Unless you have been living on the moon or under a rock buried several miles underground, you will be fully aware of the current fractious state of the housing market, as will everyone else involved in this all-important cog in the overall economy.
Lenders, intermediaries, and packagers are all facing tough times as the housing market slows and have been forced to re-evaluate the robustness of their business practises.
Yet, the tensions between each part of the housing market seem to have become ever more apparent under the stress.
Brokers have repeatedly complained of the short notices they have received for product withdrawals, with Cheltenham & Gloucester (C&G) coming under particular scrutiny for pulling products with less than two hours’ warning.
Poor service levels have also come under attack from brokers at a time when business is thin on the ground and maintaining client satisfaction is paramount.
So are lenders merely exacerbating an already difficult situation for brokers struggling to find business and treat customers fairly?
Consistency is needed
Steve Brockman, director of A2B Mtg Co, certainly believes so. He says: “At troubled times, we need lenders to be consistent and solid. The problem is that lenders are not giving us enough assistance.
At the moment, lenders could have a more stabilising effect on the market, but I think they don’t want to lend at the present time and have written the past year off to start afresh in the New Year.”
With consumer confidence knocked by the Northern Rock debacle and constant warnings over a housing market crash, Brockman states that consistency from lenders is vital to give confidence back to consumers.
Otherwise, he warns, consumers will keep away and the housing market problems will not disappear. He says: “Service levels will determine a lot in the future.”
Communication is key
However, Sue Anderson, head of member and external relations for the Council of Mortgage Lenders, maintains that lenders are acutely aware of how important their broker relationships are to their distribution and no lender would willingly make things more difficult on purpose.
Nevertheless, she notes: “These are unusual market conditions. Communication is the key thing and trying to make sure that changes aren’t imposed at the last minute. But at the same time, lenders can’t commit funds they don’t have. They are waiting for funds to emerge, while seeking to manage the volume of applications. In stressed conditions it’s not surprising some products are pulled at the last minute, but I sense that it is small in scale, though incredibly irritating.”
Certainly, Eddie Smith, managing director of the Professional Mortgage Packagers Alliance, appreciates that lenders face difficult decisions. Yet, he adds: “Often the timescales are quite short and we’re telling brokers we need all the information by a certain deadline. There is a view that often deadlines are set because the lenders know they can’t be met.
“At the end of the day, lenders are very much in the driving seat and don’t need the volumes of distribution that they did in the past. Aspirations for volumes are much lower. Even if lenders upset lots of brokers now, if they come in with a great product in the future, those same brokers will still go for it.”
Real solution
For Anderson, the real solution to market problems will come about when mortgage lenders have found secure funding, but adds that providers find it helpful to know where there are problems in the chain so they can sort them out.
Certainly, communication from all sides in uncertain times is absolutely vital. Leaving people in the dark merely creates more confusion and frustration.
Lenders must work to give mortgage intermediaries some breathing room, while brokers must endeavour to keep on top of the ever-changing product situation. It is merely good business sense to be aware of how your business changes affect others in the chain, so that relationships can be maintained for a time when the market is experiencing fairer weather.
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