Lenders continually claim that the lack of wholesale funds and low levels of redemptions means they remain restrained.
Yet a number of lenders missed their 2010 targets, showing there is more to this than meets the eye.
In a time when lenders have had to reinvent their underwriting expertise this in itself causes further log jams.
Gone are the days when every underwriting department had someone at the door with a green flag, waving every case through – whether it be fast-track, low credit score, self-cert or sub-prime.
With lenders showing off to the Financial Services Authority about how cautious they are in all aspects of risk, we must question how underwriting works in the new era.
One lender’s head of risk told our firm that 75% of all his underwriters had been in post for less than 12 months – which is concerning.
He added that he was training them up as quickly as possible. But we established they are typically aged 27-30, single or maybe living with partner, no children and, most worrying, living in rented accommodation.
I retorted how can someone who has not been to the university of life be expected to make a balanced underwriting decision on a mortgage proposal for an applicant making a life-changing decision.
Gone are the days when every underwriting department had someone at the door with a green flag, waving every case through
He quickly defended himself by saying that like all lenders it had an underwriting guide.
If a particular scenario is not in its guide it does not lend. This results in cases that may fall outside of the lenders’ standard underwriting being declined. There are few opportunities where a broker can have a meaningful conversation with a decision maker with mandate.
Luckily in my practice with the volumes of business we complete we have access to the right people and more often than not cases proceed.
But there are thousands of brokers doing acceptable levels of mortgage business who do not get past the call centre staff. If this continues they will leave the industry.
I recently sat in on a further advance meeting with a client at a High Street lender. The adviser’s expertise seemed lacking and again he was probably powerless to intervene in a case a little outside the bank’s criteria.
Once again the distribution capacity of the lenders will be challenging due to a general lack of quality branch staff.
The government’s Project Merlin claims to make substantially higher levels of funding available in the SME/corporate arena.
But once more the lenders are challenged by their own staff who seem unable to engage clients effectively, understand their businesses and subsequently fail to lend.
In time this lack of experience with lenders could benefit competent mortgage brokers.
But we need the lenders to accept that good quality distribution can be achieved through quality brokers.
MORTGAGE PRACTICE PRINCIPAL