Market Watch: A tough market calls for expert guidance

Despite global uncertainty and stringent regulation standards, a broker who is willing to go the extra mile will always be a valuable asset

Among the deluge of news around European elections, the Brexit Party, second referendums, Donald ‘Drumpf’, the Tory leadership elections, trade wars, global warming and the whole damn political malaise that seems to be engulfing the globe at present, there is much to be content with.

Maybe I am in a particularly happy mood after Liverpool’s exploits, resulting in their sixth European Cup win on a hot and sticky night in… well, I won’t rub it in. The point of this is the message that struck me this season – and I saw it a lot that night: ‘Never give up’. It particularly resonates with me when I think of not just my own career, but the industry as a whole.

Let’s face it, it ain’t easy at the moment. In fact, there have been many times in my 25 years in this industry where it has been very tough, both personally and professionally. But never giving up is the mantra of the broker.

It is about how we battle for our clients. Why we work late, weekends, take that call when we are on ‘holiday’ to make sure they are happy. It is why we challenge a valuation, question lenders on policy decisions and refuse to accept poor service from conveyancers. We are not all perfect, but the vast majority of us care and will always go the extra mile to make sure our clients are happy and that they refer their friends and family to us.

You know what really grinds my gears?

It is difficult to know where to start concerning the issue of execution-only. In certain circumstances, I understand why seasoned borrowers should have the choice to do things themselves. However, the issue is a complete rewriting of history from the FCA and ultimately undermines the achievements of those who bought in the Mortgage Market Review.

Mortgages are not simple commodities that should be examined on price alone.

There are also many other things to bear in mind, which many people are not familiar with. An apparent simple remortgage or product transfer could lead to choosing the wrong one, or a term that could end up costing thousands of pounds in additional interest or fees. I echo the thoughts of others, such as Mojo Mortgages, that first-time buyers should never be offered execution-only products.

We should not be pandering to certain lenders or new digital providers with no respect or real understanding of the market. This will undoubtedly lead to ‘gaming’ the system, (as the FCA’s former mortgage policy manager Lynda Blackwell put it), poor consumer outcomes and a regulator who will probably have to change things back again in a few years when the complaints start coming in. I’m printing my I Told You So T-shirt right now.

As a wiser man than me told me last weekend, the only difference between extraordinary and ordinary is to put in that little bit extra.

We have always faced threats and changes to the way we do business. Whether from new technology, new arrivals to the industry wailing that “everything is broken and only we can fix it” or some other such bull, to the common recurrence every few years of new regulation. Execution-only, coupled with new technology and a regulator blind to the dangers does not bode well, especially when large lenders have the funds to price out smaller competitors and possibly start to dual price once more.

Lenders who think about doing this will find that we will not go quietly.

Product transfers are a double-edged sword, both a blessing and a curse, where brokers now face the prospect of lower income, while tying up the client for five years, but we do this when it is the right thing to do.

But let me tell you this – we have been here before. We will not give up: for our clients, for consumer choice, for trust in our industry, to fight for the rights of ‘mortgage prisoners’, to improve financial literacy, to make sure advice is always front and central, to adapt and use new technology to get stronger and improve our customer journeys, to take on the false prophets. We need to open our eyes and see the future, battle for it, believe in it and embrace it. The humble broker may evolve, but we are not going anywhere.

In the markets, three-month Libor has dropped a little at 0.80 per cent, while swap rates have also fallen pretty dramatically in the past month, following the misfortunes of Brexit.

● 2-year money is down 0.04 per cent at 0.90 per cent
● 3-year money is down 0.17 per cent at 0.92 per cent
● 5-year money is down 0.20 per cent at 0.98 per cent
● 10-year money is down 0.21 per cent at 1.13 per cent

It was pleasing to see that UK Finance reported that UK mortgage approvals rose in April to their highest level since early 2017 – something I hope will continue.

Among the usual rate changes, which have seen even more competitive rates come on to the market all the way up to 95 per cent loan-to-value, there have also been some interesting criteria and affordability changes as well.

Apart from a reminder that Santander will now offer part-and-part mortgages up to 85 per cent LTV with no minimum income requirement, it has some new first-time buyer rates up to 95 per cent LTV with £1,000 cashback and a free valuation. The bank has also tweaked its buy-to-let policy and will now allow a maximum term of 40 years to age 85.

Sainsbury’s Bank is determined not to be like its supermarket competitor Tesco and has made some decent changes to its affordability calculator. No self-serve checkout here, as service is also good.

Halifax has made some pretty dramatic reductions on product transfer and further advance rates of between 0.4 per cent and 1.5 per cent. It has also increased the volume of cases where we are able to auto-verify income.

Barclays has a new five-year fix at 1.81 per cent to 60 per cent LTV, while the lovely Accord has launched a range of BTL products to 80 per cent LTV. Rates start at 3.49 per cent, with a £950 fee and £500 cashback.

Finally, it was a real shame to see Tesco Bank pull out of mortgages. Margins are being squeezed as rates race to the bottom in a bid for market share and Tesco appears to be saying that the numbers no longer stack up for it. It is difficult for challenger banks to maintain this level of competitiveness for so long and to make inroads into the market.

On top of this is the close of Which? mortgage brokers. This is not what anyone wants to see and we wish its staff well for the future.


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