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Profitability leads to erratic behaviour

Tony Yorke Principal Think Strategically

What’s been happening to those big slabs of corporate grey, or building societies to call them by their proper name?

I know profitability is an issue preoccupying many of them and this has resulted in some erratic behaviour in 2010. But one seems to have lost the plot totally.

Recently, a friend of mine enquired about a remortgage deal for £550,000 from her local mutual. A prime customer with an impeccable borrowing and savings track record, my friend had her enquiry knocked back within 15 short minutes.

Apparently, the mutual didn’t consider her attractive because it wouldn’t have made much money on the product she had applied for even though she had been encouraged to apply for a product with a low fee and limited tie-ins.

While rejecting her application, the adviser admitted that the lack of a fat fee was a factor as was her decision not to buy insurance. Because she would not switch to a more favourable product, her case could not be progressed.

This didn’t sound like the behaviour of a society. It was more reminiscent of sub-prime lending. But after calling the society and speaking to the head of broker sales, she found this to be true.

I know lenders reject cases for all sorts of reasons but you expect a society to behave with integrity, not in a way associated with sub-prime.

And this is not an isolated case. Two brokers I spoke to last week told similar stories about the same society.



Remortgage market to stage renaissance

The intermediary mortgage sector has waited a long time for signs of resurgence in lending activity. But until now it has had to subsist on a starvation diet of strictly controlled prime purchase business, with a small portion of remortgage business. Lending is still hugely restricted in its scope and attitude to risk, and uncertainty […]


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