With Halifax yet again coming top in our quarterly lending survey at a time of record-low interest rates, is the best route to lender success a balance of rate and service?
Lenders lowered their interest rates yet again last quarter, leaving brokers wondering how much further they could fall. But did those lenders with rock-bottom rates simultaneously manage to maintain good service levels?
In our latest quarterly survey – covering February, March and April – lenders have been rated as usual based only on residential mortgage business. Their scores reflect not just our panel members’ own experience but that of colleagues and other advisers in their firm.
So, which lenders proved surefooted enough to impress our judges, and which ones lost their balance and took a tumble?
Once again Halifax is the clear winner in our poll. Chadney Bulgin mortgage partner Jonathan Clark says the lender’s performance is proof that, in the long run, great service “always trumps” short-term pricing.
He adds: “Halifax’s recent interest-only tweaks are to be welcomed.”
Meanwhile, TenetLime managing director Gemma Harle describes the lender’s new-build support and initial underwriting as “excellent”, adding: “It is perhaps the best overall lender in terms of service and prompt issuing of offers.”
Trinity Financial product and communications manager Aaron Strutt provides an example of Halifax’s impressive service. “One of our brokers secured a remortgage offer in under an hour –much to the surprise of our clients,” he says.
Alexander Hall technical director Richard Merrett, meanwhile, thinks the lender has made up ground following a slow start to the year but cannot claim to be faultless.
“Products and service have been strong,” he says. “However, there are repeated negative rumblings about its valuation fees, which are extremely high compared to those of its peers.”
RBS – NatWest Intermediary Solutions
NatWest Intermediary Solutions has leapt four places up the table this quarter, demonstrating that a ‘slow and steady’ approach can have its own appeal at a time of plummeting rates.
Clark observes: “NatWest appears to be majoring on straightforward criteria and reliable service, rather than market-leading products.”
Merrett thinks the lender has had a strong quarter across the board, adding: “There have been suggestions of significant criteria improvements in the offing, which will further strengthen its position.”
London & Country associate director of communications David Hollingworth thinks NatWest has eased off the pricing pedal a little.
“But its overall offering, backed up by excellent support, means it remains a very solid provider,” he says.
TenetLime members rate the lender highly for its criteria, affordability and service levels. But Harle says: “There’s room for improvement on its Help to Buy products.”
The lender has gained one place this quarter. Harle says Virgin is TenetLime’s “lender of the year” and she praises its processing system.
She adds: “It’s the most improved lender in the new-build sector and it offers a good range of products.”
However, Harle would like Virgin to offer a percentage-based procuration fee on ported products.
Perception Finance managing director David Sheppard says the lender continues to work well with limited company clients, but he adds: “It now has a cap for the self-employed. This penalises sole traders specifically and means there are almost always better lenders for these clients.”
Hollingworth has been impressed by Virgin’s five-year fixed rates. He adds: “It also has a keen offering for those looking for higher LTVs and has performed well for first-time buyers and homemovers alike.”
Meanwhile, MoneyQuest Mortgage Brokers director Rob Clifford describes his firm’s Virgin Money BDM as “excellent”.
Coventry slightly lost its balance this quarter, slipping from second to fourth in our poll.
Nevertheless, Clark focuses on the positives, saying: “Coventry continues to win fans with its broker-focused policies and great products, such as its penalty-free five-year fixed rates – still unique in the market.”
Hollingworth says, after a very strong January, Coventry’s slightly less aggressive product set recently has not been a surprise.
But he adds: “Its five-year fixed rates have been typically popular and the Flexx variable rates are sufficiently low to appeal to those keen on a no-ERC variable rate.”
Merrett thinks Coventry’s biggest strengths over the past quarter have been its service levels and time to offer.
“For the London area, it also has a key individual who is emerging as one of the best BDMs around,” he says.
Clifford, meanwhile, praises the lender’s “fast decision-making process”, higher-LTV deals and “excellent BDM”.
Barclays has slipped one place to fifth position but is the “standout lender of the quarter”, in Merrett’s opinion.
“Large loans, affordability, service and products – Barclays has ticked the boxes in virtually all areas,” he says.
“What goes under the radar is its excellence in the new-build market, where it has firmly upset the perceived Nationwide and Halifax duopoly of recent years to emerge as the dominant lender in this sector.”
Clark says: “Barclays appears focused on buying new business, with several market-leading rates, and retaining existing customers with even better retention products.”
John Charcol senior technical director Ray Boulger says his firm is “waiting to see what impact Barclays’ changes to its telephone BDM support will have.”
Santander for Intermediaries
Santander has taken a tumble from third to sixth in our poll. But Personal Touch Financial Services mortgage proposition manager Victoria Jefferies appreciates the lender’s newly offered retention proc fee.
“The launch of a minimum proc fee is also a fantastic recognition of advisers,” she says.
Hollingworth calls Santander a “slick machine” with its processing times. He also notes that, although the lender’s products have been “slightly off pace” in previous quarters, “that has turned around this time and it’s shown it can price deals with the best of them”.
Clark says Santander’s aim to increase overall business levels has succeeded, but he adds: “It is now several days behind on underwriting and risks losing favour with brokers as a result.”
Strutt, meanwhile, misses the lender’s flexible product. “It would be great if it could launch something similar again,” he says.
YBS (Accord Mortgages)
Accord Mortgages has held steady in seventh position this quarter.
Sheppard describes it as a “very strong lender for brokers”, allowing high earners to borrow above five times their income.
“These clients generally have more disposable income to put into their mortgage,” he says.
Strutt says: “Accord’s offset option is a nice touch and brings some welcome competition to this part of the market.”
He would, however, like the lender to offer a product similar to Yorkshire Building Society’s recent 0.89 per cent discounted standard variable rate.
Riach Financial Advisers mortgage broker Bob Riach says Accord issues its offers quickly and has a helpful BDM. However, “it does not use tax credits for affordability and this can limit some applications”.
Merrett thinks the changes the lender has made to its credit-scoring process have had an excellent impact on service.
“It has also made a superb BDM appointment, which has started to have a very positive effect on volumes,” he adds.
Nationwide for Intermediaries
Nationwide too has retained its previous position in our lender table. Merrett says the service issues that were a constant feature last quarter have been corrected.
“Nationwide had a good start to the year, largely due to its flexibility on affordability for first-time buyers,” he says.
“Being one of the few lenders that will offer more than 4.5 times income is a key differentiator in the current market.”
Sheppard welcomes Nationwide’s move to have “one person look after applications throughout, rather than the unworkable process there was before”. However, this is a work in progress, he adds.
Jefferies also believes there is still work to be done, but says “the conscious effort to improve and move service in the right direction has been noted by advisers”.
TenetLime members have noticed the change in Nationwide’s approach to underwriting.
Harle says: “Its live-chat facility is very user-friendly and perhaps should be used more instead of relying on BDMs, who are not always able to respond in a timely manner.”
TSB Bank had a wobble this quarter and slipped one place to tenth in our table.
“This is the lender that I am most disappointed in of late,” says Sheppard. “When it launched, it was a breath of fresh air and easy to use. Lately this has not been the case and it needs to consider its proposition because it seems every mortgage is difficult to get to offer.”
Harle says: “It will be interesting to see how TSB shapes up when it finally breaks all ties with Lloyds.”
Merrett, however, feels it has been a good quarter for TSB, describing the lender as “strong in all areas”.
He adds: “Service on occasions is not quite as good as its competitors’, but it will be very interesting to see how it performs when its own system lands, as this should help it go from strength to strength.”
Despite coming top of the panel’s list for niche offerings, Clydesdale remains at the bottom of our table this quarter.
Clark says: “Clydesdale is still able to reward those brokers that know how to present a more complex case, with competitive products and genuinely bespoke underwriting.”
Boulger thinks the lender offers good service and excellent BDM support – “proving that you don’t have to do an Atom Bank to get the business you need”, he says.
Merrett says Clydesdale’s changes to its large-loan proposition highlight how well it understands the requirements of its key introducers and the upper end of the market.
He adds, however: “Great products have seen volumes increase significantly, which has brought some service issues of late.”
Harle calls Clydesdale a “Jekyll and Hyde lender”, offering good criteria but sometimes “awful” service and processing.
Service wins out
In a quarter that has seen lenders launch some of their lowest-rated products on record, our panel has rated highest those offering a consistently good service – proving that it is not always the lenders with the lowest rates that succeed in winning over the crowd.