My wife likes to shop. The reality is her purse would be a lot fatter if it didn’t have credit cards in it.
In Specsavers on Saturday, we were invited to take a seat while we waited. A few screws, and even a saw later, and my wife was given back her sight, and more amazingly there was no charge. The optician was long-sighted enough to know we will return for bigger and better things in future.
My watch purchase – okay, I don’t mind a bit of shopping either – left a different feeling. Advertised blatantly in the sale, and affirmed by the helpful shop assistant, I was rebuffed at the checkout by the manager.
Bizarrely, the assistant urged us to stand up for our rights – however, the manager was unrepentant, and, fearing for the assistant’s job, I backed down. I walked out with a completely mixed message from the same organisation.
As a mortgage club and packager, I occasionally experience the same. Lenders talk more favourably about the former. This has always puzzled me, as the latter naturally provides them with a greater ongoing product margin.
Perhaps the reason for this could be that lenders struggle to understand the relevance of a packager in today’s distribution chain.
Going into ‘Mortgage Day’, everyone predicted the demise of packagers. This was surprising to a degree as the Financial Services Authority never saw the necessity to regulate the function, and as the credit crunch bites, the same rhetoric is being regurgitated by the commentators in a desperate attempt to wipe the two-year-old egg from their faces.
This time around the drum beats to the tune of financial sustainability. Apparently, none of us know how to run a business; funny this, as commentary invariably comes from employees sitting in ivory towers away from the coal face.
So in an attempt to help lenders understand, it is about demand. Brokers transact the majority of mortgages in the UK, and are under immense paperwork pressure. Therefore, every deal counts. They seek reassurance on the advice they are providing in an ever changing market, require assistance with decisions-in-principle, and prefer to complete a generic application form to guard against failure with lender ‘A’.
The packager will tread the length and breadth of the country to visit brokers, providing practical advice on how to develop their business and marketing support. They can talk about the market in general, where even the multi-branded lenders cannot cover 100 per cent of permutations.
As packagers are not corporate in their approach, they can also target their audience with different client benefits and procuration fee enhancements – in essence, empowering their brokers to win the business. And dare I say it, they can beat lenders’ own processing times.
As I walked around the Mortgage Business Expo last week, it was noticeable that the significant players are no more than in their mid-40s, and certainly not ready to retire. Sure, difficult decisions need to be made – but to somehow suggest they won’t is insulting. These are entrepreneurs, fleet of foot and who are not going to let their brands and livelihoods disappear with a whimper. To help the fight back, I urge lenders to show their colours. An industry stalwart made his position quite clear on Mortgage Day, but at least then we knew where we stood.
Mainstream
Bristol & West has removed its higher lending charge.
Alliance and Leicester (A&L) has issued helpful guidelines on the income verification and the way it underwrites sub-contractors. It has also clarified the cooling period requirement on the unsecured loan element of the 125 per cent loan-to-value (LTV) PlusMortgage. Overpayments can also be made on its ‘non-flexible’ products up to £500 without charge.
Buy-to-let
Platform has reduced its LTV to 85 per cent on prime and 75 per cent LTV on adverse. It has also increased the rental coverage to 125 per cent.
A&L is the latest lender to crack down on the new build sector, restricting flats to 70 per cent LTV. It admits that the pre and post-completion builder incentives are too sophisticated to gauge, and therefore it needs to close any loopholes to satisfy itself that it is acting responsibly.
Wave has effectively moved away from non-conforming and entrenched itself in the buy-to-let sector. To operate effectively it has three different ways to assess affordability, including two based on earned income, which is dependent on the number of properties an individual has. This multiplies up to approximately 200 products.
First National has relaunched buy-to-let to over 30-year-olds. The rental cover can be as low as 100 per cent depending on status and LTV.
Mortgage Express has introduced a rental calculation cross-subsidy on portfolios post-completion.
Adverse
Rooftop has introduced mandatory title insurance, and expanded its offering to Northern Ireland.
Money Partners revised products substantially including withdrawing automated valuation models; DTIR reduction; and LTV amendments.
Platform has restricted its LTV to 75 per cent on status heavy adverse and self-cert right-to-buy. Non-conforming-to-non-conforming remortgages are no longer acceptable.
Amber has re-entered heavy adverse, and launched a self-cert option.
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