“What the Papers say” … a review of regulation
Mortgage Introducer MI Oct 14
Mortgage Strategy MS Oct 16
Mortgage Solutions MSL Oct 16
The last time I wrote this column for Mortgage Introducer was 21 Jan, at which point I decided I would not be able to continue writing the column and drive through the flotation of Network Data on the London Stock Exchange at the same time.
Thankfully the latter chore is now behind me, and I am delighted to have been offered the opportunity to re-start the column again.
Prominent among the news stories that have emerged since January have been the emergence of new lenders into the UK mortgage market with their instant mortgage offers, the demise of major IFA firms such as Berkeley Berry Birch and the Millfield Partnership, the call for mortgage sourcing systems to be accountable for accuracy, automated valuation models (AVMs), the questionable quality of lead generation firms and, love them or hate them, Home Information Packs (HIPs).
Things that have not happened this year, and attracted press attention for that very reason, have been the much mooted consolidation of mortgage networks, Home of Choice becoming the largest mortgage network as they were boasting last year, and the demise of the packager community.
Looking back at the past week, MS has an article by Mike Culhane, chief executive of The Oakwood Group, who believes that high-tech lenders with AVMs and faster decisions will put the squeeze on the rest of the lenders. Culhane says “GMAC-RFC and BM Solutions will come to dominate the market”. Frank Eve’s column also looks at high-tech innovators and feels that many traditional lenders labouring under the burden of legacy processing systems may be forced to compete on rate alone.
In MSL, we see more coverage of AVMs, mention of HIPs, and Market Watch.
First Title Group confirms that it is ‘set to take on the AVM market in the UK’. Headed by Mark Witherspoon, formerly managing director of Hometrack, now the dominant force in the UK market, the new service will operate under the name First AVM.
“Optimism surrounds next month’s launch of HIPs,” according to the National Association of Licensed Home Inspectors. Hugh Dunsmore-Hardy, chairman of NALHI, commented: “It goes to show, if anything, there is perhaps more optimism out there and it is not all doom and gloom out there”.
Griffiths says:
“Well, he would say that, wouldn’t he? Speaking for Network Data and its HIPSTAR subsidiary, we remain focussed on becoming a major provider of HIPs, but the dry-run scares the hell out of us.
No HIP provider has a fully functional ecommerce delivery system in place – and why should it? The launch date is not until 1 June 2007. The systems are in various stages of development and many home inspectors are not yet qualified to carry out energy assessments or Home Condition Reports (HCRs).
We made the decision not to involve HIPSTAR in the dry-run and we remain bemused as to what it is expected to achieve or prove, one way or the other, to the market.”
The Market Watch page in MSL asks the question, ‘Do you believe lenders should alert intermediaries if their client falls into arrears?’
Jonathan Cornell of Hamptons starts the panellists’ response by saying: “I think everyone in the industry would benefit from such a move – borrowers, brokers and lenders”. Mehrdad Yousefi of Alliance & Leicester concludes for the panellists by saying “Clearly, arrears information between lenders and borrowers, in the first instance, is confidential”.
Griffiths says: Clearly, this is not going to happen.
MI contains a feature by Emma Lunn on the Financial Services Authority’s (FSA) discussion paper on industry relationships and explores the reaction from all sides of the mortgage market. The FSA announced in September that providers and distributors need to work together in order to treat customers fairly.
The FSA encourages providers and distributors to design their products with greater care, to provide higher quality information, to monitor distribution channels more effectively at a high level, and to undertake better post-sale analysis of the performance of products.
“It is easy for the FSA to point the finger at third parties such as providers and the appointed representative (AR) networks. However, there is the growing feeling in the industry that it’s time it put its own house in order while preaching to the rest of the market. What is its span of control over directly authorised mortgage firms? The FSA is responsible for making sure such firms are ‘Treating Customers Fairly’ and yet, it would appear, it simply does not have the means to do so.
Also in MI, Peter Beaumont examines the entry of foreign financial institutions into the UK market and the implications this could have for the industry as a whole.
The article looks at the history of US lenders in the UK market since the mid-1980s, and their rapid retreat when the market turned against them. But Beaumont now argues they are here to stay, stating: “New lenders, particularly those with substantial backing from international investment banks, will increasingly make their mark”.
Nigel Payne, managing director of The Mortgage Business, contributes his view: “US backers may think they can buy a slice of the market with Hollywood-style launches and cherry-picking business partners. But we’ve been here before and all know what happened last time”.
