Government has not convinced lenders low-rise buildings are less risky – Marketwatch
At the time, a handful of lenders committed to adapting their stance for lower properties according to the new guidance but no official changes have been made since.
So this week, Mortgage Solutions is asking: Have you noticed any change in lender attitude towards low-rise buildings or do they still seem hesitant to lend without an EWS1 form?
Aaron Strutt, product and communications manager at Trinity Financial
I don’t think anyone knows the answer to this as such – even speaking to the lenders, many are choosing to follow RICS guidance over the government.
Some of the big lenders are still asking for the form and many have said they’re expecting the government could change their minds again. In the past, there have been updates, only for the guidance to change once lenders adapted.
In case they want to sell a portfolio of mortgages which consists of flats with cladding in the future, they want a report to confirm the property is safe. Just scrapping it based on government advice doesn’t seem like a very good idea for them at the moment.
One lender was saying freeholders and developers are getting the forms pre-empting any requirements, but others were saying they think tenants and flat owners are handling it themselves, then forwarding it to management agents to be signed. This is because there hasn’t been any urgency to get this done.
Overall, lenders are taking fewer questions and accepting more applications from those in flats, but if there is any cladding present, they ask for the report.
At the same time, some of these homeowners know they won’t be able to refinance until checks are done so there’s no point in shopping around and asking which lenders won’t need the report because most will.
We’re not getting as many calls as we previously did about this either.
There was a time not that long ago where it seemed every case had an issue with the EWS1 form and lenders were inundated with applications and there weren’t enough inspectors to sign everything off. It has slowed down and doesn’t seem to come up as much.
Dina Bhudia, managing director and CEO of P2M Assets
There hasn’t been much change. Lenders aren’t following the new stance because the property is their security. The risk on their part in most cases is far more than our clients are because the level of lending is generally more than our clients’ equity.
The conversations with developers about how any action will happen, such as who will pay for remediation, is all still in the pipeline. Nothing has been ironed out.
Lenders are reliant on valuer’s comments and they’ll only lend based on what a valuer says, which makes it hard without an EWS1 to cover them. They won’t recommend a lender to lend if they don’t have documented evidence to say it’s safe.
With regards to whether there’ll be any changes in attitude soon, business development managers just agree with valuer comments and say if valuers recommend it, that’s our policy.
I don’t deal with many clients who have cladding issues anymore but recently, I did have a case come through.
The valuer said he thought there was cladding on the roof but he couldn’t check, so the lender refused to lend. But on a high-rise flat, if there’s cladding on the roof, the valuer would never be able to check that. But the minute he says he thinks there’s cladding, the lender says ‘no sorry’.
Ben Robbins, mortgage and protection adviser at Trufe
With the recent announcement of the government scrapping the EWS1 forms below 18 metres, you would hope to see a change in lender stance and an ease on the requirements to offer a mortgage on these properties, at least.
You’d be wrong.
The only significant change in the industry when it comes to the cladding situation was the announcement of guaranteed funding for removal of dangerous cladding in all properties over 18 metres.
We are still seeing the need for proof of certificates needed to show that work has been completed to remediate the issues that saw the tragedy at Grenfell unfold.
Some lenders have moved to a basis that they will require the certificate, based on the valuer’s comments. This doesn’t give much confidence when we have a history of valuers being overly cautious on the properties they assess, so most brokers will more than likely take this as a need for the form on all cases.
This is understandable though because if anything happens in the future, it’ll be on the valuer.
Only a few lenders will accept a property with cladding. For their level of risk and homeowner safety, it makes sense that they will need the necessary documentation for a property before they lend.
As well as building regulations that were in place at the time, this would never have happened if the government didn’t take fire safety checks on buildings away from the fire brigade and transfer it to private firms. Fire safety officials probably would have been able to see that the cladding was unsafe earlier, but unfortunately it took a tragedy to see change.
Santander is a little more lenient as they require a headed letter from the building owner or management company confirming whether work is needed or complete. However, for now, before submitting that application, it would be best to check that all forms are in place.
Overall, I think lenders are well within their rights to refuse to lend, if I’m honest, because I also wouldn’t suggest someone buy a property if they knew it had cladding.
Investment in the rental market does not compromise homeownership – Marketwatch
So this week, Mortgage Solutions is asking: With a continued lack of property supply and huge UK firms investing in, building and/or becoming landlords for residential rental accommodation for the first time, what kind of impact might this have on the housing and mortgage markets?
Andy Hutchinson, managing director of Citra Living – Lloyds Banking Group’s private rental arm
As part of the group’s commitment to helping Britain recover, we aspire to a UK in which all people have access to stable, affordable and safe homes.
We believe there is an opportunity to support the rental market without compromising the support we provide to homeowners and those aspiring to get on the housing ladder. One in five households in the UK is already in private rental, with demand set to increase over the next five years.
For an increasing number of people that means renting, but it shouldn’t mean quality is compromised.
Citra Living is embarking on a first step to provide incremental housing stock for the private rental sector. We are also looking to partner with developers to ensure a consistent standard of properties is available to rent. We want to ensure more people have access to good quality, new-build rental properties, that they can consider their home.
Lloyds Banking Group remains fully committed to homeownership and has lent more than £9bn to first-time buyers in 2021.
We are the largest lender to the social housing sector, having provided more than £9bn since 2018 and we are a leading lender and equity provider to UK housebuilders, helping them to build tens of thousands of new homes each year.
Payam Azadi, partner at niche Advice
Lenders have always been involved in the private rental sector.
It gives a sign of confidence that UK property is still a viable entity. When global organisations look at UK residential property, they’ve obviously evaluated it. They’ve got lots of analysts and think UK property is a good bet, that’s not so bad.
As they are a big corporation, their portfolio is going to be completely different to your novice landlord. It’s a different ball game. Lloyds have a lot of insight into the property. Especially with the acquisition of HBOS, they have a lot of property data so it’s a good sign if they’re coming into it.
It will be interesting to see what type of housing structure Lloyds will go after. Will they follow Legal and General’s footsteps? Will they have purpose-built units?
It will be interesting to see what they invest in and the initiatives they approach. That will give a clue as to what areas of the sector are marked for growth.
What you will see in the UK – and it’s already happening globally – is more large institutions getting involved in the residential market. That often means large complexes with shared living areas, it’s a whole new set up.
Single buy-to-let properties will go through an evolution. Just like we’ve seen more purpose-built blocks for student accommodation.
People want all the facilities that come with these properties.
I don’t think it’ll affect homeownership. I think it’s just Lloyds trying to attract some growth; the average homeowner won’t care that they have a massive stake in the market. We already see that in the commercial market where a lot of pension fund companies own properties.
Akhil Mair, managing director of Our Mortgage Broker
There are a few ways of looking at this, both positive and negative.
The positive is that it shows Lloyds are confident in the UK rental market, they’ve said they’ll buy a large number of units which gives the sector backing.
It gives other landlords more confidence because they think ‘if a big bank like Lloyds wants to get into this, it must be a good thing’.
Landlords won’t be upset because although there is a shortage of housing, that was there anyway. Lloyds entering the market won’t disrupt anything.
On the flipside, rentals could go up and the premiums could go up.
More buy-to-let landlords are trying to make their portfolios professional including the types of properties they purchase and how they kit them out. This could increase both rental and house prices over time.
But nothing ever gets cheaper, a can of Coca Cola costs 25p when I was growing up.
Overall, I think it’s positive, Lloyds are backing the UK property market. They clearly think property is a good asset class to invest in so everyone wins.
Dan Batterton, head of build to rent at Legal and General Investment Management Real Assets
The UK needs a high quality residential rental sector that offers flexibility and choice to residents, offering long term occupational security.
The current private rented sector does not provide long-term certainty to occupiers, but the build-to-rent (BTR) sector does. Traditional build-to-sell developers produce 150-200,000 homes per year.
The growth in the BTR sector is not reducing the amount of homes being built by build-to-sell developers. A new business model and more capital is allowing for more homes to be built, BTR is providing net additional homes.
In the UK, we are roughly building 100-150,000 homes less than we require per year.
BTR is bringing new capital from long-term pension fund investors to support the building of homes. BTR will not bridge the shortfall of homes required but is adding to supply which will help with the acute shortage of homes.
Homeownership is not the only answer, it is one form of housing tenure that is right for some but not for everyone. Renting can be a positive aspirational choice and BTR is trying to deliver this through purpose-built homes with a great service.
Of our c. 2,500 occupiers, when questioned, only one third would buy a home if they could afford to. They were renting because they wanted to, because it suited their lifestyle at the time. It may not suit them for their entire life, but it does at some points.
It is simply wrong to assume everyone wants to own a home, but it is absolutely right that people want a choice and BTR can make renting a positive choice.
Jeni Browne, director of Mortgages for Business
Big players such as John Lewis and Lloyds Banking Group investing in the private rented sector is certainly good for local tenants who can’t afford housing and have to rent. Frankly, anything that increases the number of homes in the UK is in the greater interest in the housing market.
John Lewis has unveiled plans to build 10,000 homes for rent over the next few years – roughly 7,000 of the homes are to be built on sites already owned by John Lewis, ranging from studio flats to houses. That should be applauded.
Will it make a big impact on the market? Perhaps locally. Supply and demand suggests it will be significant at some level. More rental options means more competition, and that should mean less upwards pressure on rents, making renting a more attractive option. And, theoretically, that should help potential first time buyers save to get on the housing ladder.
But on a wider national-scale, this poses no threat to standard buy-to-let landlords; until the government sorts out the housing shortage and materially increases the volume of the stock of affordable homes, nothing is going to seriously affect the demand for property to rent.
Residents of John Lewis’ estate will have the option of renting flats furnished with John Lewis products and all developments will include a Waitrose convenience store near the entrance – John Lewis clearly isn’t focusing on Lidl shoppers, are they.
In fact, private landlords should probably take heart. You are judged on the company you keep and – unlike other investors entering the sector – you don’t get more bluechip than John Lewis and Lloyds. Afterall, they have reputations to uphold that large private investors don’t have to worry about.
One in 12 first-time buyer searches for £1m+ properties – Twenty7Tec
Mortgage technology and sourcing firm Twenty7Tec’s August report also noted the market had returned to relative stability after 18 months of upheaval.
It revealed that 1 in 29 of all mortgage searches are now for properties valued at over £1m, with one in 12 of all completed mortgage searches on £1m plus properties from first-time-buyers.
Statistics from equity release brokers Key Retirement show that in H1 2021 the largest proportion of equity released by over 55s was spent on mortgage repayment at 45 per cent and gifting at 22 per cent. In comparison, only one per cent was spent on holidays, suggesting that parents have been releasing equity in higher numbers than ever before to help first-time-buyers to get on the property ladder.
The Twenty7Tec data also showed five per cent growth in self-build mortgage searches in August 2021 versus July 2021 and first-time-buyers (FTB) accounted for five per cent of all searches.
The percentage of searches in the £150k- £250k valuation bracket is at its lowest for 10 months at seven per cent, despite the ongoing stamp duty relief in this price range.
James Tucker (pictured) CEO of Twenty7Tec, said: “August 2021, aside from the slight market side effects of the bank holiday, was broadly the same as July 2021. However, the fact that one in 12 first-time-buyer searches are now for properties over £1m is indicative of both a housing market that remains exceptionally buoyant, and potentially the size of deposits that FTB’s have been able to save during the pandemic.
I believe we could yet see a significant uplift in remortgage business, as consumers assess their finances after what will no doubt have been a hectic summer – especially as rates are so low at present.”
The latest report developed on the Koodoo analytics platform, in partnership with Iress showed the popularity of five-year fixed rate products continues to increase amongst consumers, with residential remortgage five-year fixed products now representing 34.3 per cent of all searches. These products have been demonstrating a consistent upwards trend over the last 10 months.
The supply and competitiveness of 10 year residential fixed rates continues to improve, with this month seeing an increase as Habito launches new products in this space.
Over the last 10 months, the gap between the proportion of searches for fixed and variable rates has increased steadily, with fixed rate searches now representing 94.5 per cent of all searches.
Tougher regulation in the new-build market should not lead to more barriers for buyers – Marketwatch
However, the new build sector is not without its faults. Higher prices and retrospective legislation have caused issues for new and existing purchasers, meaning these properties cannot always be presented as a solution to the housing crisis.
So this week, Mortgage Solutions is asking: Are there too many barriers in the new build market to sufficiently support property demand going forward?
James McGregor, director of Mesa Financial
Even without a slowdown in homeowners moving, there is a pressing need for more housing, including affordable housing, so fewer barriers to new builds is welcome.
Developers can only work within the regulations at the time. This is true of planning applications as well as material issues such as cladding.
I do think it really falls to the government to get the balance right to ensure that we build in a responsible way. We also need better protection for homeowners when things go wrong.
It can’t be right that people are effectively hostages in a home they purchased and now cannot sell due to cladding.
Holistic reformation is necessary to ensure that not only are we building new properties, but they are serving our communities and environment in the best possible way. We need investment in infrastructure – roads, schools, services. It is about balance and we haven’t achieved it yet.
Unfortunately, this means that many projects are blocked at a local level. The gap between national policy and what takes place on the ground needs to be addressed.
It is a market that requires heavy regulation but that should not translate to “barriers”. That way new builds can support property demand going forward.
Dominik Lipnicki, director of Your Mortgage Decisions
With the overall housing shortage in the UK, it is inevitable that new build properties will take up some of the demand. New builds however, are not without issues.
Whilst there are some high-quality developers taking pride in the homes that they build, the UK has a poor reputation when it comes to new builds. There are too many substandard homes, with poor materials, tiny rooms and real problems with post-moving in aftercare.
The cladding scandal has also shown how homebuyers can be left vulnerable and out of pocket when things go wrong, with developers and the government doing little to help those affected.
Lenders can also be more risk averse when it comes to new builds, with many properties dipping in value once occupied, meaning lower loan-to-value products being offered, pricing some out of the market as they struggle to save for a deposit. This can be a bigger issue when it comes to flats as they are often seen as higher risk.
We all agree that more homes need to be built, particularly affordable homes, and this is where the government should step in and reform the market.
Land banking should be stopped and the building application process should be speeded up. Local council building targets should be introduced to prevent nimbyism but house building should be looked alongside infrastructure investment, such as roads, schools and GP surgeries.
Too many estates are being built where the local amenities cannot cope with the sudden influx of people.
New-build homeowners should also have more rights when things go wrong, we hear far too many horror stories of consumers battling to get the basics fixed.
Daniel Bailey, mortgage and protection specialist at Middleton Finance
We are seeing a lack of supply in the market so there are fewer properties.
I deal with a lot of mortgages in the Sheffield market, and it’s been one of the strongest performing over the last few years. I’ve had clients waiting up to a year or 18 months to get an offer accepted because demand is that high.
I do think the new-build market will play a part in filling that gap.
Some clients are adamant they want an older property, but for others they will have to turn their attention to a new-build property at some point because their bids aren’t being accepted.
One of the big issues will be price. For a lot of first-time buyers, they are told the properties are targeted to them but it’s probably better suited to second or third-time buyers who are more established in their careers and have more money.
Also, my clients are more aware of leasehold issues which have arisen in the last couple of years. If they do see these properties come up, they tend to turn away from them because of the headlines. That is a potential barrier.
Those two issues are the big ones.
The other thing I’ve found is clients are required to use specific brokers and solicitors. I believe clients should get independent advice from somebody not connected to a development.
If some of them had done that, they would not have experienced the leasehold problems they’ve been seeing down the line because the clauses of the contract aren’t always fully explained.
Adding insurance quotes to online mortgage calculators could raise protection awareness – Marketwatch
Online calculators and price comparison websites can encourage borrowers to consider all home-buying related costs, such as utility bills and council tax. But often insurance is not included.
So, this week, Mortgage Solutions is asking: Should comparison sites and independent mortgage calculators include or suggest insurance quotes to stress the importance of protection?
Jonathan Clark, partner – mortgage and protection planner at Chadney Bulgin
For me, this is very topical as we all know that when brokers are busy servicing an increased demand for mortgages, they tend to drop the ball on protection, and the last 18 months will surely evidence this.
Most advisers aim to go back to these clients and cover this off at a future meeting but invariably, such reviews prove harder to schedule. And once the client has secured their mortgage offer, and may even have completed the sale, the lead will have gone cold and any protection sale will be much harder.
This potentially leaves clients exposed to all manner of risks and, increasingly, the adviser to a complaint, if the worst were to happen in the future.
So yes, prompting the client to think about and potentially budget for any level of associated mortgage protection as early as possible in their mortgage application journey must be a good idea.
Basic life assurance quotes shouldn’t prove difficult to generate with age and smoker status, although users of such websites would need to be warned that detailed underwriting could result in varied premiums and in some cases, a full decline.
When these clients then approach a broker for final advice and application, it should make it much easier for the adviser to introduce a protection review as an integral part of the process, hopefully resulting in better-protected clients and more relaxed advisers.
Rebekah Johnston, head of training and development at Umbrella Protect
While it is imperative to raise awareness of the need for protection, including quotes on a comparison site could be a double-edged sword.
On the positive, including quotes could raise awareness of life assurance and other protection products, making a client more open to a conversation about them. What could be dangerous, however, is someone buying their protection policy online without advice.
Someone may think they just need life insurance to cover a mortgage, but it is rarely that simple and people’s protection needs are usually more extensive. People buying online, especially for the first time, are highly likely to go for the cheapest but may sign up for something that is not right for them, which may mean paying for years into a policy that may not even pay out if they need it.
Many people understandably don’t realise the intricacies and the extent of information that needs to be disclosed to make a proper purchase.
Generating a quote based on a mortgage, or a sum of money someone believes they need, may not take into consideration their health, occupation or family situation.
For example, someone who has an occasional cigarette on a night out may put they are a non-smoker, but this would invalidate their policy should they need to claim.
When deciding on a utility provider, generally you pick the cheapest – this is not the same when choosing a protection policy.
Everyone is different, everyone’s needs are different, and protection needs to be tailored to make sure that, should the worst happen, every element of someone’s life is protected, which cannot be determined by a quote.
So including the issue of protection is vital, allowing people to buy online without advice is definitely not recommended.
John Prideaux, senior mortgage and protection adviser at KS Mortgages
A mortgage is the biggest financial commitment that most people will have in their lives.
I want my clients to be thinking about what could happen to them financially if they had a medical crisis, especially as there is a trend for younger borrowers to be taking on longer term mortgages, sometimes to 35 or even 40 years.
With the prevalence of critical illnesses affecting people at an even younger age, we need to be educating and informing clients of the all the options available them to mitigate the risk of losing their income or taking time off work while undergoing treatment or recovery, and the impact this can have financially.
I would not want anyone to use a comparison site for sourcing quality protection advice, this is where we as seasoned professionals can genuinely add value.
Especially for anyone with existing health issues who would have their cover rated and/or excluded, knowing where to place a case to get the best cover and premium for a client comes with knowledge and experience.
It is my opinion that highlighting the need for protection on websites and online calculators would be beneficial for the general public, as it raises the awareness and importance of this aspect of the house buying process.
Digital currency will be part of the mortgage market’s future – Marketwatch
So too have conversations around the possibility of other means of payment such as digital currency.
Previously associated with people making clandestine purchases, Chancellor Rishi Sunak’s suggestion of Britcoin thrust the idea of digital currency further into the mainstream.
If it happens, Britcoin would be what’s known as stablecoin. This is a digital currency that has its value linked to an external asset, such as gold or fiat money. Fiat money is a government-issued currency. Its value can be based on supply, demand and the stability of the government issuing it.
So this week, Mortgage Solutions is asking: Is the mortgage industry anywhere near ready to accept cryptocurrency as a means of payment?
Dan Salmons, CEO of Coadjute
There is a big difference between a publicly traded cryptocurrency like Bitcoin, and stablecoin like a Bank of England ‘Britcoin’.
I personally can’t see why you would use a publicly traded cryptocurrency like Bitcoin for a house purchase, it’s totally unsuitable. First, it is highly volatile – I don’t want to buy a house for 10 Bitcoin thinking it is £458,580, only to find on completion it is £615,720.
Second, public cryptocurrencies tend to be secretive, a real problem when it comes to know your customer (KYC) and anti-money laundering (AML) regulations.
Stablecoins are different. When issued by a reputable issuer like the Bank of England and pegged to a currency like the pound, the exchange rate is reliable.
They can also include high levels of security. Best of all, stablecoins are basically ‘programmable money’. This means they can be programmed only to be usable for a house purchase, by one person, or even for a specific house. It’s the ultimate in security.
So will we see stablecoins used for home purchase?
I think we will, and indeed Coadjute is already working on it. We don’t see them as a replacement for cash, but a way of enabling quicker mortgage completions at any time with a hugely reduced risk of fraud.
As for brokers, I think it will be important for them to keep up with developments and be able to advise their customers on the new options.
There’s a lot of hype at the moment – like Bitcoin mortgages – that I don’t think will ever become mainstream.
However, I see real benefits from ‘programmable money’, and when the dust settles do believe that stablecoins in some form will become part of the future landscape of the mortgage market.
Conor Murphy, CEO of Smartr365
It would be difficult to use genuine cryptos for mortgage deposits, as they would likely fall foul of money laundering and source of funds regulations.
This has been a widespread issue when considering integration with the traditional financial system.
Britcoin is somewhat different, though, as that would be a stablecoin, so the value would be pegged to the pound.
It would presumably also bring stronger regulations around issuance and usage to combat illicit fund flows, so that’s something with a bit more promise.
As stablecoins like Britcoin would be pegged to sterling or another fiat currency there is an element of security there, so provided the AML checks were met, this should be fine and relatively simple.
The use of other cryptos is very different though, and the greatest risk and requirement for advice in my opinion would be around price fluctuations in the value of the coin.
If the value of the currency or its relationship to sterling changed between the point of exchange and completion, this would put the buyer in a precarious position. This is something brokers would need to know about and bear in mind.
The typical use of cryptocurrency does raise concerns around fraudulent activity.
Brokers and lenders would need to see the full source of funds to ensure the currency was obtained legally, even more so than with ‘normally funded’ transactions.
Cryptocurrencies do depend on distributed ledger technology, where – in theory – you can see every transaction back to the very first one, supposedly solving this issue.
However, whether lenders or solicitors would trust that ledger is a different issue. With Bitcoin or Ethereum, the answer is probably. But for some of the others, with small user numbers and thin trading volumes, it’s less likely.
Aaron Strutt, product and communications director at Trinity Financial Group
We get quite a few enquiries from people saying they’ve got Bitcoin as a deposit. Some lenders say they will potentially look at it but it is very much on a case-by-case basis.
From a borrower’s point of view, they can’t understand why lenders are so fussy but it’s because lenders are worried about cybercrime and how the borrower acquired the money.
Fraud departments are worried so most lenders will give a blanket ‘no’. Otherwise, it will have to be in the applicant’s bank account as traditional money and the lender would want a full on track record of how long the money has been in there and where it came from.
Cryptocurrency is not regulated at the minute which is the whole point of it and if it was, lenders might accept it directly, though I have no say on whether that should happen.
The reason people take out Bitcoin is to increase their money, invest it, or not have it tracked so the government’s Britcoin might not be as appealing. The only reason they might transfer the money back over would be to try and clean it.
So lenders might still look on it unfavourably and want to see the trail of it. When we do get enquiries, most of them don’t go through for that reason. With that in mind, some of the private banks might be more open to taking on these borrowers.
As for advisers learning about it, there have been so many criteria changes in the last year I think most brokers will be focused on that and other immediate changes. If they get a call about cryptocurrency, they might do a quick search to see if there is a home for it but otherwise, they have other things to worry about.
Excuses for delays only go so far at this stage of the pandemic – Marketwatch
Processes have been put in place for either eventuality for over a year but with transactions levels still higher than normal and people prioritising health, having a stable working pattern may not solve any delays seen since the start of the pandemic.
So this week, Mortgage Solutions is asking: Have you noticed any change in the consistency of service since firms decided on working practices?
Anthony Rose, director and co-founder of LDNfinance
In an industry which deals with such personal and aspirational matters such as organising a client’s property finance, you really can’t undervalue the importance of face-to-face contact and collaboration.
Despite the market’s ability to adapt to remote working during the pandemic, it is a welcome relief to be back in the office, building rapport and having direct conversations both internally with our teams and our wider network of professionals again.
There are still delays in snags in areas, but we have noted that these are tending to arise from issues not related to working from home as it was during the height of the pandemic.
Rather, any delays are derived from certain lenders with market-leading rates – or those who handle more complicated business – struggling to cope with admin and the sheer level of business coming across their table in light of rates being at an all-time low.
For now, our focus at LDNfinance is to continually improve efficiency internally and ensure we are a well-oiled machine that has the flexibility and resources to overcome any potential threats to our consistency of service.
The learnings from the last 18 months have been invaluable and we have been sure to apply them to our business in order to improve our service moving forward.
As such, we have now moved into a bigger, more cooperative working space which will help aid our commitment to our team’s training and career development. Our new office has lots of rooms that we didn’t have before, from large team meeting rooms to training spaces, dedicated to upskilling LDN’s advisers to ensure their market knowledge is second-to-none and their service excellence, unsurpassed.
Adam Wells, co-founder of Lloyd Wells Mortgages
With different businesses implementing different rules for their staff, we are seeing a discrepancy in the level of service the banks are providing to our customers.
Barclays have been surprisingly quick of late, being able to produce an offer within seven working days last week.
At the same time, we are seeing both Santander and Shawbrook Bank taking 10 working days to assess documentation.
NatWest have recently emailed all brokers that they are making changes to their buy-to-let process to speed up their application process.
We’ve also had one packager have a positive Covid-19 test, meaning the whole office had to work from home, slowing down their service.
Surveys have also been an issue, with one simple buy-to-let application with a bank that was submitted on 2 July, yet the physical valuation was booked in for 13 August.
We are making all our clients aware that waiting times will be longer and we’re doing everything we can to help speed up their applications.
Now that the Euros and Olympics have finished, we hope to see service return to an acceptable level, especially when the schools reopen in September.
Daniel Bailey, mortgage and protection specialist at Middleton Finance
Some lender’s service levels are still better than others, but I think as we have moved through Covid and the changes to working patterns, generally that’s improved.
To be fair to the lenders, they’ve had to adjust to what is happening with people’s financial situations and employment. As that becomes clearer, service has got better.
Some lenders have adapted quicker than others but that’s usually the case anyway. Especially with furlough and self-employed income, those cases take longer to assess.
There isn’t a huge difference between those who had adapted to hybrid or working from home models compared to those who have returned to the office.
Overall, it’s better across the board but there is still room for improvement. Nothing has changed drastically since restrictions were fully lifted on 19 July.
Some valuations are still delayed, but I think that’s down to the volume of transactions and the holiday period.
Solicitors have been the worst at adapting, I don’t understand that this far in they’re still blaming delays on people working from home. We’ve got the technology in place, so the excuses only go so far.
A solicitor I spoke to said the volume of business took them by surprise. He said they just didn’t have the staff available. But at the same time, it was difficult to say how long that was going to last and if it was worth taking on more employees, just in case the market slowed down and they didn’t know what to do with them.
Service in general has been pretty poor with solicitors.
It’s been a big learning curve for us all as an industry, and as we come through more practices should be put in place to make things better and help us to embrace technology more.
A focus on culture rather than data is better for diversity and inclusion efforts – Marketwatch
However, the mortgage industry has a significant number of sole traders and smaller firms who may feel the structures of larger firms who may comply with and report on these measures do not represent them.
So this week, Mortgage Solutions is asking: With so many small firms and sole traders in the sector, would reporting equality data provide a true picture of the state of the industry?
Frank Starling, founder of Variety Pack
We’re having one of those moments where organisations have to ask the hard questions. They’ve got to take a deeper dive in terms of where they are when it comes to inclusion and diversity.
When we take something like pay gaps, we know that many organisations large and small have a gap that exists based on gender and ethnicity. But the internal data is usually the challenge. Many businesses don’t necessarily have a rich amount of demographic data that gives them a good enough insight of where they are and where they need to be.
But firms shouldn’t wait for legislation to be proactive. If they want to attract the best talent and create cultures which are inclusive, it’s an important thing to do for the future of this industry.
A lot has changed on a societal level, and people’s expectations now are very high.
Inclusion should be part of every single business strategy, it doesn’t just exist as an add-on function.
It is all about perception too. Recently, Accenture conducted research on the difference between leaders believing that they are creating an inclusive culture versus the actual experience of team members which was insightful.
For smaller firms, at some point they will grow. Their client base will grow and even the expectations of the partners they work with will change. I’ve seen this both in the US and the UK where huge firms are asking a lot of their partner businesses, they’re wanting to know what diversity and inclusion strategy is in place before they sign off on contracts.
Organisations have a real opportunity to tell people ‘we care’.
Pete Gwilliam, owner of Virtus Search
Whilst targets and quotas are part of trying to create progression there is a trap that exists if you concentrate purely on measurements. People might try to find shortcuts to achieve numbers to make them look more inclusive.
Data doesn’t get to the crux of the issue, there are many bigger things than that.
Speaking from experience, I’ve had biases that have been built into processes that I haven’t challenged, so I can see how processes can consistently have bias. I’d much rather people recognise the importance of de-biasing processes rather than simply looking at numbers and data.
That applies whether you are a one person or a thousand and one person businesses.
Bias isn’t loaded towards race, ethnicity and gender. It can be loaded towards different socioeconomic backgrounds, disability, sexuality and age.
However, this doesn’t mean that if you’re a smaller firm you shouldn’t use data, because it is helpful. But I don’t think having a data obsession is the way we have to go.
Of course respond to what the regulator says. But also do it because of what’s good for your people, business, clients and humanity in a society that’s more globalised than it’s ever been.
But it’s important that data isn’t all we revert to; you’re much better off obsessing about how people perceive you.
There’s no point setting up all these measurements but not changing your approach, culture or processes only to then wonder why the data isn’t helping you.
Mike Owen, director of Diverse Mortgage and Protection
It might be irrelevant for a lot of firms because there are a lot of one and two-man band companies. For our firm, we have had a very diverse group of advisers and staff as our name suggests.
Personally, inclusion has never been an issue in terms of who we employ. I don’t understand people who do have an issue with it.
I understand there are practical realities sometimes, which makes it hard for certain businesses to comply with these measures.
The FCA on the one hand expects you to be as vigorous as possible with your vetting process and compliance but sometimes there are areas that make it difficult to always put these measures in place.
We’re about to get our fifth Covid impact survey so there is enough going on; people are just trying to run their business, make a profit and deal with other extracurricular things.
To be honest, I wouldn’t think this would be part of the FCA’s remit because they are there to regulate the industry to ensure mis-advice and fraud is minimised. I suppose it’s a wider government and society measure.
It also might be more applicable to the regulator as a large body which employs hundreds of people.
Within the industry, I don’t think there will be relevant feedback from smaller firms and larger firms may skew the results for the industry as a whole.
Digitalisation trends open gap for more personalised mortgage advice – Marketwatch
However, not all broker firms have the backing of fintech or larger companies to build their technology potentially leaving them further behind in the evolving financial sector.
So, this week, Mortgage Solutions is asking: Does the acquisition of broker firms widen the technology gap between those companies and smaller brokerages which aren’t tech-led? Do you feel pressure to bolster your technology?
Adam Wells, co-founder of Lloyd Wells Mortgages
I feel that while the larger brokerages may be moving towards robo-advice and full automation, it actually offers brokers with an opportunity to fill the gap that is left behind.
We still have access to the whole of market, the software we use still allows us to complete research within an acceptable timeframe, and we offer a personal service that cannot be matched. We already use services such as Criteria Hub and our network provides with a CRM that has portal access.
Our service level agreements are already more competitive that most large brokerages who may take a couple of days to respond to their clients.
We don’t feel under much pressure at all to further advance our technological offerings. Most of our clients want secure, easy to use technology that is reliable and provides them with the service they require.
If you speak to any client, they would much rather have someone available at the end of the phone to speak to, over dealing with a live chat facility that can lead you around in circles.
We continue to attract customers who may not have the simplest scenarios who need an expert to point them in the right direction and hold their hand through the whole process from start to finish.
Niamh Byrne, senior mortgage associate at Financial Advice Centre
The arrival of Covid has certainly fast tracked our own digital advice process. Where it hasn’t been so easy to visit clients face-to-face we have had to re-assess how we conduct business in a slick, user friendly and of course compliant capacity.
Our own introduction of a client portal has allowed us to do just that, with positive feedback from many new and onboarding clients.
Operationally, we have been aware of the growing appetite for digital advice.
But as a business that prides ourselves on relationships and the longevity of clients, our focus has been not to compromise on service even with the implementation of digital “help”.
In terms of pressure, I feel personally that there is still strong and buoyant demand for personalised rather than robotic advice.
But in a year where most of our interactions became digital, it seemed the opportune time to implement state of the art technology that has vastly streamlined our internal process and the external client journey.
Toni Smith, chief operating officer at Primis Mortgage Network
Any broker firm that invests in tech to assist their offering will be able to offer clients an improved experience and improve the broker’s day to day tasks through automation.
By improving customer experience and freeing up time in a broker’s day, tech helps users deliver an improved service while focusing on winning new business and expanding their client offering, ultimately widening the gap between those using tech and those who are not.
During the pandemic, technology became a critical part of broker businesses and many feel that technology enables them to provide better advice.
As more brokers improve their customer’s experience through investment in good tech, pressure is increasing on smaller broker firms to keep up by improving their digital offering.
We are now seeing the pace of technology adoption among brokers increase dramatically as they enhance and evolve their propositions to meet an array of customer expectations and preferences in order to win and retain business.
While we are seeing more brokers adopting digital technology to best position themselves for future growth, firms with simpler tech processes can still succeed by providing excellent customer experience using the tools available to them and ensuring they have access to the best mortgage products on offer.
There are also customers still who prefer traditional business models, including face-to-face meetings and manual ID checks.
In the competition for new business, it’s important that brokers can deliver for both types of clients, and those who are experienced in traditional processes will succeed by offering a simple and efficient customer journey tailored to customer preferences.
Attractive mortgage rates make it impossible to advise a lender switch – Marketwatch
For some, avoiding intensive affordability checks while securing a favourable rate with a product transfer may seem like the better option.
So this week, Mortgage Solutions is asking: Do you suspect you’ll conduct a higher number of product transfers this year?
Lilla Dilliway, director at BlueWing Financials
Whilst carefully checking the clients’ circumstances in all cases, we have indeed carried out more product transfers than last year due to the impact of Covid on a client’s income situation.
This is especially true for self-employed people who have received Self Employed Income Support Scheme (SEISS) grants, which some lenders don’t accept or assess on a case-by-case basis making it rather difficult to switch lenders at the moment.
Employed clients are mostly unaffected, as long as they are not on furlough anymore.
Meanwhile, contractors are impacted by the IR35 changes which came in this April and saw some umbrella companies dodging tax by changing their employee structure. This has made it difficult for some contractors to find a new contract, particularly during the turmoil of the pandemic.
All in all, yes, we can see an increase in product transfer applications compared to previous years.
James McGregor, director Mesa Financial
This is certainly an interesting situation and as advisers, our role has definitely changed due to the pandemic.
Lenders have changed their processes significantly which is causing delays. On top of this, they are becoming a bit more savvy with their pricing for existing customers.
They have worked out it is cheaper for them to keep their existing customers rather than spend money obtaining new ones, which means they can shave a few points off their mortgage margins. If you are then purely advising on interest rates it becomes impossible to advise your client to change to a new lender which will lead to the advice of a rate switch.
Lenders are keen to fix people for longer too as it guarantees their own debt books, but the general public must be aware of any large early repayment charges that come with these attractive rates.
Lenders need to make their profit somewhere and fixing customers to long-term rates, then charging huge exit fees when individual circumstances change, seems to be a go-to strategy right now.
I believe they are hedging that a large portion of people will have to pay early repayment charges over the next five years. People need to remember, banks aim to make the maximum profit which they are not currently finding in their lending margins.
People’s lives are constantly changing and evolving. This means that the pricing of a mortgage falls pretty low on priorities for many.
It’s crucial for our advisers to stay close to our clients and make sure we are advising correctly, mitigating the risk of problems.
John Phillips, national operations director at Just Mortgages and Spicerhaart
With the vast amount of change this year, there will probably be a lot more product transfers in 2021 as it could well be harder for a lot of individuals to remortgage away to a different lender.
In the past few months, there has been a lot of change in the job market; clients are now moving jobs, coming off furlough, some are going self-employed. All of these changes may make it harder for people to remortgage to a new lender and should result in more product transfers.
The positive is that product ranges are now back to virtually pre-pandemic levels, so the choice is there. To get that choice right, regardless of whether a client is having a remortgage or a product transfer, it is essential to conduct a thorough review.
One of the key differences in how Just Mortgages approaches product transfers is that our brokers take a holistic view of the client, much like we would with a new client. We will conduct a full fact-find, from top to bottom to understand what has changed.
Whether that is salary, or the client’s family circumstances have changed, our brokers do a comprehensive review with the client to ensure they are switched onto the right product and they have the right protection in place.
Once that review has been completed, it will become clear if a product transfer is the right move for the client, and our brokers can ensure they get the best advice possible.
With competition between lenders fierce, rates are currently extremely low, and most clients whose salary have held up will be better off switching products, rather than moving onto the lender’s standard variable rate.