News Review: Specialist Prime
When the boot is on the other foot
by
Colin Snowdon
chief
executive, residential mortgages, Aldermore
i was watching a science programme on tV the other evening, which explained the importance of the earth’s magnetic field. in a nutshell, if it didn’t exist, then neither would we. So it was a bit disconcerting to hear that its polarity could switch at any moment, with north becoming South and South becoming north. apparently, it’s happened before and it could happen again, any time soon. i can’t pretend that i’ve
got to the bottom of pre- cisely what the effect of such a switch would be (presum- ably compass manufacturers would be overjoyed?), but it did get me thinking about the types of unusual situations in which our perception of nor- mality is suddenly turned on its head. actually, i had to think no
further than the intermediary mortgage market, because one of the most notable conse- quences of the credit crunch has been the way in which the power base has suddenly shifted from intermediaries to lenders. a couple of years ago, lend-
ers had to dance to the tune of mortgage distributors and mortgage intermediaries, who undoubtedly had the upper hand because they controlled distribution and new busi- ness volumes, but not so today. When the market came to a grinding halt in 2008 the boot very quickly switched foot.
With lenders no longer in- terested in new business, they dictated the terms on which they were willing to work with intermediaries and a number of lenders abandoned the in- termediary market altogether; others adopted a policy of dual pricing and the rug was pulled from under the packag- ing market overnight.
Change in polarity
Having recently negotiated deals with a number of in- termediary distribution part- ners, i was immediately struck by the consequences of the change in polarity in the mort- gage market. not only did it help negotiations go a lot eas- ier, but i was also in danger of letting the situation go to my head. However, i resisted the temptation to let it do so, for two very important reasons. Firstly, i have always been a believer that the most ro- bust deals are those which strike an evenly matched bal- ance between the interests of both parties. Secondly, i also recognise that, like the earth’s magnetic field, the balance of power may well switch back in favour of distributors, as the market picks up again in the future. i believe all lenders now
find themselves in an impor- tant period when a new type of relationship has to be struck with intermediaries, which goes far beyond the simple customer/supplier style rela- tionships of old. We need to work together in collaborative partnerships, in which both parties recognise the other side’s needs and are genuinely willing to work to help achieve them.
6 mortgage introducer JUNE 2010
of paramount importance
A successful working rela- tionship has to be an evenly balanced deal, so what are brokers looking for in return? From the feedback I have received over the past few weeks, brokers want the following: firstly, not to be treated as second class citi- zens, where they are clearly playing second fiddle to a bank or building society’s branch network. This isn’t simply a matter of dual pric- ing; it’s also about receiving a reliable service.
Which brings me on to the second point, which is reliability of service. Brokers don’t want to be messed about by lenders who re- quest additional information, take days to make a decision and then say no. Actually, in my experience most brokers don’t mind the answer being no, as long as the decision is made quickly and for a fair and understandable reason. Brokers also want lenders to stop playing games with credit scoring systems in which they manipulate cut- off levels to control business volumes. Thirdly, brokers also want the relationships they forge with lenders to be long-term and they want to know that they won’t be cast aside the minute a lender reaches their new business target. All of these requirements are perfectly understandable. This is a time for lenders and intermediaries to forge a new style of genuinely collaborative relationship which works to the benefit of all concerned - especially borrowers.
for all lenders is the need to control new business quality and this has to be the key issue on which new working relationships are forged. Having just gone through
the process of developing a new mortgage application and processing system, i am still aware that no amount of technology can give lenders a 100% rock-solid answer to some of the fun- damental questions about a prospective borrower’s credit- worthiness and ability to repay their mortgage.
Quality contact
Why? Because in many in- stances lenders don’t have the same face-to-face contact time with clients that brokers have, nor do we have the same abil- ity as a broker to gain a com- plete picture of a borrower’s lifestyle and circumstances. Lenders therefore want bro- kers to work more closely with them, to help assess a client’s circumstances and suitability for a mortgage. Prior to the credit crunch,
a number of brokers would have submitted marginal ap- plications to lenders in the hope of success, but with no real expectation of such an outcome. indeed, when new lenders came to the market, they were typically tested by brokers who submitted appli- cations which pushed credit criteria to the limits. However, that approach
won’t cut ice today. if brokers do try to test lenders in this way, they must accept that lenders will increasingly be reluctant to accept further business from them.
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