Philip Evans: Many aspects of the mortgage market have changed in the past year including the lead times for providing advice. We are revisiting existing clients earlier than we did because of the liquidity crisis.
Lenders are exacerbating the challenges brokers face, especially in the specialist sector where most of our business was placed until recently.
For example, we’ve seen a sharp increase in the number of client applications declined by the sub-prime lenders hardest hit by the ongoing market turmoil.
Those lenders that are still keen to lend are either struggling with service backlogs due to excessive demand or only making limited tranches of funds available.
When funding is restricted it is usually in clients’ best interests to submit remortgage applications earlier to ensure they can secure a deal.
In recent months, the limited availability of products has encouraged brokers to liaise with clients as early as possible in the process.
After all, why should brokers take the risk of borrowers losing their homes because they submitted applications too late?
When approaching clients early, brokers must ensure they document the advice they give. This will ensure they can justify why they have taken a safety first approach in the prevailing conditions, particularly if rates fall again as most of the industry expects.
And brokers must not be afraid to change their recommendations on the back of market movements. As professionals, we need to maintain our integrity and ensure we do the right thing for our customers. The market may have changed beyond recognition but clients are still the lifeblood of our work.
Richard Barnett: We’re not involved in the mortgage advice process but as a national conveyancer dealing with about 6,000 instructions a month, we are privy to numerous statistics that offer insights into the behaviour of brokers and lenders in the market.
Conveyancers are judged on results so we have to measure all aspects of our work. As a result we’ve discovered that during the first part of 2008, 39% of the cases we’ve dealt with have taken more than three months to complete.
This is a marked increase on the same period last year, so we can say with certainty that the length of time it is taking for mortgage transactions to complete has increased.
This is not good news for our performance statistics, that’s for sure. Whether this means clients are being advised too early in the process is difficult to gauge but it does seem strange that it’s taking longer at a time when technology is increasingly prominent in the industry.
All who work in mortgages would accept we’re moving towards a market dominated by technology. The benefits of this approach to business are becoming more obvious every year.
Thanks to the prevailing market conditions brokers have been hit hard in the wallet, so processing the largest business volumes in the least time for the lowest price is the name of the game.
At a time when I find myself engrossed in daily conversations about exciting developments like instant remortgages and next day completions, I find myself scratching my head about why mortgage deals are taking longer to complete.
But these are interesting times and until equilibrium returns to the market, it’s likely there will be even stranger statistics to ponder.