FA reports on Abbey ‘leading the way’ in terms of innovation, with housing groups saying other lenders should copy Abbey’s five times multiplier, while experts say it could be the start of a trend. Abbey claims to be motivated by the need to help first-time buyers get onto the property ladder. Many other commentators vehemently disagree with this development.
Griffiths says:
“It never ceases to amaze me the fuss made about five times income multipliers and the accusations of encouraging people to take on loans they cannot possibly afford to service.
What about the three times multipliers when rates were 15 per cent in the late 80s? In simple terms, with rates now down at 5 per cent or so, lenders could be lending at nine times income to maintain the same monthly outgoings for the borrower.”
In MS, Gerry O’Brien, managing director of Home of Choice, says” “While some networks offer appointed representatives (ARs) money to join, this is because they have fundamentally deficient propositions. It’s something that was done a lot in the 1990s.” In defence of Mortgage Next’s policy of providing an allowance of up to £25,000 per AR, its marketing director, Justine Tomlinson, says the scheme is intended to help intermediaries and ensure they don’t lose out on any insurance commission that is owed to them.
In MM, Alan Cleary, managing director of edeus, believes that ING Direct could end up taking 500,000 customers away from mortgage intermediaries. Cleary says: “ING Direct is a threat to intermediaries as it has a track record of being very successful by marketing simple, mainstream products, direct to the consumer.”
Griffiths says:
“ING has been successful in marketing a simple savings product. But the public perceives mortgages to be a huge and complex commitment, and welcomes the support from a broker.
If mortgage marketing was that simple, how come Direct Line has never made a real impact? Its lending in 2005 was £630 million, which at £100,000 per loan means Direct Line attracted 6,300 customers.”
Most of the trade publications have carried the story of insurance company Paymentshield’s acquisition by Towergate and the news about the cessation of renewal commissions to non-active intermediaries and advisers.
In MSL, Paymentshield categorically denied any connection between its buyout by Towergate and its decision to terminate trail commission payments to intermediaries that are no longer regulated to sell mortgage-related general insurance products.
In an open letter to Stuart Pender, chief executive of Paymentshield, Simon Chalk, mortgage planner at Mortgage Portfolio Services, warned: “I strongly believe you need to revert to the former stance or your new owners will witness a huge exodus of agents to other insurers that actually value the relationship.”
MI carries the headline ‘Home Information Pack (HIP) dry-run begins’ in its news pages. The industry remains divided over the subject, with Alan Dring, sales director at e-Conveyancer saying: “It is very early days, but I think a lot of positives will come out of the information pack dry-run.” Thomas Reeh, chief executive office at blackandwhite.co.uk explains that the overall mortgage market is healthy and questions why HIPs are being introduced at all, while an anonymous broker said: “I didn’t even realise the dry-run had started. HIPs are off most people in the industry’s and consumers’ radars now.”
Griffiths says:
“Anyone who says that HIPs are off the radar needs to recalibrate their equipment. Otherwise, they may find they are the ones off their clients’ radar screens from June 2007.
Someone else will be arranging their HIP when they are selling their home, looking for their next mortgage, arranging insurance cover...”
