How many lenders will make their second charges directly available to brokers, and how many brokers will want them?
So the Mortgage Credit Directive has been implemented and the world is still spinning. Many extra hours were put in by lenders, master brokers and intermediaries to implement IT changes and make policy amendments so that systems and processes could continue to run smoothly after 21 March.
In almost every company this hard work has paid off. I always admire how well both lenders and intermediaries get to grips with change – no matter what is thrown at them.
In the case of the MCD, I think the changes, ultimately, have been a good thing and made for a smoother customer journey. We are already seeing very positive moves within the sector as far as product innovation goes.
A key hope for the directive was that it would increase awareness among intermediaries of second charge mortgages, making them more mainstream. There is already evidence that increasing numbers of brokers and intermediaries are becoming aware of the value of second charges and the fact that they can be a much more cost-effective option than a remortgage or further advance.
Heightened levels of factfinding will always assist in making the most suitable recommendation. And, although initially it was an eye opener because of the additional time it was taking, we are already confident it ensures better-quality business is written and the outcome for the customer is improved.
The big debate now is over how many lenders will make their second charge mortgages directly available to intermediaries and how many intermediaries will want to take advantage of this.
Some doomsayers have even predicted the end of master brokers as far as second charge is concerned. I do not share this notion. Master brokers will evolve with the market, ensuring that we can work with all intermediaries in whichever manner works best for them.
There is room in the market for every option. Of course, some intermediaries will go direct to lender if that option is open to them; but there will be others who do not deal in second charges every day and who will seek help from specialists with greater knowledge and expertise.
No overnight change
To be able to offer a whole-of-market second charge solution, intermediaries seeking to do it themselves would need to be able to offer clients a comprehensive panel of lenders covering prime, adverse and buy-to-let. And that is just the beginning. This is not something that can be achieved overnight.
Even if some intermediaries choose to deal direct, many will prefer to retain their independent status by giving the advice themselves but will utilise the master broker’s knowledge, expertise and lender panel.
Some intermediaries will want qualified, professional help for their clients in a way that lets them continue with their bread-and-butter business. That is what they have invested their time to become expert in and they will not want it to suffer. It is the same situation that intermediaries already find with commercial or bridging finance, for example.
Why be a jack-of-all-trades and master of none when you can be an expert at some and allow other specialists to handle the rest?
Bradley Moore is director of second charge loans at Brightstar