Industry professionals urge the mortgage sector to work together
As the mortgage industry faces another potentially challenging year, collaboration between brokers and lenders has never been more key, a leading industry expert suggests.
Rob Barnard (left), intermediary relationship director at specialist lender Pepper Money, believes the value of the interaction between advisers and financial organisations is paramount.
“The key word here is relationship,” Barnard emphasised. “Working together has never been more important for brokers and lenders. If brokers do have an opportunity to speak directly to an underwriter, then jump at the chance. This will be the best two minutes you spend during the entire application process.
“Common goals underpin strong relationships and we need to be open to challenging each other to be collaboratively better. Brokers and lenders can always improve on how they engage with a broader range of customers.”
In Barnard’s view, 2023 ended on a more optimistic note for the industry.
“The softening of rates over the last few weeks has certainly been a boost to the market but 2024 will undoubtedly still be a challenge for brokers and lenders alike,” he remarked. “We hope to see reductions in the Bank of England base rate at some stage this year, although how soon and by how much remains to be seen. I just hope we see brokers leaving 2024 with a much higher business pipeline than many will be starting the year with.”
Speed up transactions
Barnard said he would like to see an improvement to the speed of end-to-end transactions, especially in the purchase market.
“Technology undoubtedly has a part to play in this but not at the expense of, what I call, proper good old-fashioned manual and individual underwriting,” he commented. “The conveyancing process is being streamlined all the time and further developments in this area will only help to expedite the completion process.
“Affordability continues to be a major challenge and it’s important that all lenders look to develop their propositions further to help with this, particularly when it comes to more specialist circumstances like additional income sources and self-employment.”
There is “a big elephant in the room” that the industry needs to acknowledge, believes Barnard.
“Property may be worth less than homeowners would like and hope it to be worth – and all lenders are seeing an increase in down valuations at the moment,” he suggested. “Lower price inflation is a double-edged sword of course. It doesn’t help homeowners who want to maximise the value of their property, but it does help to make homes more affordable.”
Despite the current challenges, Barnard remains upbeat about the tips he would share with others.
“This industry of ours is simply the best in the world,” he enthused. “So, I would say ‘carpe diem’ (seize the day). Make the most of every opportunity and never be afraid to challenge yourself when it comes to approaching something in a slightly different way.”
Lenders could make a difference
Daniel Yeo (right), managing director of brokerage Specialist Finance Centre, in Cardiff, meanwhile highlighted the difference lenders could make to the industry in the year ahead.
“As cost of funding decreases at a time when recession threatens us, lenders will have a great chance to play a vital role in increasing borrower confidence with continued rate costs in attempt to gain market share,” Yeo told Mortgage Introducer. “This, combined with criteria enhancements is just the tonic. From a regulatory perspective, we are likely to hear from the FCA on their extensive information request for second charges by the end of Q1. I believe the industry will have to make significant changes to advice provision and potentially adjust their fair value assessments.”
Yeo said he would like to see “greater, innovative implementation of tech to remove friction” in the way the industry operates day to day. “I believe AI will become a very powerful tool, very quickly,” he shared, adding that the biggest barrier to success for brokers in 2024 is IT, particularly around product sourcing and lender integration, MI (management information) for Consumer Duty and overall governance. “Off-the-shelf systems can greatly assist in focussing on these areas,” he advised, recommending investment in infrastructure, particularly IT.
Furthermore, Yeo, whose business advises on first and second-charge, bridging development, commercial and buy-to-let mortgages, wants closer and more regular collaboration between lenders and brokers. He believes lenders should bring brokers together for industry discussions, which would be ‘a real value-add’.
Brokers need to focus on working with those ‘on the frontline’, he said, collaborating with more industry colleagues. “The year ahead will be challenging,” Yeo predicted.
