Wells disagrees, however. “I would have said fast track is self-cert,” he says. “I have always heard the term associated with self-cert. It has never been associated with anything else such as full status or stood on its own. Electronic trading is making the mortgage ” If people continue to decide to work for themselves or the number working on temporary contracts increases, there will always be a need for self-cert products”process faster in general, but that’s across the board – it doesn’t just apply to fast track.”
Mawdsley takes a different view altogether. He says fast track is neither going to lead to the demise of self-cert nor can it be described as a self-cert product.
“Fast track is one of those areas where if you can establish the credibility of the borrower then why not fast track them? I am not sure that it is self-cert, as fast track does not require references. It simply requires wage slips and P60s, and often it doesn’t even require those – the lender will simply take income on face value.
“Fast track also tends to only be available at a much lower loan to value. Whereas if you are self-employed going to a prime lender with accounts that might be two years out of date, it is unlikely the lender will grant you a mortgage – or it will mean a lot of work to persuade the lender to do so. So that is obviously a perfect self-cert case,” he says.
Where distribution all fits into this seems a little obscure. Boulger believes distributors, while being a big force in the sub-prime self-cert market,will never be the same force in prime self-cert. But where they can have some involvement, he says, is in product design and testing.
“Distributors are a good place for lenders to carry out quite a bit of product testing before coming to the market, because what they don’t want to do is come to the market and then find out they have got it wrong. Also if there are issues in terms of the IT then it takes a long time to come back from that,” he says.
This is borne out to some extent by Kensington Mortgages’ recent pilot with All Types of Mortgages, which saw the lender test a product that was 80% full status and 20% self-cert. The lender has now withdrawn the product because, says Alex Hammond PR manager for Kensington, it “might have been little too complicated”.
Wells agrees self-cert is a big part of distributor business at the non-conforming end of the market, arguing many distributors might not see the value of being involved in prime self-cert since the fees tend to be quite low.
But Mawdsley says this is simply not true. “We are involved in the prime end of the self-cert market and always have been. Where distributors add value is there is now so much competition for self-cert business that we help to clear the fog for the intermediary, and it is the same for other sectors such as buy-to-let.
“There is so much product choice and it is now so complex that mortgage brokers need to be able to see as many self-cert deals as possible in one place.”
Wells says self-cert is such a big part of the mortgage market that it is likely more lenders will become involved in the sector, rather than less. “No-one is expecting the self-cert market to disappear – most lenders have got it in their business plans and have no intention of getting rid of it. It probably accounts for 50% of business volumes for the specialist lenders.”
Mawdsley is more bullish. “Products may become more complex and the boundaries between different product types could become blurred, so there will be a merging of product types to suit the changing needs of consumers.
“How much of that will involve self-cert is difficult to say, but if people continue to decide to work for themselves or the number of people working on temporary contracts increases – if the employment market continues to change as it has done – there will MDalways be a need for self-cert products.”