In Mortgage Strategy’s first quarterly lender survey of 2016, has anybody achieved the perfect combination of good rates and excellent service that is the key to all brokers’ hearts?
- Simon Collins, Products technical manager, John Charcol
- David Hollingworth, Associate director of communications, London & Country
- Gemma Harle, Managing director, TenetLime
- Richard Merrett, Technical director, Alexander Hall
- Aaron Strutt, Product and communications manager, Trinity Financial
- Bob Riach, Mortgage broker, Riach Independent, Financial Advisers
- David Sheppard, Managing director, Perception Finance
- Rob Clifford, Director, MoneyQuest, Mortgage Brokers
- Jonathan Clark, Mortgage partner, Chadney Bulgin
- Victoria Jefferies, Mortgage proposition manager, Personal Touch Financial Services
The scene is set for what promises to be an eventful year in the mortgage market as Mortgage Strategy reveals the results of its latest quarterly lender survey. The first two months of 2016 have not disappointed as an opening act, with the sector on the edge of its seat watching the arrival of a new, controversial self-cert lender and listening attentively to talk of more mainstream lenders in the pipeline.
But how did lenders fare in the past three months? Did they let their standards slip during the festive celebrations, or use the time to make amends for failures in previous quarters?
As for previous surveys, our panel of critics has rated lenders purely on their residential mortgage business, assigning each a score from 0 to 10 across the various categories.
Each panel member’s scores are based on not just their own experience but also that of their colleagues and other advisers in their firm/network.
Percentage scores were calculated for each lender per category, accounting for any cases where no score was assigned due to a panel member not having dealt with a particular lender. Finally, each lender’s average percentage across the categories was calculated, enabling an overall ranking and comparison to be made.
You can find a summary of the results in the table below. Our panel has also highlighted a Lender of the Quarter, which does not sit within the top 10 largest lenders by volume but whose overall offering has stood out during the past three months.
Halifax Intermediaries has regained the top spot after the panel gave it rave reviews for its improved service. Personal Touch Financial Services mortgage proposition manager Victoria Jefferies says: “Halifax is back to its best having resolved some of the service issues it experienced in Q3.”
Alexander Hall technical director Richard Merrett also praises the lender for overcoming the service problems it had last year and says it is back to its “usual excellent standard”. He adds: “Halifax has been the standout lender this quarter, largely due to its excellent product transfer process and rates that have offered great value and benefit to existing customers.”
However, he wonders what the recent decision to cap income multiples at a flat 4.75 per cent for single or joint incomes will do to Halifax’s standing. “It will be interesting to see if its loan-to-income change impacts on its market share,” he says.
Meanwhile, TenetLime members commended the lender for “greatly improving its document submission process”.
Managing director Gemma Harle says: “It’s now possible to upload to a secure Intralinks website.”
But she adds that members still find tracking at the lender’s end “inconsistent”.
Advisers also praise the lender’s new-build and Premier service but members have “differing views on Halifax’s BDM service – ranging from very good to thin on the ground, depending on the region”, says Harle.
MoneyQuest Mortgage Brokers director Rob Clifford says: “Application assessment over the phone makes the process very smooth and even high-value cases are easy as a dedicated underwriter will make contact.”
The BDM is helpful, he adds, “but restricted by what she can influence”.
Clifford says Halifax’s main selling point is that it accommodates cases that other lenders may not consider.
Santander for Intermediaries
Santander for Intermediaries has gained two places since the previous quarterly poll and moved into joint-second place, receiving praise both for its service and for overall confidence in using the lender.
Trinity Financial product and communications manager Aaron Strutt says SFI is on form at the moment and its whole process is simple and efficient.
“It would be great to have another seven-day exclusive as they tend to cause a lot of excitement,” he adds.
Harle applauds the lender for being “best from a service and admin point of view, especially online”. But her members feel SFI can be “very aggressive in retaining business and waiving ERCs for loans, which disadvantages the intermediary”.
She adds: “SFI is not over-keen on Help to Buy outside England and its policy of not paying proc fees for retention business, yet expecting the broker to take the advice liability, seems extremely unfair.”
Chadney Bulgin mortgage partner Jonathan Clark says that, despite the lender having pulled back some of its income multiples to keep it in line with other lenders, it continues to offer “one of the best overall intermediary propositions on the market”.
Clifford says the lender’s underwriting standards are excellent and the process can sometimes take less than 24 hours.
“Underwriting can still be pedantic but support is very good, with a knowledgeable and efficient BDM and members of staff on a dedicated BDM line always available to help,” he says.
Virgin Money has fallen by one spot to tie with SFI in second place, again scoring highly for its service.
Strutt says his firm’s administrators are big fans of Virgin. “They are impressed with its systems and how smoothly they run,” he says. “They particularly like the way the lender sends emails so they know how the application is progressing.”
Not all panel members share this opinion, however. TenetLime members complain that the lender has a “terrible online VMO system” but Harle says this is scheduled for improvement in 2016 with a new customisable desktop.
“Clearly there has been a message from the top to improve and over-deliver. As a consequence, Virgin is really going for it on service levels,” she says, adding that the lender is “very committed to the intermediary space”.
Clark too believes the lender has its targets set firmly on the intermediary market. “Virgin has set out its stall to attract more broker business in 2016 and so far things look promising,” he says.
Jefferies concurs that Virgin has made a concerted effort to make headway with brokers.
“The information and support it has provided our advisers with ahead of the Mortgage Credit Directive changes have been useful,” she says.
Merrett praises Virgin’s products and service but adds: “The real positive has been in its underwriting. It has shown a good level of flexibility and allowed customer-focused, common-sense decisions to be taken on cases marginally outside standard criteria – the type of innovation that many other lenders should take note of.”
RBS (NatWest Intermediary Solutions)
RBS has fallen one place to fourth in our poll, gaining its highest scores for overall confidence and its proposition.
London & Country associate director of communications David Hollingworth says 2015 was a superb year for NatWest and the lender shows no signs of slowing down.
“Product pricing is good and its criteria broaden its appeal, especially given the superb BDM support,” he says.
Strutt is also an admirer of RBS, saying : “NatWest’s rates are still very competitively priced and it is popular with our brokers. It is still the go-to lender for expats and I know that brokers really appreciate its support for this part of the market.”
The lender’s flexible approach also wins favour with Clark. He says: “NatWest is still favoured by many brokers due to its generous affordability calculator that ignores most payslip deductions. Its service has also improved in recent months.”
Merrett says the lender’s changes to its interest-only policy have been very well received and this, along with an improvement in service, means RBS is “in a good position going into 2016”.
Coventry had a steady quarter and finished joint fifth in our poll, receiving one of its highest scores for its products.
Hollingworth is impressed by how the lender can move quickly on pricing when necessary but still sticks to the withdrawal notice that it promises to intermediaries. He adds: “Service is clearly at the heart of Coventry’s proposition too, which boosts confidence.”
Merrett agrees and says the lender consistently had the best service this quarter and across the whole of 2015.
Harle is also a fan. She says: “Coventry was brilliant in Q4 with good products and BDM support. It’s a lender that tries to do things, as opposed to not doing things.”
However, not all panel members’ dealings with Coventry have been plain sailing during the past three months. Riach Financial Advisers mortgage broker Bob Riach says, although the lender often has market-leading fixed rates, it can be strict on underwriting.
“If the clients pass the underwriting, the offer is normally produced in a reasonable timescale, and the changes Coventry has made to its online application system are a big improvement.”
But Riach says Coventry is one of the few lenders that deduct a client’s pension contributions as an outgoing for affordability.
He says: “I recently submitted an application for a police officer. After Coventry checked his payslips, it deducted his £400 per month pension contribution as an outgoing and rejected the application loan amount.”
Clifford has mixed views, saying: “Coventry often requires only the latest payslip and P60 and the valuation is instructed straight away so the process is very quick.
“The only problem that continues to crop up is with the accountant’s references, which are sent via a secure email that accountants cannot open, leading to the references having to be posted and then posted back because they are not accepted by the lender via e-mail. This tends to cause severe delays.”
Skipton Building Society
Skipton sits alongside Coventry in joint fifth, gaining one place on last time. The building society seems to be a favourite among the panel.
Strutt says: “Skipton has some great rates and is pushing hard to get more applications. Incredibly, 95 per cent of its business was submitted through brokers last year.”
Clark thinks the lender combines “excellent rates, good BDM coverage and refreshing flexibility on some of its criteria to good effect”.
TenetLime members also offer praise. “Skipton has proactive underwriting and excellent customer service,” says Harle. “It also knows how to read and interpret accounts, thanks to a Deloitte-managed monthly training programme.”
While Merrett deems Skipton “the most improved lender of 2015”, not all panel members have been impressed. Clifford says his firm has processed very few applications with Skipton recently, which could be down to its poor rates.
“The application process is simple and, if issues are occasionally encountered, they are always solved. It does, however, view the use of overdrafts very strictly in the underwriting process, which can stop cases being placed,” he says.
Clydesdale has advanced two places in our poll to seventh. The panel appear to be fans of the lender’s niche outlook but less so of its systems.
Merrett says the lender has made useful product improvements and seen a good increase in residential business as a result.
Clark, meanwhile, observes that Clydesdale’s service has gone on improving and its unusual criteria continue to make it a home for more challenging cases.
Hollingworth says it remains high on many brokers’ list as a big lender that can think differently. But Clifford points to its “unclear process mapping, errors, inconsistencies, packaged documents that go missing and system problems”.
He adds: “Communicating with the BDM is unhelpful; they are often unsure about criteria. It also has no affordability calculator so you can’t gauge whether to place business with it.”
Tenet members also have reservations about Clydesdale. “It can be difficult to get documentation to it and its online facility is not the best,” Harle says.
On the plus side, the lender’s products and service look good, with a current 90 per cent offer on new-build and a reputation as an attractive niche.
“It will also lend against operating profit as well as salary, but has a bizarre system with credit scoring at the end,” says Harle.
Nationwide for Intermediaries
Nationwide has fallen a single place to eighth, receiving one of our panel’s lowest scores for its service. Clark says: “Nationwide’s rates and policies continue to shine but its service has slipped noticeably in the past few months with too many silly mistakes made by seemingly poorly trained back-office staff.”
Clifford praises Nationwide’s online system for being “easy to use” with few documents required for packaging. However, “underwriting tends to be pedantic and communication very poor”.
The lender’s porting system is still causing brokers anguish. Harle says: “Nationwide is still using paper for porting and it can take two weeks to work through the system. Its online service is better.”
Hope may be on the horizon, however, as the lender is believed to be working on plans to allow existing customers to port their current mortgage online.
Harle continues: “Nationwide sometimes suffers from what appears to be a lack of internal continuity. For example, it uses a different team for valuations, so instructions can get confused.”
But she adds: “The lender offers good BDM support, with a lot of internal recruits who bring good existing contacts with them and already have a good knowledge of company. This can often expedite the process.”
Riach says Nationwide has good rates and “a very useable online system” as well as a helpful BDM. However, he says the lender’s decision to stop taking employer’s references has been a problem for clients who have recently changed jobs, as has its service.
“Over the past couple of months, the phone lines have been busy and I’ve been kept on hold for 20 minutes,” he says. “Processing times have slowed and what took 24 hours now takes about four days, so when uploading any new documents or replying to requested additional information it can take between four days and a week to be looked at.”
Nevertheless, he welcomes the lender’s recent move into the 95 per cent LTV market for first-time buyers. “I have been surprised by the applications that have been agreed, even some that had been declined by other lenders,” he says.
Merrett welcomes the recent changes to valuation fees. “Nationwide has become another lender to drop valuation fees in favour of a free basic inspection,” he says.
“This is an excellent customer-focused move that offers a significant differential when sourcing the best options for a client. It enables the customer to have far greater control of the purchase process – something that has increasing value in a competitive market.”
Like Nationwide, Woolwich fell by one place this quarter, to ninth in our poll. The panel favoured its products but Woolwich was another lender let down by its service over recent months.
One panel member comments: “Inconsistencies with underwriting, regular oversights, errors and incompetence often make the application process difficult.”
Although the BDM won praise for being “helpful and prompt”, the help available was often found to be limited.
Another panel member says: “During a recent case, an underwriter asked for proof of right to reside, having stated that the applicant’s UK passport showed he was born in Northern Ireland, ‘which is not part of Britain’, he said. This sums up how frustrating the process can be.
“Woolwich’s online system can also prove an ordeal for getting cases submitted and could do with being streamlined to become more efficient.”
Harle calls the Woolwich BDMs “as elusive as the Scarlet Pimpernel”.
She says: “The product range is normally good and it offers some flexible criteria but it is let down by a poor online system compared to the other top 10 lenders.”
Clark rues the recent departure of the lender’s chief executive of mortgages, Steve Weston.
“His departure is surely a loss to Woolwich as he was just beginning to make some real changes. Let’s hope his good work continues after him,” he says.
The lender managed to score well with its products. Strutt says its enhanced income multiple trial for Premier customers, which allowed them to access 5.5 times salary mortgages, was a great idea. “Hopefully, it will be extended or available again later in the year,” he adds.
Hollingworth, meanwhile, says: “Woolwich is pricing well to compete head-on with its peers and is delivering a great service too. With strong BDM support to back all that up, it is ticking a lot of boxes.”
Merrett says the lender has had “some superb products, and service has been excellent this quarter”.
He adds: “The launch of its intermediary hub has been very well received, particularly by our administration team, and it has significantly reduced the volume of calls being made to obtain case updates.”
Like several others in our poll, Accord has performed well on the product side but needs to improve its service, being placed tenth by our panel. However, it seems to be making headway in its service department and impressed with some recent improvements.
Merrett says: “Recent tweaks by Accord to its service proposition have had a very positive impact. Its products have been very good and it has made an all-around improvement from the previous quarter.”
He adds: “It’s great to see the removal of some of the unnecessary documentation requirements to evidence ground rent and service charge fees.”
Strut is also a fan of some of the lender’s products. He says: “Accord has an incredibly cheap two-year tracker at 1.24 per cent for large mortgages up to £3m, with loans above £1.5m considered by referral.”
Clark notes: “Accord is making efforts to cover its gaps in BDM coverage as well as amend some of its rather tricky criteria that can still snag even the most carefully submitted cases.”
The lender’s efforts to improve its service are not yet reflected in its scores perhaps because of teething troubles.
One panel member says: “Recent staff recruitment has meant that many applications have to be checked, rechecked and checked again – by trainee underwriters, standard underwriters and senior underwriters – causing delays. Accord is very strict on credit scoring and still maintains obscure rules such as that married couples must both be named on the mortgage.”
Tenet members have also had problems with the lender’s underwriting policies.
Harle says: “Its ‘ghost’ underwriting policy – where the actual document requirements don’t always match its published criteria – can cause some frustration. This is often exacerbated by post-offer referrals or even declines.”
The long run
Our latest survey shows that the challenge for lenders remains the same – a simple cocktail of good rates and excellent service is all that brokers desire. Yet it is still something few lenders seem able to master.
They do appear to be listening and recruiting new service personnel, as well as updating online systems, but harder to achieve is the universal approval of our panel.
Scores still vary greatly for areas such as BDM support and service, suggesting lenders are either short of resources or focusing their attention on certain regions.
Bigger does not always prove better, though. As our results table shows, some of the smaller lenders that arguably do not have the same resources as the larger ones nevertheless manage to outshine them.
LENDER OF THE YEAR
TSB Intermediary has been named lender of the quarter once again.
Hollingworth says: “TSB had to get the nod again, given its consistently strong service and product offering.
“It’s really going head to head with the big names in the table and has had a superb first year in the broker market.”
Jefferies says: “TSB has outstanding service levels that have stood out in the market, making it very easy to deal with.”
Other lenders that impressed the panel this quarter were Kent Reliance, Scottish Widows and West Bromwich.