mainstream

Quality not quantity

New understanding needs to be achieved if the intermediary channel is going to thrive in the changed mortgage landscape

by

Chris Tanner,

managing director, HomeLoan Partnership

When we look at the state of the mortgage market, it is easy to slip into a nostalgic daydream for the ‘good old days’ when finding a mortgage for a client was not a question of ‘where?’ but more of ‘how many choices?’ Now we face a really barren landscape where not only has the sub-prime market all but disappeared along with the lenders who had become household names, but the mainstream market has become totally reliant on a few big names and the trend for not taking any kind of risk has led to longer and longer application to offer times.

Much has been made of the

government’s efforts to get banks to resume lending. However, when lending institutions have been told to ensure that they get their own houses in order, particularly from the point of capital adequacy, as well as working through the inevitable fall out from the economic downturn which has seen arrears ratios go skyward and repossession on a scale not seen since the late 80s and early

26 mortgage introducer MAY 2010

90s, it is hardly surprising that caution has become the name of the game. If you then add in the extra

responsibility for ensuring clients’ ability to repay under MMR recommendations and the closure of the securitisation markets, lenders being unwilling to lend is a little easier to understand.

Value

However, from the point of view of

brokers both AR and DA, the mortgage famine has not only made their usefulness to their clients a concern, but also with so little money about, their value to the lending community has come under even greater scrutiny. Clearly, from the broker’s standpoint,

apart from the inevitable slowdown in lender’s turnaround times and the shortage of funds, the dual pricing of products has caused plenty of resentment. Products sold through a branch network or directly online had in some cases been better for the client than those offered through the intermediary channel. Twelve months ago, the trade press was full of this kind of story and there were those who wondered whether the love affair between lenders and introducer had actually been called off.

Yet here we are in 2010 with the hint that new lenders are gathering on the borders and existing ones are dusting off new products and beginning to ease criteria, so what does the relationship hold going forward?

landscape

If we look at the existing landscape, the industry is actually dominated by two major providers, Santander and Lloyds Banking Group. As far as Lloyds is concerned, it is easy to see why it is so dominant when you remember that they now include so many names from the past, such as Halifax, Bank of Scotland, Birmingham Midshires, and Cheltenham & Gloucester, all of which were strongly involved with the intermediary community.

And what has become clear is that although lenders are happy to see business introduced to them, the value to brokers in terms of procuration fees, has fallen in some cases to nothing, and with funding targets so low, lenders could go out direct and not have to pay a fee.

assessments

Two other factors are now very apparent. The use of credit scoring has not only been adopted as a means of Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48