In an age where tech and customer service rule, we all need to get better at failing, learning our lessons and moving on
I am currently reading an interesting book by Matthew Syed called Black Box Thinking, the crux of which examines why it is good to fail and to learn from one’s mistakes. It is only by doing this that we can ultimately be successful and move to a better place, he argues.
The problem comes when ‘cognitive dissonance’ happens. Crudely put, this is when we refuse to believe that failure has occurred and change the facts to fit our beliefs.
Lenders and brokers do this all the time. The former often refuse to acknowledge that their failings are the reason why the latter do not use them as much as they would like. Lenders interpret their lack of take-up as the result of brokers selling the wrong products, instead of lenders not supplying products that clients actually need. Either that or it is the regulator’s fault for not allowing lenders to innovate, they claim.
For example: I do not buy the assertion from lenders that brokers sell more two-year rates just in order to churn. We give advice: if a two-year product is the best advice, so be it. A new borrower may not be able to see beyond that period for various reasons, so affordability, future plans and flexibility need to come into play. Life changes quickly these days.
Meanwhile, brokers blame everyone but themselves for not setting realistic client expectations at the start. I have also seen many fail to admit that any slowness in the process is perhaps down to haphazard paperwork on their part.
There are examples on both sides all over the industry. But as we move into an age where customer service and technology rule, we all need to get better at failing, learning our lessons and moving on. We can shape our future if we are willing to.
In the markets, three-month Libor sticks as stubbornly as Jeremy Corbyn, at 0.38 per cent, while swap rates have fallen like Sam Allardyce.
- 2-year money is down 0.01% at 0.42%
- 3-year money is down 0.03% at 0.41%
- 5-year money is down 0.08% at 0.45%
- 10-year money is down 0.13% at 0.70%
Mortgage-wise, there has been a lot of wailing over Nationwide’s decision to pay existing clients £250 to stay with them but still not offer retention fees to brokers. Of course, Nationwide is not the only well-known lender that refuses to engage at this stage. It will change.
Speaking of such lenders, Santander has released some new deals, including 80 per cent loan-to-value products from 1.64 per cent and some key account exclusives such as a 90 per cent LTV product at 2.34 per cent, both with £995 fees.
Halifax, a shining light in the retention game, has withdrawn its £1,000 cashback campaign for first-time buyers and replaced it with £500. It has also reduced rates by 0.3 percentage points between 60 per cent and 75 per cent LTV, as well as reducing higher-LTV products. As a result of the latest rate cut, it has also reduced its stress-test affordability calculation by 0.25 per cent.
Accord has also improved its affordability model and now households with incomes above £60,000 will be able to get up to 5.49 times income for loans under £500,000. It also ignores pension contributions and season ticket loans and uses one year’s bonus history if below £75,000, which is all very useful.
Accord has also cut its buy-to-let rates, some with free valuations and legals. Its two-year fix for remortgages is now at 1.84 per cent to 60 per cent LTV with a £1,845 fee.
Elsewhere, Tesco Bank has reduced rates across the board, as has TSB, while Skipton has some good exclusive products from 1.09 per cent fixed for two years to 60 per cent LTV with a £1,995 fee. Staying in Yorkshire, Leeds has a reduced 10-year fix at 2.55 per cent to 65 per cent LTV with a £999 fee.
Coventry has reduced buy-to-let fixed rates with a five-year product to 75 per cent LTV starting at 2.99 per cent with a £1,999 fee; the Flexx Fix version is at 3.19 per cent.
The Mortgage Works has new buy-to-let products, including a free valuation and £250 cashback from 2.34 per cent to 65 per cent LTV for a two-year fix and from 2.99 per cent for a five-year fix. They have fees of £995.
Andrew Montlake is director at Coreco Group