The property boom is still in full swing and mortgage applications are as high as ever but this is not the only factor behind the delays in processing mortgages.
Hardly a day goes by that I don't hear stressed, overworked brokers complaining that they can't keep up with the volume of work. The same applies to consumers regarding the time it is taking to complete.
And a number of major mortgage players have admitted to me privately that they have been forced to stop taking new enquiries to enable them to catch up.
Now, you didn't need to be a smarty-pants to have predicted such a scenario some time ago considering the massive changes that were about to overtake the mortgage industry.
Thousands of brokers have quit the industry due to qualifications coming into force and this has left a black hole that is yet to be filled. Many more will seek alternative employment as Mortgage Day draws closer as they choose not to adhere to the FSA regime.
So was it not possible 18 months back to put into place contingency plans in preparation for the volume of applications and the shortage of qualified mortgage brokers?
Many of the big boys thought they had most if not all the angles covered but many have fallen short of providing a quality service. Most failed the contingency test as they lost focus. With all the rhetoric and dogfights between the major players in their endeavours to recruit the biggest network membership it easy to see where their focus lay.
It appears at this stage that many have been focussing on quantity rather than quality and herein lies the catch 22. To attract both mortgage brokers and consumers, networks need exclusives. For lenders to grant exclusives they demand distribution, as distribution will always be king.
Hence consumers have suffered delays in mortgage completions as resources have been thrown behind players jostling for position. I stand by my prediction made some 18 months ago that there will eventually be a premier league of around six major mortgage players.
Another disappointment that has been the cause of some delays is the dismal ineffectiveness of the common trading platform in our industry. Despite all the trumpet-blowing by the mortgage sourcing companies and the alliance of former rivals Mortgage Brain and Mortgage 2000, the fact is that many lenders cannot deliver what is required because of outdated systems.
A system is only as strong as its weakest link and the lenders certainly contribute in this department. Also I doubt whether any of the sourcing systems will be able adequately to keep track of all those exclusives mentioned earlier.
Qualifications and the loss of thousands of brokers, FSA regulation and general industry under-investment have come together to produce a second-class service for consumers.
Firms that do not recognise their weaknesses and fail to address the service problems may well end up with a big distribution network and no customers to serve. News of bad service travels much faster than good news. Do you need to take action?
Speaking of consumers suffering, there was widespread alarm at the news last month that interest rates might rise significantly. Some sections of the media – notably the Sunday Telegraph – reported a statement attributed to the Council of Mortgage Lenders that interest rates would have to increase to 10% in order to stabilise an overheated market. CML directorgeneral Michael Coogan was quick to point out that comments had apparently been taken out of context by journalists.
But with talk of 10% interest rates it is easy to predict that fixed rates could become popular again. I believe there are a number of measures which the government, the Bank of England, the Treasury and the CML can take without doubling interest rates – as Bank of England governor Mervyn King demonstrated in his unprecedented warning that house prices might fall.
The repercussions of doubled interest rates would be devastating, leading to many thousands of repossessions and financial hardship for millions. And such a move is hardly likely to appear on the agenda of a government soon to go to the country for a third term in office.
But in my mind there is little doubt interest rates will be at least 0.50% higher by next year.