News Review: Packaging


Latest MMR delay smacks of EU influences


by Ian Balfour, CEO, Solent Mortgage Services


While the announcement of the latest delay to the Financial Services authority’s much publicised mortgage market review leaves intermediaries and the wider market in a state of limbo, there is something to be said for a further round of consultation and reflection and maybe demonstrates that the regulator is prepared to listen. if that is the case, then that


is all to the good. However, there is every possibility that this has as much to do with ensuring that any uK regulatory rules reflect the wishes of the eu in its wish to harmonise member states’ approach to consumer protection as it does with further consultation. With the eu already


working up new proposals, which have yet to be ratified, the danger of putting mmr in place and then having to make further amendments would not play well even with a regulator, which has until now tended to follow its own agenda with little recourse to opinion.


EC’s directive continuing the european theme, intermediaries should be raising a glass to robert Sinclair and the association of mortgage intermediaries’ stand on the most important part of the european commission’s mortgage directive. While lender bodies


have asked for a scrapping of the proposal on advised sales, ami has stood aside. this is significant for all of us who give advice because the ec proposal would require lenders to have their sales people do a proper analysis of available products, including those of other providers. of course, turkeys do not


vote for christmas and i can understand why providers would not want to see this particular part of the ec’s proposal becoming law. However, this goes to the heart of the argument as to what constitutes advice. if customers are going to be helped properly, then all advice should be whole of market and not simply masqueraded as true advice when a customer walks into the branch of a bank or building society.


90% LTVs a headline on the Mortgage Introducer website last month caught my eye when it confirmed there were over 300 mortgage products with a headline LtV of 90%. on the face of it, great news and a sign that the market is beginning to recover its nerve as far as risk profile is concerned. talking to people within the industry who know about these things, the days when the market was short of funding is behind us at least for the time being. However, with the price


war going on among the mainstream lenders, it seems that the problem the industry faces is not now one of supply but rather that of demand. it is ironic in the extreme that we have all been praying for


24 mortgage introducer AUGUST 2011


the day when normal supply service would be resumed and now we find that the demand is not what is should be!


“All advice


should be whole of market”


underlying all this is the


massive sea change in many customers’ circumstances and although it looks like 90% mortgages are the new benchmark for LtV, the perception is that many potential customers are just not creditworthy enough even with the expansion of the LtV envelope. Historically,


the sub-


prime market was with us for less than ten years in any size and only the last five up to 2007 were the years there were really significant volumes written. in that time, a generation of remortgage and purchase clients got used to almost unlimited credit no matter what their credit position. Since 2008, we have all been undergoing cold turkey, both individually, corporately and nationally – look at the uS and the eurozone. So are the mortgagees of


the future just shy because of the precarious nature of the world economy or really unable to get a mortgage even now?


Near prime to carry on that theme, i am just throwing this out there, but after the drubbing that the non-conforming market took in 2008/9, when it effectively ceased to exist and all the negativity that then ensued,


could it be that brokers have become too wary of the bad publicity that in essence they have stopped looking to help people who have anything but a clean credit record? the market for what is


being called ‘near prime’ is still relatively new but there are more lenders, particularly among the newcomers and some of the smaller building societies, which are looking to offer mortgages that are both attractive and properly underwritten. the days of the mortgage


for anyone regardless of their credit position or ability to repay provided they have a pulse, are fortunately long gone. mindful of the changed world and the need to write business that is sound, lenders have been demonstrating their willingness to engage in offering products which go some way to meeting the needs of those who have had past problems, but are able to show the means of shouldering a new mortgage. With the choices available


now resources like the product and service hubs, as represented by the packager community, can take a lot of the guesswork out of finding a suitable lender for a client. While there are many past clients and new prospects who are probably not going to qualify for a new mortgage this side of hell freezing over because of the economic downturn, i would urge advisers to look again at their existing clients who have had problems. You could be missing out on a potential income source now that the market has begun to expand again.


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