A is for Abbey, resurgent in 2006, and after a measured specialist lending debut, expectations are high for it to develop further in 2007 possibly with a large loans niche. As with the crestfallen David Beckham, it will be interesting to see whether a Spanish paymaster cultivates its asset even more or determines that its specialist proposition will not receive incremental investment in a challenging market.
Ais also for Advantage. Its Flexishare product marked an innovative and ballsy entrance last year and has won admiring glances from peers that perhaps now wish they had pioneered it. Good luck to Morgan Stanley – it’s doing more to help first-time buyers than the government. The HomeBuy product is one you sense the government is not fully committed to (see Q).
B is for Bachelor. Set to resurface at Lehman Brothers next week, this Guy has a single-figure golf handicap and an unreturnable first serve. European franchises may be the mainstay of his jurisdiction but I hope he puts the UK at the heart of his agenda. Lehman’s three businesses are good brands but there must be opportunities to streamline them and develop a greater broker focus.
C is for Consolidation. Last year’s buzz word will become this year’s reality. Expect more building societies to morph (the Yorkshire is the nap pick) and more networks to voluntarily come together. Personal Touch is one to watch (now Personal Touchski after Lloyds’ investment?). Even if these love-ins aren’t structural, we will continue to see greater collaboration in the broker market.
D is for Delusion – the only word to describe the state of affairs when the aggregate of lenders’ loan targets for 2007 is near 500bn with only 350bn to play for. Too many virgin entrants in the specialist market will see the bandwagon stop before it starts. With purchase transactions slowing, overambitious business plans will have foundered by Easter.
E is for edeus. I correctly forecast 12 months ago that Bolton and his cohorts would have their first 1bn worth of loans instructed within six months. Edeus is a formidable proposition so I offer odds of 3-1 that it will instruct over 4bn this year. (Call 020 7220 1003 to place bets.)
F is for Filter, which is next to cascade. Expect the regulator to look more keenly at single lender cascading. As repayment delinquency increases on the back of rising interest rates and personal debt defaults the FSA will want to assess the accountability of lenders and brokers in the spirit of Treating Customers Fairly and lending and advising responsibly.
G is for GMAC-RFC. The Ricky Hatton of the industry – i.e. pound for pound possibly the most fleet-footed lender around. Regardless of whether the POS-O/AVM phenomenon proves to be as consequential for consumers as the hype suggests, I expect the CML’s next annual tables to mark the restoration of GMAC-RFC’s top 10 status.
Hcan only be for the outstanding behemoth that is HBOS, wherein Messrs Stockton and Jenks double for Rooney and Ronaldo. Some competition at last in the shape of upgraded e-commerce capabilities from Nationwide, Lloyds TSB and Barclays will keep it honest. 2007 will also be the year in which HBOS spring-cleans its countless and disparate distribution value chains.
Iis for ING. Dutch dartsman Raymond Van Barneveld is now one of our own and this Dutch lender’s no-exit fee guarantee is a welcome riposte to the outrageous behaviour of some lenders when it comes to this stealth mortgage tax.
Jis for Jamborees. The mortgage calendar is plagued by a chronic saturation of junkets and jaded awards ceremonies where many awards are thinly justified, the result of jaundiced selection and won by journeyman businesses or individuals.
Kis for Kinsfolk. Mainstream and specialist lenders need to do more to resolve the first-time buyer malaise. Bank of Ireland, HSBC and Britannia’s innovations have been commendable but more is needed.
L is for Lending , or DIY lending. Unity is now adolescent and with further intermediary plays likely from Freehold, Spectrum and Concordia we could reach a point by 2010 whereby larger brokers are profit-sharing as much as 15% of their loan originations.
M is for Menu Engineering – the term I use to describe the flagrant manner in which some lenders are balancing and blending their revenue streams as competition toughens, i.e. exorbitant exit fees, 0870 call centres, opt-out mortgage protection products and practices, mortgage indemnity guarantees and earnings from third rate inhouse or associated conveyancing departments.
N is for Nationwide. Now a 150bn entity, let’s hope it does a Man Utd and gives the industry’s champion lender a good run. Both The Mortgage Works and Portman have punched harder by weight recently than Nationwide and UCB Home Loans, so hopefully a multi-brand strategy will emerge.
O is for Oblivion, the only destination for those brokers who do not take the FSA’s dictats seriously. Fines and enforcement are on the increase, and not before time.
P is for Procuration fees. This will be the year when lenders establish justifications for their proc fee policies with brokers across both DA and AR channels. Some policies are opaque at best and inexplicable at worst.
Q is for Quixotic, the best word to describe this government’s unjoined-up thinking on promoting wider home ownership and shortening the property buying process. Home Information Packs continue to be the equivalent of the love interest at school who, upon being dumped, just won’t go away.
R is for Reciprocation. On valuation work , lenders , brokers and surveyors need to stop treating this word as the one that is never uttered. The day of reckoning is approaching on this subject.
R is also for RBS, fast becoming the happy-slapped Leeds Utd of the industry. Memo to the new management team: Stop overconsulting strategically with brokers and be more single-minded. There is no shame in copying what other lenders are doing well.
S is for Specialist lending. It’s becoming crowded and margins will erode. But more interesting is the US banks (and HSBC) starting to fail shareholders Stateside. The models aren’t entirely comparable and I don’t think 2007 will see pain in the UK but by 2009 the point in D (opposite) will have manifested itself.
T is for Traction or more pointedly, retention. My sense is that HBOS would be pleased to see other lenders following its lead (Nationwide and Abbey?). In some cases an internal product transfer makes sound sense. But in others it doesn’t.
U is for Underdogs. Non-top 10 lenders I fancy to grow their propositions further in 2007 include Advantage, Accord, Clydesdale, Coventry, First National, Freedom, Infinity, Intelligent Finance, Victoria and West Bromwich.
V is for Volte-Face, the only way to describe Nationwide’s clumsy U-turn on equilibrium pricing. It took the moral high ground on our TV screens for many years and would have been better regarded had it come clean about the commercial reasons for its switch. But in its defence, its remortgage product suites are still exceptional value.
W is for Woolwich, showing distinct signs of re-emerging as a powerful player. Fantastic product pricing and innovation of late is underpinned by strengthening service.
W is also for Website. The launch of web-based broker mform has reignited the debate on whether near execution-only models are anything more than information services.
X is for xit2. Congratulations on a smashing 2006 and all power to you in 2007. Your technological advances have made life so much easier for brokers and surveyors in particular. Bravo.
Y is for Yanks. In the past, US lenders have been Ugly Betties – shortsighted, full of ideas and eager but friendless. But now, thank God they’re here. Merrill Lynch, Morgan Stanley and Lehmans are leading innovation in the UK broker sector.
Z is for Zeitgeist. The spirit of our time is convenience. I’m not sure about GMAC-RFC’S assertion that iPods will deliver mortgage offers but firms that fail to invest in technology will lose out.