There is no such thing as a quick and easy deal any more and all lenders need to start waking up to that fact
The message from new lender Atom last week that it would pay the same level of procuration fee for product transfers and further advances as it would for new business made me feel all warm and fluffy.
To compound my smiley mood, I then received a nice email from BM Solutions alerting me to a product transfer opportunity on which it also pays a full proc fee. This bodes well for lenders, both old and new, which can count on continuing support from brokers.
Given that we have now been through the Mortgage Market Review and the Mortgage Credit Directive, the amount of work brokers have to do on each file is nothing short of staggering. There is no such thing as a quick and easy deal any more and all lenders need to start waking up to that fact.
Although it may seem as if we are just pressing a couple of buttons to get a product transfer sorted, the background compliance on why we have recommended one rather than a remortgage, and now quoted and considered a second charge loan where any capital raising is concerned, means that, even for those charging, we are close to a loss-making position without a proc fee.
While all brokers will continue to do the right thing for clients, it is inevitable that, where there are two lenders with the same rates, the one with a proper retention scheme will have the edge.
As for the argument from some lenders that technology will solve this issue and cut out the broker, well, I do not quite buy that either. Even on a remortgage, many clients want to fully understand their options and what they are taking out.
At the product transfer stage there should also be a discussion around the continued suitability of the mortgage term. Failure to do this could lead to a client paying thousands of pounds more in interest than they need to and, in my book, lenders have a duty of care to check this with the client or leave themselves open. Pushing a client down the non-advised technological route should not absolve a lender from all responsibility.
In the markets this week, three-month Libor is riddled with rigor mortis at 0.59 per cent while swap rates have decided to jump up a touch.
- 2-year money is up 0.06% at 0.82%
- 3-year money is up 0.08% at 0.88%
- 5-year money is up 0.07% at 1.02%
- 10-year money is up 0.06% at 1.44%
As for mortgage products themselves, Barclays has made more changes to its buy-to-let criteria and will now accept joint borrower/sole proprietor applications, as well as amending the monthly commitment calculation for existing residential mortgages, which should help more landlords.
Kensington has raised its maximum loan caps for both first-time buyers and buy-to-let applicants by £500,000. First-timers can borrow up to £1m while buy-to-let landlords can get up to £1.5m.
Halifax is now accepting some internet-printed documents for client identification and verification, as long as they have the date, client name, account number and originator details clearly displayed.
Accord has cut some selected buy-to-let fixed rates by up to 0.3 per cent and reduced all £2,495 fees to £1,845.
It has also changed the rental calculation for all new applications. For two- and three-year term products it will use the higher of either the product rate or 5.5 per cent, while for five-year term products it will use the higher of the product rate or 5 per cent.
Skipton International has expanded its ex-pat criteria and will now lend to self-employed applicants earning a minimum of £60,000 a year. They must have an accountant’s certificate from one of 13 approved accountancy firms.
Finally, it was interesting to read that another new buy-to-let lender, Zest Mortgage, is looking to start in this year’s already competitive marketplace. Apparently, it will offer a fresh, tech-savvy approach to lending.