News Review: Near Prime


Customers need brokers to approach them by


Alan Cleary, managing director, Precise


Mortgages


We have recently produced a supplement in association with mortgage introducer called Prime time for near Prime that seeks to highlight the problems faced by many customers in getting a mortgage and also highlighting the increasingly attractive options available to them. as i have said on previous occasions there are literally millions of people in the uK who have some form of blemish on their credit history. the number of people in this category is likely to increase over the next few years as increased taxation and inflation coupled with low pay increases squeeze the net disposable incomes of many families. add to this the spectre of


an increase in interest rates and public sector job cuts; i think you will agree that there are strong headwinds to come. i am by no means a doom monger but i do believe that after any recession there is always a tail and that tail is likely to last some time. this needn’t cause you


to panic as i believe that customers need sound mortgage advice more than ever and there is an increasing army of people who cannot get a mortgage from a high street lender. i have no doubt that many of the “fair weather brokers” have left the industry or at least have stopped selling mortgages but those


brokers that are left need to be much more than just sales people taking orders from a rampantly hungry customer base. they need to offer a genuine solution to their customers’ problems.


Fear or greed People normally buy for one of two reasons: fear or greed. right now the general mood of the nation is one of fear and this can be seen in spending patterns. net lending in most asset classes is down as people pay down their debts. credit cards, mortgages, overdrafts are all massively down on their peak because when people are fearful they hunker down. they are scared of a decreasing standard of living, they are scared about paying their bills, and they are scared about losing their jobs. obviously, not everyone is in the same boat and it is important to look at every situation on an individual basis but this is where a good broker is worth his or her weight in gold. in our supplement we highlighted six case studies of people who could be helped by a mortgage broker with some of the products available from Precise mortgages. the options for these customers are increasing and there are now at least four lenders that specialise in lending to people who struggle to get mortgages from a high street lender. in one of our case studies


a lady called emily who like many people had got sucked in by all the credit card promotions that were commonplace in the boom.


She had amassed a fairly sizable balance on her cards but now that she was unable to get interest free deals the payments were starting to get out of control. Her iFa advised her to consolidate her expensive debt onto her mortgage which substantially reduced the interest she was paying and allowed her to start reducing the balance and at the same time reduce her outgoings. the deal was on an early repayment charge free product so she is free to pay off the mortgage whenever she has the ability to do so. Because emily didn’t have a perfect credit history she was unable to get a loan on the high street. Without her iFa she would


never have known about Precise mortgages products and she certainly would not have been advised to use us by a high street lender’s mortgage adviser. this is a perfect example of the significant benefits of using a broker rather than going into a branch of a high street lender. there are 62 million credit


cards in circulation in the uK that more than there are people eligible to get one. the average interest rate is 18% and that includes 30% of those cards being on interest free periods. many people are paying 25% to 30% aPr on their cards. By helping these people reorganise their debts, brokers may be able to significantly reduce their outgoings or speed up how quickly they pay down their debts or even both at the same time. now i will get onto the hard


bit. Precise mortgages has commissioned a survey that sought the views of over 2000 customers that currently have a mortgage. there is a mass of interesting data but i will just focus on what is relevant to this article. only 66% of people have some degree of confidence about being able to secure a mortgage and 18% of people are not confident at all. in the context of the overall mortgage market the 18% not confident represents about 1.8 million people. Some 46% of people who had applied for a mortgage in the last 12 months had gone direct to a high street lender and 38% to a mortgage broker. one possible view based on


these findings is that unless mortgage brokers proactively contact those customers that are not confident about getting a mortgage they are unlikely to do anything and those that are in the market for a mortgage are more likely to go direct than via a broker. this is puzzling as when


asked about whether they would prefer to visit each high street lender individually in pursuit of the best deal or going to one person who can advise about all lenders, 81% of 2,113 people surveyed said that they would go to the person advising about all lenders. incidentally only 9% said


they would go to the banks with 10% not having a view. my conclusion is that


if brokers do not have a proactive relationship with their customers then the chances are the customer will do nothing or go direct to a high street lender.


mortgage introducer JUNE 2011 19


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