Guidance needed in a landscape that has changed

11 January 2010

As we start a new year many businesses will be looking back at the previous 12 months, reflecting on how they went, what lessons can be learnt and how this will affect what they do this year.

It’s important that lenders share their experience of working in this type of market with brokers as this could shed some light on why lenders do what they do. And perhaps they could also give some advice which could be used by brokers in their businesses.

So, how was 2009 for us? If truth be told it was pretty much as we anticipated. It was never going to be an exciting year for those lenders that aren’t originating but it was an important one nonetheless.

In line with many lenders our arrears figures went up in the early and dropping to an acceptable level by the end of the year.

The Council of Mortgage Lenders’ arrears figures which track arrears over 1.5% of outstanding balances show that we hit 1.02% in November
compared with the industry average of 2.61%.

So 2009 was a year for grinding out a good result and paying attention to every part of our business to see how we could improve.
Of course, you can only do this when everyone in the business understands that a firm is only as good as its results.

Unlike many in the industry I have not wasted my energy berating the Financial Services Authority for its perceived shortcomings. Frankly, I need to focus my energy and resources on making sure that we continue to be a well-run business.

The FSA’s Mortgage Market Review has generated an extraordinary amount of debate but for what it’s worth I don’t believe it’s going to close down the mortgage industry and I’m not surprised that the regulator has reacted to the problems in the industry the way it has.

As many of those who know me might remember, I have long warned that this would be a difficult period and that we needed to get our businesses ready for the hard times that lay ahead.

For us, as I’ve mentioned, 2009 was pretty much as we expected and in terms of the performance of our portfolios probably better than I could have hoped at this time last year.

So what can we expect for 2010? More of the same.

We are focussing on managing those borrowers who are having problems paying us, often helping them to move out of arrears because they
want to retain a lifestyle they can’t afford.

I don’t expect to see any great changes that will affect our business directly during 2010. But this won’t be the case for many others.
I imagine that brokerages will be looking to continue doing the things that have allowed them to survive this far.

One thing we should all stop doing is harking back to the good old days of a few years ago. The industry landscape has changed forever and we are living in the new normal so we’d better get used to it.

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