbestos, flood risks, short leases or high rise flats? What is the service of a particular lender like?
Once you have used plenty of filters to find the lowest overall cost product, you can then add what you know about a lender’s service.
The Covid crisis has compounded some of the potential servicing issues for lenders, with many staff working remotely, and all of the communication issues that brings. Can you actually talk a case through with them quickly and easily? Can they get an urgent case through quickly?
Another factor that Covid has brought into focus is whether the applicants will still be working or have the same decent incomes when their new mortgage product ends. If not, what will their options be if the lender has a high standard variable rate?
Do they offer decent products to transfer to internally? Will they be competitive? Historical lender knowledge plays its part here.
Many borrowers cannot see beyond a few years and consider what their lives will be like, but advisers know the effects of difficult life changes.
The ‘cheapest mortgage’ requirement does not insist that only the cheapest mortgage is the best solution to a client’s needs. Instead, it only requires the client to be given an explanation as to why an alternative ‘cheaper’ product has been recommended.
Usually, this is easy to do and justify.
Rachel Dixon, mortgage adviser at RH Dixon
I’m with Sesame so I’ve been using Mortgage Brain’s cost column for a while. I know it works differently than it does for directly authorised firms because we have to recommend the cheapest mortgage from the FCA column.
We are able to reject that, as long as we have a reason why we’ve rejected it and chosen something else. We’ve always done it.
Sesame have had it up and running for going on two years. We were made to do it on the basis that it would come in, so Mortgage Brain was always set up for that, they’ve just slightly tweaked it now.
Something came up the other day which I thought didn’t look right. I don’t know what happened in the end and it seemed to sort itself out, but it is pretty simple.
Because I’ve been doing it for so long I don’t have any problems but you’re more likely to have DAs recommend certain lenders whereas under a network we’re always reviewing our work.
It was an easy transition to start looking at the cheapest mortgage based on overall cost over a specific time, especially when I’m using the system. We can still use our discretion we just have to have a plausible reason why a certain lender or mortgage has been discounted.
Adam Wells, co-founder of Lloyd Wells Mortgages
As part of our appointment with our clients we will always ask what their priorities are.
For some, that may be the lowest monthly payment, for others it will be the least amount of fees, or it might be the overall cost over the initial period.
As long as we are doing our job and finding out what is important to the customer, we are confident we will always comply.
I feel that the rule does leave room for error, however. If you are applying for a mortgage and adding the fee to the mortgage, you’re still paying that fee.
Part 3ii of the rule states ‘includes any product fee or arrangement fee if the customer proposes to pay that fee directly rather than add it to the sum advanced under the contract’. Why are we not taking fees that are being added on to the mortgage into consideration?
The rule has not made us change the way we search for mortgages as we find out what our customers objectives are and advise them accordingly.
Mortgage Brain’s partnership with Sesame with be a helping hand for many advisers, but it isn’t necessary. If you are qualified to give advice on mortgages, it is your job to understand the regulations.
David Hollingworth, associate director of communications at L&C Mortgages
Most advisers will be very aware that the cost of a mortgage will typically be high on a priority list for any borrower.
If you asked most people what kind of deal, they want they’d be highly likely to say that they want the cheapest before then delving into the wide range of product options on offer.
As a result, I think that it’s always been impossible to divorce the search for a mortgage from the price on offer and this is therefore not something that will be alien to advisers.
In fact, demonstrating to customers how one product may prove to be cheaper than another when factoring in other costs will be second nature to advisers and only helps to underline the value that a broker adds.
It’s also of great value and standard for most to be able to build other factors into the equation, including service and criteria elements that will clearly have an impact, depending on the personal circumstances of the borrower.
That can clearly remain part of the recommendation but will require the correct record keeping to identify the reasons that may have made a slightly more expensive deal the more suitable option.
This approach will not be new for many but the development of tools in sourcing systems will of course help ensure that the right detail is kept to back up the product choice and assist the record keeping as well as offering a consistent approach.
‘Shared Ownership is rising but it’s not an alternative to Help to Buy’ – Marketwatch
Recent changes to the Shared Ownership initiative include the reduction of the minimum share from 25 per cent to 10 per cent, possibly giving those who saved enough for the Help to Buy scheme another route to purchase.
So, this week, Mortgage Solutions is asking: ‘Do you think the shared ownership changes will be an effective alternative for those who benefitted from or preferred the Help to Buy scheme?’
Kelly McCabe, managing director of The Mortgage People
I don’t think the changes affect that; I don’t think the two are linked.
Help to Buy and shared ownership have always sat comfortably alongside each other and served different purposes, but I don’t think the changes have been geared up to affect that.
They don’t do enough to make any difference.
Shared ownership and Help to Buy are for different people. If you qualify for shared ownership you wouldn’t be able to buy a Help to Buy and if you can afford a Help to Buy you shouldn’t be looking at shared ownership.
There’s a small crossover but overall, it’s two different purchasers.
It can serve Help to Buy people, but it will only be towards the higher end of purchases.
The differences between the two is shared ownership goes through much more rigorous testing. The affordability checks that are done mean that shared ownership is tailored to each individual purchaser. Whereas Help to Buy has always been a builder-led scheme if you can afford it.
Generally, shared ownership might be able to pick up where Help to Buy has left off especially if there is a natural rise in the market. But it will mostly help cash purchasers.
If we don’t specifically focus on the changes, then it can step up and fill the gap in some way.
Rupi Hunjan, CEO and founder of Censeo Financial
Shared ownership has been around for a while; Help to Buy came in after the credit crunch to help builders and the government underpinned the scheme.
People who come into Help to Buy typically aren’t in the affordability bracket but those in shared ownership are.
On an equal position, if they can’t afford Help to Buy and put down five per cent, the salary multiples won’t work so they could to go for a shared ownership instead.
The changes to allow a lower share would invite more people into the shared ownership tenure. Whether or not it works is yet to, be seen. The devil is in the details.
We need to know how many people would be able to put in a lower share because the housing association could very well ask for more otherwise it won’t work for them commercially.
But with the changes to Help to Buy coming in in March, those looking at Help to Buy will begin looking at shared ownership which to be fair, they are already doing.
My worry is whether purchasing a 10 per cent share in a property work would for a developer or housing association to make it a viable scheme, especially in London.
However, depending on the grant subsidy the government offers developers, it might be possible. We’ll have to wait for the details.
John Doughty, financial services director at Just Mortgages New Build
Anything that helps more people to own their own homes is a positive.
Shared Ownership is definitely rising up the agenda for us, and we’re dealing with a lot of first-time buyers who are looking at this as a way to get onto the ladder.
I don’t really see this as an alternative to Help to Buy as the two schemes are targeting different types of buyers. This will work for those on low incomes, but shared ownership is not the same as full ownership and this is what people using Help to Buy want.
The restrictions on Help to Buy that are due to come into effect next year will affect people further up the income scale, and they will not for the most part be looking at shared ownership as an alternative.
Reducing the minimum stake to 10 per cent will encourage a lot of people, who may otherwise have thought home ownership was beyond their reach, to think about taking that first step. Cutting the deposit they need by more than half will clearly make this much more affordable.
But reducing the minimum stake is only one piece of the jigsaw. They will still need mortgage finance, so lenders also need to step up and make the right products available to support shared ownership.
It’s important also to remember that a smaller initial stake means the ongoing rental payments will be larger.
Borrowers need to be sure they can afford the combined rent and mortgage payments, and also to be clear about where the responsibility for maintenance and repairs lies.
‘Retaining cash will be crucial to broker survival over the next six months’ – Marketwatch
Along with Brexit and the end of the furlough scheme, the stamp duty holiday is winding down and the Help to Buy scheme is transitioning to just first-time buyers; the impact of these events on the mortgage market is still unknown.
So this week, Mortgage Solutions is asking: What market scenarios are you preparing your business and your clients for over the next six months?
Pete Mugleston, director at Online Mortgage Advisor
I can’t remember a time where there’s been so many things pulling the industry in different directions – from payment holidays and furlough, to the online shopping boom and eye watering property prices.
Little of it, good or bad, is reliable or predictable and whilst we don’t know what to expect we’re certain that to survive retaining cash will be crucial.
As a business we’re in a strong position, having been back at the coalface and had insights I wouldn’t swap for anything. Every penny counts, and we focus on the quickest, low cost wins and shelve the big ideas for another day.
If we can’t justify a return, we don’t make the investment – that’s true of both time and money.
For our customers, I wouldn’t change my advice: Live within your means, get all the protection you can afford, and do what you can to be relevant and useful.
I commented on a LinkedIn post recently where a broker ‘advised’ their customer not to buy, certain that property prices will drop.
I found this odd, not just because they showed no credible evidence of a crystal ball or because they were talking themselves out of business, but because they were so happy to offer ‘advice’ they were dangerously unqualified to give.
Whether one can accurately predict how, where and when prices will drop, or not, advisers need to be clear on their role in the industry and stay in their lane. Consumers need us now more than ever.
Saira Haider, senior finance and insurance consultant at Mansion Mortgages
I am preparing my clients for a slight drop in price in some areas, but also advising them to buy, especially as I own a property in Swanscombe that was issued with a potential compulsory purchase order from the upcoming London Resorts theme park.
So, I am preparing clients to buy property in the nearby area as potential holiday lets for the future.
I find that first–time buyers are still around but not as much as the investor who wants to draw funds from properties to buy.
I’m not in the 90 per cent market, but I cannot see how a lender can issue a five-year fixed 90 per cent loan to value product with a high rate. Is this not exploitation?
If I were advising on this I would not be urging clients to take these mortgages, instead they should borrow the difference if at all possible and have the bulk of the loan on a lower rate.
Lenders are definitely tightening up. Barclays who were the leader of higher income multiples has now updated its multiples with 4.5 being the highest, so it seems as though they are slowing down too.
Lenders also seem to be stalling issuing offers but we are still seeing clients coming in on the frontline so it would seem the wheels are still in motion.
So, I’m proceeding as normal and remaining cautious and keeping a close eye on things in the coming months.
Akhil Mair, managing director at Our Mortgage Broker
As an optimistic but realist team of experienced mortgage brokers, in response to coronavirus, we created a business plan in the midst of lockdown.
We anticipated volatility in unemployment, a reduction in property prices and further due diligence by banks and lenders.
We also planned how we would remotely work with our clients and what our approach to an increase in mortgage rates would be.
With experience and the effects of the 2008 recession, comes the knowledge of what to do and what not to do.
Since March we have made it a point to contact all of our clients to provide them with relevant advice and how best they could consider any purchase and remortgage plans they may have for the remainder of 2020 and going into 2021.
As a business, we have set up zoom meetings, a dedicated WhatsApp line and seven-day, 9am – 9pm business openings to ensure our clients can contact us to discuss any property finance matter.
‘Being a broker is not simple, you will never know it all’ – Marketwatch
So this week, Mortgage Solutions is asking: Are you finding the cases that land on your desk are becoming more complex and as a result, are you making use of packagers?
Nik Mair, director at London Mortgage Solutions
We are experiencing cases with notable challenges.
The central issues are stemming from the economic uncertainty caused by the Covid–19 pandemic which has affected many businesses and in turn, pushed the banks and building societies to alter their lending criteria.
Government assistance has been invaluable to many businesses and employees. However, most lenders are either shying away from lending to employees that are still furloughed, or lending based on the furloughed income which in general is at a maximum of 80 per cent of their normal income.
In the case of those who are self-employed, most felt an impact on their earnings during the lockdown and have also taken advantage of the opportunity to receive a bounce back loan from the government.
Such individuals are now faced with stricter documentary evidence required by the underwriters who are naturally more discerning and risk averse.
The minimum deposit required by the vast majority of lenders has also increased; 95 per cent loan to value (LTV) mortgages are a distant memory, and 90 per cent LTV products are very limited in availability.
Equity release and second charges are becoming common solutions for those needing to release money tied up in their property to invest or simply stay afloat during these unprecedented times.
The highly experienced team at London Mortgage Solutions are equipped with the knowledge, resource and support to adequately and successfully resolve the vast majority of these complex cases.
We are utilising packagers where appropriate to ensure that our clients benefit from a solution that is the most suitable for their needs and requirements.
Stuart Gregory, managing director at Lentune Mortgage Consultancy
Being a broker is never simple.
As an industry we have to adapt on a sixpence whenever the situation changes, and normally it’s a situation which is outside of our control.
Whether it’s a pandemic, or changes in government policy thrown out to gain political capital and headlines, you can guarantee that whenever you think you know what you are dealing with, something will happen to send a curve ball into your world.
So, the pandemic has seen a shift in enquiries combined with the stamp duty holiday – more enquiries for purchases with many seeking a holiday let property. Our August in 2020 was our busiest in years.
For us, a complicated case means a standard case. Very little of our enquiries could be considered ‘vanilla’ – there’s always a complication involved.
As a result, our work is always varied – if it wasn’t, then we wouldn’t be able to deal with the queries we have from clients, especially those who have made their own application elsewhere and been turned down.
Items such as one year’s self employment and a minor – or major – credit blip in the past can make a difference to what can be achieved.
Normally, what a client sees as standard is normally anything but. Occasionally, we’ll get a call once a deal has been struck and expected to work a miracle.
We utilise our own knowledge together with strong lender relationships and software to produce quality results – we also use packagers where we seek a second opinion.
As a broker, you never ‘know it all’ – those who claim to are lying.
Adam Wells, co-founder of Lloyd Wells Mortgages
To be honest, all of the cases we deal with are quite complex.
That being said, this week I’ve had a client who is looking to staircase out of shared ownership property, as well as a client with significant debt looking to sell their home and purchase their next home with the Help to Buy scheme.
We also have a landlord looking to remortgage his home and one of his buy-to-lets to raise money to purchase his sister’s property and turn that into a buy-to-let.
I would say that most of the complexities come from clients looking to do weird and wonderful things.
With everything that has happened this year, clients are trying to be creative to make their money go further and their mortgages more affordable.
We don’t refer anything on to third parties as we are the experts and if we can’t do it, then we’re confident that no one can.
My experience of packagers is quite negative, and they often don’t offer clients the same service that I offer them and don’t have the levels of experience I have.
I’m sure packagers are useful for brokers who deal in volume and would rather pass the cases onto someone else rather than complete the research themselves.
Our philosophy is that there is a mortgage for everyone, and it’s up to us to find out which lender is able to help.
‘The extra stress and longer hours are worth the completed mortgages’ – Marketwatch
This busy period is undoubtedly having an impact all the way through the mortgage market so, this week Mortgage Solutions is asking: Are you working longer hours to maintain current business volumes?
Pam Brown, principal at Pam Brown Mortgages
Due to the tsunami of mortgage and protection enquires in the last few months, the life of a mortgage broker is way beyond the average person’s nine to five.
With a limited number of lenders currently in the 90 per cent loan to value (LTV) market, we find ourselves glued to the laptops at 7am trying to secure our clients 90 per cent deals.
With rate changes and criteria changing almost daily, we have to make sure the application is submitted, and the client secures the rate that was given to them at the approval in principle stage.
During such challenging times, and in the fast-paced market we find ourselves in, managing the client’s expectations is in itself a full-time job.
The hours here at Pam Brown Mortgages have definitely increased and are 100 per cent more stress filled, and some days feel like a pressure cooker. However, all the increased hours, stress and higher expectations are worth it in the end when the client gets their new mortgage deal or new home.
Andy Wilson, director at Andy Wilson FS
Mortgage business owners and self-employed advisers will tend to work whatever hours are needed to get the job done.
The drive and working ethos of those working for themselves is naturally different, and most will think nothing of dealing with clients over weekends and in the evenings. At the moment, this can also involve early morning starts, to try and secure funds using online systems where there are tight limits on the number of new applications some lenders will take.
I find that the working life of a small business mortgage adviser is rarely a nine to five position, and never has been. Such advisers have the flexibility to rise to the occasion when business volumes increase, as at present.
So, we are working longer hours than normal, but we did have a lengthy quiet period earlier in the year to provide contrast.
Also, with the ongoing uncertainty about whether a second wave will close us down again, or whether house prices might fall and lenders restrict loan to values even further, we need to write business where we can.
There has to be an acceptable work-life balance, but at times the balance will be tilted more towards work, and so we simply roll with it. Fortunately, the mortgage market has recovered rapidly and many advisers will be making hay whilst the sun shines, ready to pay for that long overdue holiday next year.
Scott Howitt, sales director at Chartwell Mortgage Services
The simple answer is ‘yes’.
Since the start of the Covid-19 pandemic, we have seen a significant increase in activity.
Working predominantly in the new-build sector, our activity levels are always buoyant but the last three months have seen a 30 per cent surge in business, ranging from initial enquiries and qualifications through to mortgages being submitted. Our normal working practice is a seven day a week operation and we have continued with this throughout the crisis.
As a business we are well positioned in terms of our systems and infrastructure and we have adopted some of the latest tech in our industry to handle the increase in demand.
Interestingly, the spike in activity levels has helped us shape some of our future working processes which will undoubtedly help us grow our business further over the coming years.
The current challenges in the market, such as lender LTV updates, additional underwriting requirements and product changes, mean that our adviser and support teams have been working longer to ensure that our service is not compromised and that we are meeting the expectations of all of our customers.
‘Discipline and productivity essential as cases take longer to complete’ – Marketwatch
So this week, Mortgage Solutions asked: ‘Has the time you dedicate to each case changed? How do you make sure you remain efficient?’
Mitul Patel, founder of Lemon Tree Financial
Things are taking longer; before it took two to three weeks to get a mortgage through and I’d say it’s taking four to six weeks now.
I try to pre-empt clients and manage expectations by telling them it’s going to take a little bit longer.
One lender in particular, I was on hold to them for 58 minutes but I had to continue because they hadn’t updated their systems and I needed to speak to someone about a case.
It is the whole process that is delayed.
You can send an application through, but you don’t know when a survey will be actioned. Some lenders are taking between seven and 10 working days to get it booked.
It’s harder to speak to business development managers and underwriters too. And once someone looks at a case, because documents are coming from different places they sometimes ask for more supporting documentation.
Also, this Covid-19 declaration that a lot of buy-to-let lenders are asking for takes up extra time. And it doesn’t help that some estate agents don’t appreciate that things are taking longer.
To remain efficient, I give clients examples of how long things are taking because I’d rather lose business at that stage than later.
Apart from that, I keep aware of lender limitations and use a diary system so I can chase something up once it says it’s due. It takes more time, but it’s just something we as brokers have to do.
I also try to be productive. If a lender takes 58 minutes to pick up the phone, I’ll send emails and do other tasks in that time.
On the whole, we still get cases through and a positive is that the complexities of completing a case means clients need broker advice even more now.
Akhil Mair managing director of Our Mortgage Broker
As an independent mortgage broker, the process, documents and information we need to obtain from our clients is growing because of general market conditions and regulatory requirements.
On average each case takes approximately two to eight hours depending on the complexities of the case, which includes property portfolio background checks and credit profile analysis for those in financial difficulties.
It also includes those with complex income streams and we have to consider lender underwriting processes and timescales.
The core amount of time is spent requesting and sending the supporting documents to the lender and answering prerequisite questions. This has led to the current service level agreement being extended throughout the majority of the lending market.
To remain efficient, we ensure we have gathered the core documents every lender would require.
We also regularly visit each lender website so we know we don’t just have the minimum documents as per the submission guide, but we also have supporting information relating to property portfolios, personal tax returns and accountant references to support the lending application where necessary.
This is so we can satisfy the prerequisite questions that the lender is likely to ask.
The key to a successful application is being open, transparent and evidencing the information which in turn helps the underwriter make a decision with the correct documents to hand on day one which then should create a win-win for all parties.
Dominik Lipnicki, director of Your Mortgage Decisions
We are finding that it can be harder to place cases and lenders may well need more paperwork, such as confirmation of employment post–furlough or current bank statements and accounts for self-employed clients.
This has without a doubt added to the workload when it comes to placing a case.
Requesting documents to be scanned or posted obviously also increases waiting time as previously, these could just be collected during the meeting.
The key to efficiency when working from home is planning and discipline.
Clearly this starts in ensuring that the working environment is right – this can be easier said than done with children off school – but working in a noisy room or spending the day on an uncomfortable chair will not result in an efficient working day.
Breaks are also crucial and should be planned for at the start of each day, especially in between Zoom meetings as these can be exhausting.
It is too easy to be checking your email 24/7 and it is imperative that an away from email down time is set up every day.
I do this by having a mobile phone ban in the living room and by leaving my phone at home when I take the dog for a walk.