The property sector should have an independent valuation process – Star Letter 08/10/2021
This week’s comment came from Adam Hosker, in response to the feature: Let’s drop the term ‘down valuation’ and unify the industry – Baguley
He said: “Totally agree but if you want this to change, its more than rebranding down valuation. It starts by recognising valuers are not infallible and putting in place an independent valuation process.
“Let’s fix it rather than putting on a rebranding bandage.”
He added: “Yes, agents need to present why they believe valuations may differ, then what next? Fix the next and there is less of an argument.”
Long way to go before brokers get on board with ‘smoke and mirrors’ crypto-mortgages – Star Letter 01/10/2021
This week’s comment comes from Andy Wilson in response to the story ‘Coadjute creates first UK cryptocurrency for mortgage transactions‘.
Wilson writes: “Sounds wonderful, doesn’t it? No more delays on the day of completion, less stress for the homeowners, fewer irate phone calls for the mortgage brokers, estate agents and solicitors sat on the back of the removal wagon with nowhere to plug the kettle in.
“However, mention the word ‘cryptocurrency’ to any of those parties and you will get an immediate response of ‘too risky’ and ‘it’s not for us’, me included.
“I don’t profess to know anything at all about bitcoin, cryptocurrencies, blockchain or wallets (other than the one with my Costa card in it) and frankly I don’t need to. Financial transactions in this country should be in good old fashioned sterling, including house sales.
“Everyone can understand that; it is (relatively) safe, money gets to its destination eventually and there is no risk of having your life savings turned into a digital string of numbers that can be stolen in seconds and never, ever traced again (my own perception, but probably not uncommon).
“I accept I am perhaps a dinosaur in this respect. But there is a long, long way to go before ordinary mortgage brokers need to get on board with such innovation, and the scary smoke and mirrors world of cryptocurrency.”
‘Sub-one per cent deals are great for borrowers’ – Star Letter 27/08/2021
This week’s comment was in response to our Star Letter last week, where Lankydes said sub-one per cent deals were “utter stupidity”.
Positivethinker17 said: “[With] fractional reserve banking there’s never really been any value to the money.
“[There is] nothing new here and sub-one per cent deals are great for borrowers.”.
Sub-one per cent deals are a sign of ‘utter stupidity’ – Star Letter 20/08/2021
This week’s first comment comes from LankyDes in response to the news that Yorkshire Building Society was bringing out sub-one per cent mortgages up to 75 per cent loan to value (LTV).
He said: “[This is] evidence of an economy gone wrong for 40 years. Utter stupidity these rates, there is no value in the money used to lend any more. Only asset prices matter as the rich know – with their six country houses – that even they might not be safe if [the] money to buy them loses its value.
“Money put into assets like that has been sucked out of the real economy and will stay out forever. Please don’t give me the politics of envy. I envy nobody on Earth. Indeed, I pity people who have such a desire for wealth.”
Stephen Barry also had a view on the low-rate market, as he reacted to the news that TSB was adding a 0.84 per cent deal to its range.
Barry pointed out the discrepancy between these low rate deals, often offered to borrowers with 25-40 per cent equity in their homes and older homeowners who tended to have more equity but were paying higher rates.
He said: “With the latest mortgage deals of less than one per cent with an LTV of 75 per cent it would be interesting to note why the retirement equity release mortgage sector is still on average three times more than that.
“Most clients seeking to release some equity to subsidise their state pension or repay their end of term interest-only mortgages have on average 66 per cent equity.”
The concept of a direct relationship with BDMs is in the past – Star Letter 13/08/2021
This week’s comment came from Spinmeister, in response to the article: Excuses for delays only go so far at this stage of the pandemic – Marketwatch
Spinmeister said: “Some lenders have used Covid to directly reduce service and standards to brokers.
“Some bank’s business development managers (BDMs) are now simply order takers. Any concept of a direct relationship with a BDM able to help you with cases is long past.”
Spinmeister added: “They’ll get their volume, but not any more long-term relationships with brokers wanting to give preferred lenders business due to their service proposition. They’re far too busy to be bothered anymore.”
Anything that gives more access to RIOs is a good thing – Star Letter 06/08/2021
This week’s comment was from Scott Taylor-Barr, in response to the article: RIO affordability barriers solved with life cover, says LiveMore
He said: “This is certainly a great innovation and a sensible way to get more people through the retirement interest-only (RIO) affordability rules.”
Life cover eligibility
“My only initial concern would be how many people could get life cover, given age and potential medical issues, up to age 90 at a cost that is both affordable to them and still allows them to pass the lenders affordability?
“That being said, anything that potentially allows more people to access RIOs is a good thing. I hope it catches on and I hope that life companies take note and move to help too.”
Clients accept solicitor fees as ‘necessary cost’ but not brokers’ – Star Letter 25/06/2021
This week in a Marketwatch piece, HD Consultants owner Howard Reuben, Rose Capital’s managing director Richard Campo and Darryl Dhoffer, mortgage and protection consultant at The Mortgage Expert debated whether broker fees should be on a par with solicitors fees.
They suggested that due to a higher volume of business and heightened property prices there should be a restructuring of procuration fees, commission, and broker fees to better reflect the increased workload.
Paul Smulovitch said: “The difference here is the perception. Most clients accept a solicitor is a necessary cost and will pay accordingly, however, regarding brokers some clients are aware they can do without or use effective robo-advice so it is being sensible and justifying the charge.”
He added: “However, as most conveyancers charge circa £1,000 for work, as a broker fee this is not unreasonable at all.”
Adam Hosker said: “[It is] your business. Charge what you think works best for your business. If you think broker fees should match solicitors and be based on case complexity, then do it.”
‘The last thing my clients need are seven or 10-year fixed rates’ – Star Letter 18/06/2021
This week, JLM Mortgage Services director Rory Jospeh and head of mortgage finance Sebastian Murphy proposed introducing seven or 10-year fixes into the market to cater for higher loan to value (LTV) borrowers.
They also criticised the market’s moved to launch sub-one percent rates, arguing that they could be the “equivalent of a chocolate teapot”.
John Azopardi said: “The last thing my clients need are seven or 10-year fixed rates. The last person who successfully planned seven years ahead was Joseph wearing a technicoloured dream coat in Egypt.”
He continued: “The reason that these products [seven and 10-year fixed rates] are rarely taken up is that they are over-priced and inflexible. Clients often pay more than on a five-year rate, coupled with the inflexibility of a long early repayment charge (ERC).
“If penalties dropped off or reduced drastically after five years then maybe – and if the rate was slightly over the five-year rate then possibly – but until then I would suspect that very little business is transacted at seven and 10 years.
He added: “More to the point, if the lenders are buying in more lending at sub 60 per cent to improve market share and to ensure that they can do more high loan to income lending above 85 per cent I am all in favour of their stance. That’s a win-win for all my clients and we get the added bonus of news space when we are competing with Euro 2020 and the Delta variant.”
A robust file will protect brokers from the growing ‘sue culture’ – Star Letter 21/05/2021
The first comment was in response to the story: Broker wins case against charge of mis-selling interest-only mortgage
Andy Wilson said: “As always, a robust file will help to protect against losing claims such as these, which are likely to become more and more common whilst we live in a ‘sue culture’.
“It is not enough to give your clients sound advice, you need to be able to prove you gave them sound advice.”
He added: “Converting an interest-only mortgage to a capital and interest loan in the future is an acceptable repayment strategy, as long as the effects and risks of such a strategy are carefully explained to the client upfront, and in writing. There would also need to be evidence on file of how this change would become affordable, preferably with some stress-testing calculations in place too in case interest rates rise in the meantime.
“It would not be an acceptable strategy however, if there was no likelihood of meaningful changes to the borrowers income in the future to be able to afford to convert in this way.”
“We also know all too well that borrowers conveniently forget they needed to put in place a plan to repay the debt at the end of the term. They can also conveniently suffer total amnesia when asked to recount conversations that may or may not have taken place with their adviser, especially when someone is given a whiff of possible compensation, so documented evidence on file and saved forever is key,” he added.
Wilson said: “As an example, my supervising network sensibly keeps electronic files for 80 years, and this is solely to be able to defend complaints.”
Long live the BDM!
Last week’s Star Letter comment, which questioned the need for business development managers (BDMs), also garnered responses.
Simon Wilkinson kicked off the support for BDMs, saying: “A good experienced BDM is a lifeline for brokers and their value should not be in question.
“The idea of different lender BDMs sharing a WhatsApp group is excellent and a useful way of getting cases placed and co-operation between BDMs is a useful resource for brokers.”
Danielle Panteli weighed in, adding: “BDMs are so valuable. I’d say I speak to at least one of our BDMs once a week.
“Some I’ve known through my almost 20 years doing the job and are more like friends. A BDM’s guidance, help, advice quite often decides if a case goes through or not. I’ve had more situations than I can count where a case has been declined and a BDM has managed to turn it around.
“I, for one, love our BDMs and love seeing them in the office for a coffee and catching up. It’s also hugely valuable for new staff to learn the lenders USPs and during the last year we’ve relied heavily on our BDMs support with various changes in criteria especially for the self-employed. Long live the BDM.”
Arron Bardoe said: “How can any broker demonstrate they are maintaining their awareness of lenders’ criteria and getting their clients the best deals without speaking to their BDMs?
“While the quality varies in what support a BDM can provide, they make all the difference in my business.”
Tiffany C saw things from both sides, saying: “Not all BDMs from each lender are as co-operative or truly adding any value compared to others.
“I know some BDMs who go the extra mile for me and my cases which makes a huge difference than if I didn’t have that relationship in the first place. There are certainly some BDMs who are just there and not adding any extra value than if I called the broker helpdesk or looked it up on their website.”
Brokers don’t need a BDM to sell to them to use a lender – Star Letter 14/05/2021
This week’s first comment was a response to the article: Without BDMs, it is difficult to make ‘out-of-policy’ cases fit – Marketwatch
Andrew Ducksbury said: “Before regulation, business development managers (BDMs) were the lender’s sales force.
“They had targets, appointment targets and were pushed onto the broker community by lenders – since regulation you don’t need BDMs.
Ducksbury added: “If, as a broker, you are any good, you don’t need to be sold to in order to use a lender. You use the lender because for they are the best available for the customer you’re dealing with.
“I’ve not allowed BDMs to make appointments with me at my office for years.”
Benefits of advice
Robert Drury responded to the article: Product transfers: Benefit to the customer or the lender?
He said: “We contact all our clients three to four months before the maturity of their current deal, and while some clients do go direct to the lender due to the ease of the process nowadays, many also come back to talk to us.
“The loan to value (LTV) is only one area for discussion – do clients want to borrow more? Borrow less? Decrease the term?”
Drury added: “Even if my advice is to stay with the existing lender, our clients really appreciate that time spent discussing their biggest financial commitment.
“Two hours every two to five years seems to be time well spent with our clients and many of them allow me to make the product transfer for them, on their behalf, as we cement our relationship with the client for the next time they look to review their mortgage.”