Choosing the right partner is essential. There are various factors to consider from the initial excitement to long-term satisfaction. Placing too much emphasis on the former is a dangerous game that inevitably ends in tears if you are looking for commitment.
Courting happens regularly in our industry. It is an ongoing theme. The initial flirtation often starts with a boast; a bit like speed dating where, I am reliably informed, you have three minutes to sell your virtues to the person sitting opposite.
When I think of over-zealous promises I tend to think of would-be satellite packagers, but the same could apply to the smaller packagers within a packager association.
Both of these distributors infamously talk of contacts in their possession that no one is able to reach, and in return they want to be part of your home and benefit from the bigger buying power, such as exclusive products and savings on property valuation costs. They also have a habit of two-timing with the mortgage packager next door.
You see the fact remains that a partnership works best when you meet each other eye-to-eye, 50-50. In this relationship however, it’s clear who wears the trousers.
Resentment is also felt by the lender which wants the lead company’s business, and takes its younger sister to the cinema with them.
So why do the leading packagers go down this route? The answer is simple: while they don’t want to form the ultimate bond with a satellite, they also don’t want to lose them to their playground rival either.
Questions asked
t could be said that 2007 was the year of the satellite packager. Mortgage lenders would happily have an orgy of distributors on the back row, but in the current market conditions questions are now being asked.
Is this company an intermediary who wants a bit of extra dough or does it genuinely have brokers feeding into it? One lender has already flexed its muscles in the public domain and culled 70 firms.
The fact is the majority of mortgage lenders have had a good 12 months of operating the additional process, and in the majority of cases have been underwhelmed by the results. I guess here, like everywhere else, the natural 80-20 rule applies?
Unravelling the mess
So how are mortgage lenders planning to unravel the mess? It appears the start point is minimum business volume commitments, perhaps a tricky step in an environment regulated by the Financial Services Authority. Restricting exclusive products to the leading company only is another.
Some are opting for very good completion ratios, and this seems to be a subtler way and should enable them to keep the bigger boys, who typically have slicker and more hi-tech processes, in place.
The new yardstick being bandied around is the quality of the performance of the loans originated. This, I believe, will be a key indicator, but requires greater management information than is currently available.
Either way, you can certainly expect some interference in your relationship from your mothering lender.
Mainstream
HSBC is ruffling a few feathers with its promise of a re-fix for its existing customers at the same rate they are currently on. They can choose a product for two, three or five years, and while the completion fee depends on the circumstances, most will be charged under £500.
In its other stable, First Direct has been consistently cheaper in the offset market for the last six months. This sleeping giant appears to be on the move and the bad news is, intermediaries are not in its plan.
Self-cert
Advantage Home Loans has restricted its lending to 75 per cent loan-to-value (LTV).
Buy-to-let
The Mortgage Business (TMB) has started to limit the maximum loan size on some of its flat completion fee deals.
Bristol & West has limited its exposure to 5 per cent of any development.
Mortgage Express has clearly stated it wants all builder sales incentives deducted before applying its maximum LTV.
CHL Mortgages is asking surveyors to value new build properties on the basis that they are second hand.
Woolwich has extended its existing borrower procuration fees to buy-to-let.
GMAC Partners withdrew its 100 per cent rental cover mortgage product at short notice.
Adverse
Amber Homeloans has dispensed with the usually-dubbed ‘feather adverse’ range in favour of the more traditional near-prime tag.
Advantage Home Loans has dropped its heaviest range, ADV 500.
Future Mortgages has altered its ignore CCJs totalling £250 to any number of CCJs under £250.
