www.mortgagestrategy.co.uk ANALYSIS
There are many challenges
facing brokers at the
moment, one of the key
ones being that there’s
likely to be a reduction in gross
lending this year. The total will
probably be around half the level
seen in 2007.
This falling trend has led to
cash flow difficulties for brokers
which in turn has led to a
rationalisation of the sector.
With proc fee revenue about a
quarter of what it was a couple of
years ago it’s not surprising that
many brokers have left the market,
and it’s likely that more will follow.
It has been sad to see the likes
of Cobalt Capital, Hamptons
Mortgages and Chase de Vere leave
but consolidation could be good
for consumers as the firms that
remain should be better placed to
When Hector Sants,
chief executive of the
Financial Services
Authority, recently
remarked that principles-based
regulation does not work with
those who have no principles he
caused quite a stir in the broker
community.
Advisers didn’t like the
implication that they are less than
honest and although he also said he
believed most market participants
were decent, the damage was done.
Being honest, truthful and fair
are principles that underpin not
only financial regulation but also
our legal system. We expect
individuals to play fair. If they
don’t, they face legal sanctions.
The concept of fair play applies
to housing transactions as much as
it does to other aspects of our lives.
We hope, when we view a house,
Keeping brokers
alive and kicking
NIGEL STOCKTON
SALES DIRECTOR OF MORTGAGES
LLOYDS BANKING GROUP
Dishonesty will
undermine HIPs
EDDIE GOLDSMITH
SENIOR PARTNER
GOLDSMITH WILLIAMS
help them in the current climate.
Rationalisation means the
remaining distributors will take a
higher proportion of the mortgage
market. They should be in a
position to provide strong
propositions to consumers.
It always strikes me how
resilient, adaptable and
entrepreneurial brokers are and
John Charcol’s recent agreement
with HSBC is a good example of
this.
But with mortgage revenue
dramatically down, this remains a
difficult market in which to
operate.
Brokers are well placed to guide
borrowers through the storm and
they remain central to our
distribution strategy. It’s up to
lenders to keep the broker sector
vibrant in these tough times.
that the seller is honest in the
information they give.
Unfortunately, there’s plenty of
evidence that this is not always the
case which is why conveyancers
spend so much time checking the
details of properties under offer.
Which brings me to Home
Information Packs. HIPs now
require sellers to complete
Property Information
Questionnaires. I am sure most
sellers are honest but some are not,
undermining the validity of this
approach.
This is the point Sants was
trying to make – a few rotten apples
can ruin everything.
So lawyers still have to check
every property, which means HIPs
aren’t much use. There are calls for
the packs to be abolished on the
grounds that they add cost and but
little value. I agree.
It seems unbelievable that
some lenders are claiming
they don’t know what they
hold on their balance sheets.
But the truth is that some of
these firms genuinely don’t know
what’s in their portfolios.
How can this be the case? The
following quote may be of interest.
“The past three or four years
have been abnormal, with cheap
money, new lenders, lenders pricing
for acquisition rather than risk and
customers able to borrow
regardless of their circumstances,”
said the managing director of a
rival mortgage club in 2008.
Coupled with this must be the
fact that lenders often only had a
superficial idea of what they were
buying when purchasing portfolios.
Parking for a moment the bad
bank idea, whereby lenders would
With the protection gap
standing at more than
£2trillion I wish there
was a magic wand I
could wave to make it disappear.
But in the absence of an
education at Hogwarts I am pleased
to note that the industry has taken
some steps to improve the
perception of protection in the
eyes of consumers.
For instance, last year saw the
introduction of proportionate
payment of claims as standard.
This is a step in the right direction
in addressing concerns over
whether policies will pay out.
But the fact remains that we
human beings don’t like to think
about our own mortality. We dread
not being able to work due to illness
yet too often do nothing to protect
ourselves.
This could be why pet insurance
Lenders must look
at their portfolios
NICK BAXTER
DIRECTOR
MORTGAGE PROMOTIONS
have to identity the make-up of
their balance sheets, the time is
surely right for lenders to analyse
what they hold.
Some commentators are
suggesting that we are approaching
the bottom of the market.
Lenders should be reviewing
their books to identify the
borrowers they can help through
the tail of the credit crunch and
those for whom swift repair actions
should be initiated.
Show your clients
the value of cover
MARK JONES
HEAD OF PROTECTION
FRIENDS PROVIDENT
is such a big industry. Some of your
clients may see the problems that
could arise if, say, their dog needs
an operation and they fear the
thought of huge veterinary bills.
So some individuals protect
themselves against such costs while
remaining unaware of what might
happen if they can’t pay their
mortgages or their main family
income ceases. Do they realise that
their pets may be more protected
than they are?
Could you help them to see they
should be protecting themselves,
and the consequences of not doing
so?
By painting a picture for clients
with a budget planner you can
show them what they stand to lose.
Why not give them the peace of
mind that pet insurance brings but
through products such as income
protection or critical illness cover?
MORTGAGE STRATEGY April 13, 2009 15
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