“So goodbye to sale and rentback. I don’t think there will be too many tears shed at its demise at the hands of the regulator, who in January made the decision to refer one of the last active companies to its enforcement division, after discovering evidence of fraud and poor practice across the industry.
The concept was fine in principle but as with many good intentions, the process was ripe for abuse. When there are vulnerable people involved and you don’t get much more vulnerable than those about to lose their homes, it was hardly surprising that the bottom feeders made a mockery of what could have been a good service.
It is a particular regret that pioneers like Peter Beaumont, who more than most had attempted to introduce an ethical business model for sale and rentback, should see their hard work come to nothing.
However, it is never over for someone like Peter and I am sure he will already be looking at how this potentially valuable service can be made to work for the benefit of those people for whom it was originally designed.
There has been much to vex our political masters as they wrestle with the issues surrounding the housing market and responsible lending.
One of the rare joys in these straitened times is watching politicians tie themselves in knots with trying to align the seemingly opposite demands of stimulating the market while at the same time trying to make sure that we poor consumers don’t overstretch ourselves.
In normal circumstances in a healthy economy, these goals are not mutually incompatible.
However, today we have a stalled housing market with a yawning affordability gap opening up for potential first-time buyers needing to find large deposits and lenders constrained by perceived risk and a regulatory framework agonising over affordability.
So it is good to see that apart from the government’s attempts to resuscitate the Mortgage Indemnity Guarantee scheme in part, we have a lender, which has really thought through how the best interests of all parties can be served when approaching high LTV lending.
Aldermore’s 100% mortgage looks like it is driving a coach and horses through the responsible lending mantra.
However, at second glance it demonstrates not only a deep understanding of the problems facing first-time buyers but completes the circle of responsible lending by adapting the ‘Bank of Mum and Dad’ principle and having taken on a guarantor arrangement, they are planning to accept money from parents on deposit as a way of bringing more first-time buyers into the mortgage fold.
This is the kind of thinking that we should expect from new lenders and brokers have to hope that the new generation of lenders will exhibit the same sense of entrepreneurial spirit.
In the wake of the FSA’s announcement to delay individual registration of brokers, which, if I was a conspiracy theorist, looks suspiciously like a case of pressure being brought to bear by the big battalions who clearly don’t want the expense or the closer scrutiny of their sales practices, there seems to be a number of news stories which seem to suggest that the tide is still moving towards the intermediary.
First up, Tesco, which had already postponed its planned 2011 mortgage launch until this year, has still not ruled out offering its proposed mortgage products through intermediaries.
Hardly a ringing endorsement of the intermediary channel, I hear you say.
However, with the news that Google has decided not to go live with a full blown version of its piloted consumer mortgage comparison website, which directed clients directly to lender websites and closed the pilot, I would say that if Google, the mass marketeer without parallel, cannot see how to make the consumer to lender story work, then the tide must be turning in favour of the intermediary.
Going back to Tesco, they have great brand awareness but even with that huge advantage, they are still going to have to go up against the established players who have had a lot of time to perfect their own direct to consumer sites.
Let’s face it very few of them actually don’t see intermediaries as a part of their sales strategy.
So I think that while Tesco might start with a direct to consumer proposition, like Virgin Money before them, they will see that the intermediary market still represents great value and consequently the best way to market.
It will be interesting to see whether, if they do adopt an intermediary friendly route to market, whether they look to identify key partnerships through which the intermediary can access their service or open up access to the whole market.
If they want to save money and manpower, it would be a wise decision to seek out some key partners to help them with distribution and administration. I shall be waiting by the phone!”
