News Review: Packaging
New lenders good news for broker market all of this leads me to
by Ian Balfour, CEO, Solent Mortgage Services
Just loving all the good news! the Financial Services authority has revealed that 11 new lenders have applied for authorisation in the past 12 months which is potentially great news for the packager community. of course, assuming they
are successful and their backers are not put off by any future economic hiccoughs, one of the most important parts of their business plan will be the choice of route to market. the majority will not have a
branch network or significant sums to spend on blanket coverage to build a brand and therefore will be looking for other conduits to reach the market. We have seen all too clearly that a price war has broken out in the prime sector and it could be argued that lenders are not getting the volumes they need.
surmise that while the underwriting criteria is still difficult for brokers to negotiate, it is evident that the strategy, conscious or perceived, of lenders trying to freeze brokers out in favour of a direct approach is dead in the water. While the intermediary
sector has shrunk, lenders have all had to recognise that although their lending targets are still modest, they are going to need broker business to meet them. on top of that new lenders mean more competition and while there will be some segmentation and specialisation in key areas. new entrants are going to have to be particularly canny with their offerings, as competition from existing players will be fierce. Being attractive to the
intermediary sector though is so much more than simply rate and product. delivering a compelling
marketing message, online and offline technology, transparent underwriting, backed up by 24/7 case
Computer says no
Lenders are scratching their heads and industry pundits are pondering the apparent contradiction of a growth in the availability of funding in 2011 and yet lending figures remaining stubbornly flat. Last year, it seemed that all that was required was more funding and it seems baffling that when we have more capacity, lenders are seemingly involved in a price war to generate enquiries. So is this just a shortage of activity? After
all the old chestnut of restricted loan to values hardly holds water with the recent announcement of 90 and 95% lending? So where should the spotlight be focused?
26 mortgage introducer JULY 2011
communication are vital features which lenders, in an uncertain market, will do well not to ignore and can all be delivered through the
DON’T SHOOT THE BROKER The Institute for Public Policy Research’s latest pronouncement that the Mortgage Market Review does not go far enough, comes at a time when the general consensus from the industry and now the government is that the regulator should go back and reassess the impact of some of its recommendations. Perhaps it is not so surprising that the IPPR, set up by a long time Labour supporter and with a board whose political sympathies lie to the left of the political spectrum, should choose to wait six years and until its government of choice is safely on the back benches, before waving the flag for greater regulation. Where were these gems of wisdom for a three parliament governing party, which oversaw the last and biggest housing boom and bust? Their
The industry has gone through troughs
before and they have been categorised by the pendulum swinging back from a sales/ marketing focus to one dominated by credit policy and underwriting. What we are seeing today though goes a lot further than previous cycles. Meeting criteria is an obstacle course
for any but the most vanilla of customers and having come through the initial crisis, many of the frustrations of being a mortgage broker in the 2011 market boil down, not to a lack of funders or variety, but to coping with the underwriting. I would suggest that we have reached a point now where so many potential
packager/product and service hubs. the 2011 packager
community is the place for lenders to make their mark.
other woolly charge portrays brokers in a poor light in that they “may” have been responsible for much of the high risk lending because of their dominant position as mortgage introducers. The suggestion is unfair as well as being inaccurate. Yes, brokers were then and indeed are now, the major introducer of mortgage business. What does not seem to have percolated is that brokers can only advise on the products which lenders provide. The intermediary has always been a convenient whipping boy when blame needs to be apportioned. I remember a chief executive, whose policy of suicidal product provision nearly brought his society to its knees in the early 90s, laying the blame at the feet of the broker community for having used those same products. Hubris indeed!
customers for mortgages and loans have been turned down that there is a real danger that the lending industry, in its attempts to interpret its own credit policy and the added responsibility placed on it by the regulator for responsible lending, is close to being unable to lend to a fair proportion of the population. I seriously wonder whether consumer
protection will reach a point where the sheer volume of proof needed to back up a lending decision causes a real breakdown in a realistic service to the public in much the same way that lives have been lost because emergency services have to undertake risk assessments before acting.
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