It is not all about a race to the bottom in terms of rates.
Richard Groom (pictured) is head of mortgage sales at Tipton & Coseley Building Society
Low mortgage rate deals continue to grab the headlines in the press as many lenders fight to win over customers.
Competition between some of the high street lenders in particular has pushed rates to record lows.
But what differentiates one lender from another when it comes to competing on price, meeting the customer’s needs and how good is their customer service?
Many building societies including the Tipton have steered away from this price war.
Instead our focus has been to apply flexibility to criteria to help the specific requirements of many customers. These could be newly qualified teachers or those working on zero hour contracts.
Or it could be someone who wishes to include his or her pension value to assist affordability when seeking a mortgage.
With so many customers having more complex and different requirements, it’s important that lenders work with their brokers to seek a more individual tailored approach to help provide a solution.
Smaller lenders in particular, therefore have an opportunity to help these types of non-vanilla customers.
This is key for the Tipton. Lending in areas that fit with our strategic plan and getting business in at the right price – there’s a lot of areas we are in where rate is not the key driver.
Criteria flexibility
At the Tipton we are targeting another year of significant lending growth in 2020 and planned tweaks to our criteria and policy wording in the coming months will help us reach that target.
For example in the later life lending market applications on our standard later life range are now accepted up to age 95 years (maximum 25 year term will apply). What’s more no maximum term is applied on our Retirement Interest Only (RIO) products.
Over the last 12 months we have also entered new areas of lending such as expat buy-to-let and Joint Borrower, Sole Proprietor.
To be successful in these markets, we have to box clever with criteria and be prepared to change or adapt criteria as well as ensuring service remains a key driver.
For Joint Borrower, Sole Proprietor applications we previously would only consider one applicant and one parent to support mortgage requirements. However having listened to brokers we have responded to what the market is calling for.
We will now consider cases with four applicants and will include four incomes. The maximum age of the occupying applicants is 35 years old. All income will also be considered when accessing affordability, subject to LTI limits.
Underwriting expertise
Communication between our brokers, BDMs and underwriters is crucial to providing solutions for the specific needs of individual clients.
For example, a broker approached us about the difficulties of placing newly qualified dentists due to a lack of self-employed history.
We worked as a team to uncover a solution and with our underwriters’ expertise were able to update our lending policy. This meant that within a matter of weeks we were able to provide the broker with a suitable product.
Adopting a flexible approach to criteria, being prepared to make changes and a sharp focus on service remain key areas where the smaller lenders can win in the competitive market place. It is not all about a race to the bottom in terms of rates.
