Aggressive pricing and strategic actions feature as much as rates in the latest Mortgage Strategy quarterly lender survey
As the low interest-rate environment continues, the battle for lender supremacy shows no sign of abating.
Mortgage Strategy recently conducted its latest quarterly lender survey. As we reveal the results, has Lloyds Banking Group retained the throne through the house of Halifax or has another lending dynasty – or young pretender – managed to supplant it? And has anybody in the top 10 fallen on their sword?
Not all lenders have an army of workers and assets behind them with which to challenge their rivals. But over the past three months some strategic moves by certain protagonists have enabled them to gain ground.
As always, our panel of critics has rated lenders on the basis of their residential mortgage business, assigning each a score from 0 to 10 across the various categories. Each panel member’s scores reflect not just their own experience but also that of colleagues in their firm or 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. The average percentage across all categories was then calculated, enabling an overall ranking and comparison to be made.
A summary of the results can be found in the table below. Our panel has also highlighted a Lender of the Quarter, which is not one of the 10 largest lenders by volume but has stood out in terms of its overall offering.
- 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 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
RBS (NatWest Intermediary Solutions)
The ‘threat from the north’ proved victorious this quarter as NatWest Intermediary Solutions stormed past its closest rivals, climbing three places from last time to secure the top spot. Its overall proposition score of 83 per cent and its excellent BDM support held all opponents at bay.
London & Country associate director of communications David Hollingworth believes broker exclusives have helped NatWest seize the throne, and they prove it has no intention of tempering its performance from 2015.
He says: “Couple the exclusives with criteria that can offer the required flexibility for borrowers and it’s no surprise that NatWest is achieving good things this year.”
MoneyQuest Mortgage Brokers director Rob Clifford pronounces NatWest the “best lender in the market at the moment”. He adds: “Its simple packaging requirements and online tracking system are excellent, as are its exclusive products. Its BDM is fantastic – very knowledgeable and always ready to help.”
Perception Finance managing director David Sheppard believes the new champion has perfected its battle plan.
“NatWest had a particularly good last quarter with some great rates, and its service did not drop, which is a testament to its good controls,” he says. “The BDM is also there to help, and willingly does so.”
Meanwhile, Personal Touch Financial Services mortgage proposition manager Victoria Jefferies commends the lender for continuing to offer “a reliable product range with strong BDM support”.
However, it was not a clear victory in the minds of all panel members. TenetLime managing director Gemma Harle says: “NatWest’s affordability is good but there has not been much else to shout about this quarter.”
Valuations are often instructed incorrectly, she says, and the lender is poor at progressing cases compared to other lenders.
“It requires a lot of chasing at all stages of the process, with little or no ongoing communication. It’s not a new-build lender, either.”
She adds, however: “On the plus side, although it has no BDMs available on a face-to-face basis, they provide an excellent response via telephone or email.”
Halifax Intermediaries was overpowered this quarter and pushed into second place. It gained the panel’s confidence with a mighty score of 86 per cent but weaknesses in its product offering caused it to lose its crown.
The big news was Halifax’s relaxation of its treatment of older borrowers’ income, followed by the extension of its upper age limit to 80.
Chadney Bulgin mortgage partner Jonathan Clark believes the moves could have a significant impact on Halifax’s overall business levels, “especially if it manages to retain its unrivalled service standards”, he says.
Harle says the lender offers “consistently good service” and makes it possible “to deal with multiple cases together in one phonecall.”
Clifford praises the lender’s Intralinks system. He says: “It cuts down application assessment timescales and means that cases are often agreed, subject to valuation, after one phonecall.” However, Halifax did not win over all panel members with its BDM support this quarter.
Sheppard says: “Its rates have remained very competitive but that, in turn, has had a knock-on effect on its BDM service. “I think Halifax needs to consider taking some of the strain off its BDM team because it can be difficult to get hold of them.”
Alexander Hall technical director Richard Merrett feels the lender has been very competitive on remortgage rates but less so on purchase rates. “The biggest factor impacting on its ability to take business volume is the level of its valuation fees, which are extremely high against those of the rest of the market,” he says.
Santander for Intermediaries
Santander slipped one place this quarter to third, receiving an average score of 79.6 per cent.
Merrett has high praise for the lender’s service. “It has clearly been helped by the decision to move valuation instruction to the front end of the process,” he says.
“It has also made good headway in the new-build market and has one of the best all-round propositions in this area.”
Clark says Santander “seems to have run out of criteria tweaks” and is instead “resorting to rate adjustments to capture more business”.
He adds: “Service standards have been consistently excellent. The only downside has been a recent tightening on higher-LTV income multiples.”
Harle says Santander’s online cases fly through if the requisite boxes are ticked. However, when a human gets involved in the process, things often grind to a halt. “There are many positives as usual, though,” she says, “including the fact it now instructs surveyors straight away. Free valuations also make it very competitive, especially on higher LTVs.
“There is room for improvement over weekly paid applicants, where it takes the lowest weekly figure as opposed to averaging out. And it still has no Help to Buy in Scotland and Wales.”
Virgin has lost its runner-up position and fallen to fourth place this quarter, but panel members are still keen supporters.
Hollingworth says the lender has worked hard on its proposition.“Some of its rates have been outstanding this quarter, especially in the five-year market. Other incentives and good high-LTV rates have contributed to an appealing all-round offer,” he says.
Harle thinks Virgin’s new-build proposition looks promising.“This is part of an attractive overall offer that includes a lowered affordability calculator, the ability to extend a mortgage offer after six months and a £500 cashback incentive,” she says.
“Virgin is the most proactive lender and is always looking for ways to enhance its service.”
However, the lender operates “a lot of ‘nice to do’ rather than ‘need to do’ systems”, she says, adding: “Culturally, it has always been somewhat anti-intermediary, but there are signs that is changing.”
John Charcol products technical manager Simon Collins praises Virgin’s ‘Marathon Exclusives’ and the way it always tries to find a different angle.
Clark, meanwhile, thinks Virgin is probably the only lender competing with Halifax on service.
He adds: “Virgin’s only weak link is its product range, which is a little off the pace and still unnecessarily complex, with 127 different rates at the last count.”
Skipton Building Society
Skipton has retained fifth position from our previous poll. Clark says its recent policy changes on new-build applications, combined with its competitive rates, are “keeping it firmly in most brokers’ top 10”.
Harle rates Skipton highly on service. “It has been very competitive on products and it is not uncommon for offers to appear within three days,” she says. “It also offers more than any other lender in terms of affordability and has made a huge effort in recent months to develop its new-build proposition.”
Hollingworth agrees. “It’s easy to see that Skipton’s proposition has the broker at the heart of it,” he says. “Just look at its work on the Mortgage Credit Directive, with an effort to make the move as easy and seamless as possible.”
But the building society did not please all panel members. Clifford says he has had no Skipton cases since the start of this year. “Presumably this is due to its rates being poor,” he says.
Meanwhile, Merrett says: “Business volumes have slipped a little of late, which is probably more about increased competition than anything else. After an extremely strong 2015, Skipton may need to look for other areas of improvement to maintain its significant recent progress.”
Coventry has fallen one place this quarter to sixth.
Hollingworth says the lender has not offered the same high number of top rates that brokers have come to expect. But he adds: “It has shown it still has an eye for products with the launch of the only 10-year offset fixed rate.”
Sheppard says: “The Coventry is a steady lender that continues to support the broker market with its pledges and service. But its rates were not as prominent last quarter so it lost out on business as a result.”
Merrett thinks the lender’s most notable achievement is its “delivery of some products that are unique, in that they are a bit different from the rest” – such as its lifetime variable rates and fixed rates with no ERCs.
Clark says Coventry has continued to win business through a combination of “generous affordability and competitive products”. But he adds: “Its slightly cautious underwriting approach sometimes limits applications.”
Barclays has leapt two places up the lender table, due in part to having gone on the attack with its products during the quarter.
Hollingworth calls the lender’s strong offering in the larger-loan sector “the cherry on top” of a very solid all-around range from Barclays, which includes fee-free remortgages and a strong tracker range.
Sheppard says: “The major development for us has been meeting our [Barclays] BDM for the first time, as a result of which our confidence in using them has gone up. There is nothing like a local contact who understands the market for getting things fixed and providing the right type of support, which we cannot always get through a centralised call centre.
“Woolwich does, however, need to improve or do away with the need for brokers to key in changes to applications, which is a poor system to work with.”
Merrett thinks the lender is “easily the best of the major lenders this quarter”. He adds: “It has had excellent products, good service and a large-loan proposition that is some distance ahead of the rest of the market.”
Clark says that, while Barclays has made it clear it intends to retain its “rather complex and still challenging MAX system”, its continual adjustment of both criteria and rates is gradually winning over even the most cynical brokers.
However, one panel member complains of “terrible service, inconsistencies and errors on every case this quarter”, adding: “Communication with the lender is made difficult by language barriers and outsourced call centres.
“We recently had three cases held up on the day of the release of funds because a reference number had to be added to the customer declaration and direct debit mandates. This was applied retrospectively and threatened completion.”
The panel member adds: “[Barclays’] affordability calculator is useless, as is the decision in principle. Our BDM seems uninformed and not interested in acknowledging negative feedback.”
Nationwide for Intermediaries
Nationwide has failed to make progress this quarter and remains mired near the bottom of the table, in eighth place. Our panel members, however, believe it is heading in the right direction.
Clark says: “Nationwide’s gradual move to a case-ownership proposition is starting to pay dividends and should begin to address some of its recent service slippage. Otherwise its overall proposition is still among the best available.”
Sheppard says the handling of his Nationwide cases in the first quarter of 2016 was “OK” but not “easy”. He adds: “Nationwide needs to look at its underwriting and determine what is ‘need to have’ rather than ‘nice to have’ because it is being left behind by lenders that are applying more common sense.”
Jefferies says her members think Nationwide is “an invaluable panel member, with fantastic products” but “they have commented on reduced levels of service this quarter, which has been disappointing”.
Harle agrees with the criticism. “Service tends to be slow and inconsistent, with a huge variation from case to case and a lot of to-ing and fro-ing due to the way they are underwritten,” she says. “Nationwide has an attractive product range, backed up by good case handling and document upload facilities. However, its piecemeal underwriting and dual pricing can be very frustrating.”
But Riach Financial Advisers mortgage broker Bob Riach says: “Nationwide still offers good service and often has good rates, with an easy, useable online system and one of the best BDMs.
“Nationwide recently moved into the 95 per cent LTV market for first-time buyers and we have been surprised by the applications that have been agreed – even some that had been declined by other lenders.”
He adds, however: “Over the past few months its phone lines have been busy and I have been kept on hold for 20 minutes. Processing times have slowed and what took 24 hours now takes about four days. So, when uploading new documents or replying to requested extra information, it can take four days to a week to be looked at.”
YBS (Accord Mortgages)
Accord has moved off the bottom at last, advancing from tenth to ninth position.
Strutt has been pleased with its service recently. He says: “Our contact at the lender really helped us get a deal done over the telephone this quarter and went that extra mile.”
Sheppard too has noticed an improvement at Accord. “Not only has it started the year with good pricing but it seems to have continued to work hard on improving its service and underwriting, looking to get a better market share,” he says.
Merrett thinks Accord’s approach to affordability for borrowers without debts or significant outgoings makes it a “very attractive option because it is able to deliver very positive outcomes for the right type of customer”.
Meanwhile, Clark says: “Accord has just released some sharper rates but it needs to make more criteria adjustments and have more of a BDM presence if it is serious about increasing market share.”
Another panel member says: “Underwriting criteria can be excessive and pedantic and it can be obsessive over very small and insignificant details. We often encounter problems if a client is not registered on the electoral roll or has been removed from it in the recent past.”
Harle adds that, although Accord is hard to beat on rates, its service is inconsistent and a lot of chasing is required through a laborious processing system to secure the best deal for a client. “There is a prevailing feeling that its underwriters look for reasons not to accept a case. On the plus side, however, its phone-based BDMs know their stuff and the team provides excellent support if your nominated BDM is unavailable.”
Clydesdale has fallen significantly in our panel members’ estimation, dropping by three places to tenth, and bottom, in our table.
Harle says despite being hard to beat for bigger loans, Clydesdale is “a bit of a last resort for anything else”.
She adds: “Its realistic approach to higher-end lending is commendable but it can sometimes be let down by its underwriting system, which needs to become more flexible.“It can also get bogged down on the service side, although generally it offers a reasonable range of products.”
Sheppard approves of the way Clydesdale permits its local BDMs to agree cases, getting them to put their name on applications so that the underwriter knows they have been discussed prior to submission.“This sets Clydesdale apart from other lenders; long may it continue,” he says. “Its rates have not been as competitive this quarter but it makes up for that with its BDM being as good as he is.”
Clark says the lender continues to win business with its ‘no credit scoring’ policy. “Its underwriters have the ability to really consider the individual merits of an application and are backed up by knowledgeable BDM’s,” he says.
However, one panel member says: “Clydesdale’s online system is poor for sending documents; these are often missed or fail to come through properly.
“For some reason, its staff continue to fax updates to us even though we don’t have a fax machine, using the number registered on their system, which is ‘0000000’. We’re unsure why it keeps doing this.”
Lenders have been more aggressive with pricing of products this quarter. The trend looks set to continue as some raise their upper age limits and Barclays launches a guarantor 100 per cent LTV mortgage.
Lenders are having to think more strategically about which products they offer and how these can help to widen their hold on the market.
Brokers and their clients want lenders to be more pre-emptive and calculated in choosing their product offerings, which means the future ‘game of loans’ will not be one of rates alone.