News Review: Mutuals
Teachers BS launches broker deals with MI By Sarah Davidson and Yuan Phoon
the mutual sector has long been thought of as sleepy and lacking in innovation. But teachers Building Society is one mutual that has decided to step up and challenge this image. its first step towards achieving that is to partner with network mortgage intelligence to take its mortgages to borrowers across the uK through the broker channel. the society launched a
range of fixed and discount residential
mortgages
specifically designed for educational professionals with the network in late may and after an initial test period, plans to roll distribution out to Legal & general later this year.
Last year it lent £15m direct
to consumers, a sum it plans to double this year by lending through intermediaries. it might sound as though
this will have limited appeal for brokers but James Bawa, chief executive, says there is a community of 1.35 million people in education in the uK. teachers is there to listen to brokers and to lend to borrowers in this profession, even if it seems they might not be suitable for a mortgage. the key is knowing and understanding the customer’s financial situation, how it’s likely to develop and underwriting manually for that. Bawa says: “teachers has
always been passionate about our customer service and we make sure every customer has an individual point of contact. But we realised we were excluding doing mortgage business with educational
professionals who wanted advice from their broker. Brokers deal with 60% plus of mortgages and we should be dealing with them.” alan gravett, head of sales
and marketing at the mutual, adds: “We’re not the biggest lender in the market place, we’re one of the smaller ones but James makes the point about customer servicing. We are passionate about it and we want to take that to the broker market. “We’re ready to lend. We sit
on a strong capital position and i think we recognise both the fact that we should offer teachers the chance to come through the channel of their choice but also that intermediaries have the dominant share in the market at the moment and it would be crazy not to offer products via them.” mortgage
intelligence
advisers will be the first brokers with access to teachers deals but gravett says if it goes well, he will be extending distribution. “our customer retention
is around 90%,” he says. “We don’t want to lose that strength and the relationship with mortgage intelligence feels comfortable, open and honest. its values fit in closely with our own.” Sally Laker, managing director of mi, says: “in this climate it is great to be adding a new lender to panel with a unique proposition. this gives us access to the specialist knowledge of teachers, as they understand the needs of a wide range of education professionals in addition to teachers.” So what should brokers
6 mortgage introducer JUNE 2011
be looking out for when speaking to potential teachers borrowers? “unless you’re one of the
big banks being supported by the government liquidity schemes you have to fight for the business that isn’t the top quality prime,” says gravett. “For us that’s not been a problem because we deal with teachers who are not the wealthiest individuals anyway. “We’ve always got space for
high loan to value lending and government schemes like Homebuy and the new FirstBuy are a natural fit for us. in some cases we can lend with no deposit under these schemes because we understand teachers are consistent in their aversion to risk and career progression.”
Know your customer underwriting has been a bone of contention for borrowers and brokers alike with both increasingly frustrated when high street lenders turn down apparently good cases. But teachers says it will not fall into this trap. “We have specialised in education since the start,” says Bawa. “if you’re a contract teacher, we know how your contract works depending on which sector of education you’re in. “We will give you a mortgage one month before you start a new job because we know people need to get themselves settled in. “as a mutual it’s important
that you have a purpose. a lot of societies try to be all things to all people. But we understand the education sector. We understand all the quirks. We understand what
teachers are worried about in this moment in time. We can bespoke deals because we don’t do credit scoring and we know every teacher has got a great story. “We know our stuff in
the education sector so we can be sensible about what borrowers need.”
Now’s the time gravett points out that now is the perfect time for brokers to target teachers looking for a mortgage because the three year pay freeze their union negotiated has come to an end. “the recession hadn’t
really happened to teachers as it had for many in the private sector but suddenly they’ve become more alive to what the rest of us have been facing for the last couple of years,” he says. “For the most part teachers are very well protected but they still feel as if they’re being hurt by a recession.
TEACHERS IN BRIEF
· Teachers Building Society was set up by the National Union of Teachers and remains its only endorsed lender
· Only one applicant needs to be an educational professional if joint · LTV thresholds start at 75% and go up to 100% under some shared equity, Homebuy and FirstBuy schemes
· It is considering offering a 95% LTV deal for first-time buyer teachers · Teachers will lend to borrowers up to 85 years old
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