First published in Mortgage Introducer
Right now, I know that broker firms are working incredibly hard to push through the current situation and to ensure they come out the other side of it in one piece – whenever that might be.
There is no doubting that, but I also want to take a moment to consider lenders in all of this, because I sense in some quarters that a small minority are frustrated with mortgage lenders. I’ve heard broker rumblings about whether lenders are doing all they can, that the decisions they’ve made since the outbreak haven’t sufficiently considered the effect on the broker market, and that there are at best some unintended consequences for intermediaries.
From my perspective, as much as the financial impact for networks and brokers is very real and severe, there needs to be an understanding about what all mortgage market stakeholders are going through right now, because I have faith that lenders’ decisions to reduce product ranges, or stop new lending, or pull back on LTV levels, or cancel offers, were sadly unavoidable in most cases.
I read recently of an adviser suggesting the broker community will somehow punish those lenders who have ‘let them down’ when the market returns to normality. I understand the anger and hurt that many are feeling but I’m just not sure that lenders had any alternative. We might take a dim view of some lenders’ business continuity outcomes in the face of the pandemic, but hindsight is a wonderful thing.
One of the major outcomes of the lending constraints though, is the whopping increase in Product Transfers which must be helpful to lenders but which has serious financial consequences for most brokers.
There needs to be patience and understanding right across the board at present, because in a very true sense, it’s likely that it will be lenders who drive the market recovery to any sort of ‘normality’ over the weeks and months ahead. We need them just as they need us.
It’s great to see we’re already beginning to see some significant changes though. In the last week alone, a number of lenders have inched back into sectors and markets that they had left in the initial period after the lockdown was announced.
At the time of writing, Barclays has returned to 80% LTV and Nationwide to 85% LTV and we shouldn’t forget that HSBC has been hugely helpful throughout, by delivering a consistent capability and willingness to lend. Whether that’s the reintroduction of remortgage options, interest-only mortgages, or new buy-to-let ranges, lenders are clearly moving their propositions forward and this will only help both existing and new borrowers.
We’ve also seen some potentially positive soundings in the specialist lending arena, with discussions taking place between the Treasury, Bank of England and our trade bodies about support for non-bank lenders, who are currently not able to access the funding schemes of their deposit-taking peer group.
This is a potentially important development especially given the large number of non-mainstream borrowers serviced by these lenders and the support they can provide to, for example, self-employed borrowers, freelancers, contractors, those with adverse credit, and the like. There can be little doubt that post-crisis the need for specialist lending will grow and it’s vitally important we have a strong group of lenders active in these areas.
So, while there might be a level of frustration with, and a desire for better communication from, certain lenders, in the grand scheme of things we, as an advisory community, need to recognise the unique situation we (and they) are in and their consequent decisions.
Lender-broker relationships are strong in the UK market and can certainly survive this to mutual advantage. I will sign off by politely suggesting to the lending community that it could consider an increase in fees paid for product transfer business, given the detrimental effect of the income plummet for brokers, despite their loyalty and commitment.
Rob Clifford, Chief Executive of Stonebridge