The date to apply for the Self-Employment Income Support Scheme for the fourth and final time passed in June, the furlough support is due to come to a close in September and payment holidays will end at the end of this month.
By now, people are either already depending on their own incomes to pay their way to or preparing to do so once the forbearance ends.
So, with most borrowers on track to being self-sufficient again, is it time to strike criteria which relates to changes in income due to the pandemic?
When should lenders start considering the removal of pandemic-based criteria?
When asked in a Mortgage Solutions poll: “Will sun and an excess of delayed fun with family and friends bring a summer of service difficulties?” around 73 per cent of brokers said that they were already seeing lumpy service levels.
This compares to just 18 per cent of those surveyed who thought it wouldn’t make a difference and just over 9 per cent who thought that everyone was too busy or well-managed for that to happen.
It comes after the news from Prime Minister Boris Johnson on Monday that many Covid-19 rules would be lifted on 19 July, meaning that people can socialise and travel normally after nearly 18 months of on and off restrictions.
Some brokers thought that the learning curve the sector has been on over the past year or so would help lenders and brokers navigate the summer months, whilst others took a more negative view.
Lessons learned
Chapelgate Private Finance associate director Colin Payne said he didn’t believe service levels from “freedom day” onwards would be impacted negatively.
He explained: “Lenders have learnt a great deal over the course of the last 16 months on how best to manage their processes and barring the odd exception the vast majority have had extremely good service levels.
“This is despite receiving a huge increase in volume due to pent up demand from Brexit, the sudden need for people to seek a home with outside space and the Stamp Duty holiday.”
He pointed to lenders using automated or desktop valuations, using mortgage verification schemes to verify income and reducing documents required.
He added: “So whilst the early days of the pandemic created problems for brokers and lenders alike, these have in the main been successfully overcome, which can only be good news for service levels going forward.”
Chess Mortgages adviser and director Bob Singh said that service levels over the summer would be a “game of two halves” for brokers; those with cases at £250,000 and below and those with cases priced higher than £250,000.
He said that brokers who deal with larger cases would experience a bit of a slowdown but not experience too much disruption as lender capacity is expected to increase.
Singh added that there could be service disruption due to further stamp duty deadlines but hoped that lessons had been learnt from the last month.
He said: “Freedom day will be a green light for many to go out and have a good time. Home buying may not be a big priority for some. The expected slowdown in the marketplace coupled with the spectre of rising inflation and possible mass unemployment following the end of the furlough scheme are factors which could slow down the relentless rise in house price inflation fuelled by the stamp duty benefits announced last year.”
‘Shabby’ service
Jane King, mortgage and equity release adviser, Ash Ridge Private Finance, said that the summer would not make much difference to service levels.
She said that there has been some “very shabby service standards” over the past year from some lenders as underwriters, administrators and tech support have been working remotely.
She also noted that some business development managers had been late in returning calls, which had delayed cases.
King said: “We have had to manage client expectations and make sure that this does not reflect badly on us as many of us have been working long hours and trying our best to get cases through. The stamp duty holiday stampede has not helped.”
She added: “As a result I think I am so used to it that it won’t make much difference. I have been advising clients for the past year that if they want fast turnaround times then we need to maybe select a lender on this priority rather than rate and this may well continue to be the case.”
Bank of England data shows house purchases were at the same level as last July and anecdotal reports suggest August continued to be busy.
But taking a break from the pressures of work is essential and especially so during this unusual period.
So this week Mortgage Solutions is asking if you managed to fit in some time away from work during the summer?
Did you take a summer holiday this year?
Some 74 per cent said they predicted a shift towards properties near green spaces while 68 per cent believe homes with private, non-communal space will become more desirable.
Lockdown restrictions have been a challenge for everyone, but those without gardens have been forced to spend a hot spring trapped indoors.
So this week, Mortgage Solutions wants to know if you have begun to see a rise in the number of buyers looking for a home with its own garden.
Have you seen a rise in house hunters seeking a home with a garden compared to before the pandemic?
Writing for Mortgage Solutions, Martin Langlands, chief risk officer at Harpenden Building Society, said: “Proving to your supply chain and the regulators that your business can operate seamlessly during an IT meltdown will be the main issue facing financial firms in Q2.”
He added that large and medium organisations already have robust operational plans and many small and medium size enterprises have thought through how they would operate in the event of a disaster.
But with more controls and rules designed to “beef up” this process, all organisations are going to have to apply more due diligence and put in place more controls and contingencies.
So this week, Mortgage Solutions wanted to find out how ready intermediary firms are to cope with a massive system failure.
Is your business operationally resilient in the event of an IT meltdown?
Free legals, the perk offered to remortgage borrowers to make switching to a new deal cheap and easy, are giving mortgage brokers a service headache and causing them reputational damage.
Just over 40 per cent of intermediaries responding to Mortgage Solutions’ latest poll said the change they wanted lenders to implement next year that would have the biggest impact on their clients was better management of the service given by free-legal conveyancers.
Brokers say the term ‘free-legals’ is a misnomer because the process takes so long it costs their client money when their mortgage deal expires and then ends up on a more expensive standard variable rate (SVR) until the remortgage completes. It also costs them more in man power than if the conveyancing work had been paid for.
Colin Chapman, director of Genesis Financial Services, said: “Are free legals really free? Technically yes, but not if you add up the time we spend chasing cases and trying to almost reinvent the wheel to get them over the line to avoid deadlines being missed.”
‘Shocking’ service
Chapman describe the free legals package as ‘shocking’. He said there was a lack of communication from the conveyancer, emails and calls went unanswered and firms denied receiving documents that had been securely sent to them but when challenged would ‘miraculously appear’.
He added: “Deadlines have been missed and clients revert to a standard variable rate for reasons that are totally avoidable. The most recent example is where a mortgage deed was rejected the day before completion after sitting in the conveyancer’s office for over six weeks, signed and ready to go.
“The package has to either change so that lenders offer cash back instead of free legals or solicitors need to staff their operations appropriately for the volume of cases they are telling the lender they can handle.”
Back of the queue
Richard Campo, managing director of Rose Capital Partners, has experienced free legal problems with his clients and his own mortgage.
Campo said that some of his cases have taken so long to complete that the lender had since dropped their rates. He added that requesting a new mortgage offer with a cheaper product then put the client at the back of the conveyancer’s queue again.
“This very same thing happened to me on my own remortgage last month,” said Campo.
“My mortgage offer was produced at the end of September. A new offer was needed, and produced on the same day of the change by Halifax, so we pushed for completion at the end of November.
“I had no update or even a response to calls, emails or secure messages from me and my team for over a week. That cost me nearly £1,000 as I hit the standard variable rate prompting a very embarrassing conversation with my wife to explain why the ‘expert’ got it wrong. The latter was more painful.”
Campo said he is calling his remortgage clients to warn them of the issues and begin the switching process earlier.
‘Unprecedented and unexpected volumes’
The lenders and legal firms picked out by brokers for offering poor service through free legal packages were NatWest, Virgin Money, Enact and Involegal.
NatWest admitted it had free legal service issues at The Mortgage and Protection Event in Manchester at the beginning of November.
A NatWest spokesperson said: “In recent weeks we have seen a high demand from customers, and are working with all of our partners to ensure that service levels are strong throughout the home buying process.”
Involegal said the contracts that conveyancers had with high street banks were based on the bank’s anticipated work volumes and were not based on a fixed number of cases which made it difficult to anticipate the level of staff that would be needed.
Matthew Tossell, chief executive of Involegal, said: “Like many other firms in the remortgage and conveyancing sector at the moment, we have received case volumes far in excess of a particular lender’s anticipated work volumes in a short space of time. This has put considerable strain on our ability to answer phone calls and emails within our normal service level standards.
“We took the proactive step of pausing instructions from our client over a month ago to ensure we could prioritise the processing of existing cases. However, this has inevitably impacted on our ability to communicate as effectively as we would like with the bank’s customers in the short term and we are sorry for any frustration this has caused.”
Tossell said the firm was “working around the clock” with the lender to deal with the “unprecedented and unexpected volumes” of remortgages in the market. It is also having discussions with banks around managing work volumes in the future.
A spokesperson for Virgin Money said: “We are always looking to improve service levels for customers and we work closely with partners to address any issues which occur. We’ll ensure the issues raised here form part of those discussions.”
Enact did not respond to requests for comment.
