Plenty of room for master brokers to thrive in second charge sector
I read the Mortgage Strategy cover story entitled ‘Will the MCD kill off the master brokers?’ last Wednesday at 11.30am. By 11.32am I had tweeted Mortgage Strategy to ask if I could comment on it. By 11.34am deputy editor Sam Barker had rung me and commissioned 500 words for delivery by 9am on Thursday.
Next time, I’ll keep my mouth shut.
But the article rattled my cage. We started a second charge master broker firm around three months ago, so reading that headline quite simply caused me to go looking for a cat to kick.
Thankfully, I couldn’t find one. And, to be honest, with my back I dare say I would have come off second best.
Upon reflection, my answer to the headline’s question is: “Quite possibly, yes – but not all of them.”
Post-MCD, there will inevitably be collateral damage in the market. But we believe this market is set to grow massively.
Recent figures from the CML show that £433bn of mortgages have rates that are under two per cent. That’s 35 per cent of the market that may need to consider a second mortgage, before we even get to those with interest-only debt or complex income scenarios.
We acknowledge that some brokers may go direct. One of our introducers did. The lender rejected it. We looked at it , repackaged it and got it agreed with the same lender. Not all will be so lucky.
We also helped a broker design and copy-write a newsletter to send to his clients to help generate second charge enquiries. He got two strong responses within 24 hours.
These small actions are the differentiators that may add longevity as well as profitability to our business.
There is plenty of room in the second charge market for packagers and master brokers to not only survive but thrive too.
It is an exciting and challenging time to be involved in this industry but – and here is the warning – the fight did not end on 21 March.
Stay vigilant. Stay relevant. Stay trading.
Martin Stewart, London Money/London Money Loans
House price inflation should be regulated to give everyone a chance
I bought my first property in 1970 aged 22. It cost just under £4,000 and I needed a 90 per cent loan. My wife and I somehow got a mortgage once I had put my savings with a building society for three months.
For the most part, it was done on the basis of trust.
Lenders then started bringing in a points system that seemed to deny normal applicants a loan facility, taking away the local manager’s discretion.
Then the banks got involved, whereas once upon a time it was almost entirely the preserve of the building societies.
Unreasonable house price inflation has been fuelled, as much as anything, by banks’ crazy income multiples. This should be regulated by the Government so that everyone knows where they stand.
The property I bought in 1970 is now worth £300,000. A 10 per cent deposit from a buyer would be £30,000 and lenders require proof of a very substantial income too.
This is the problem: people doing the same clerical job as me are probably not earning more than £35,000. How on earth are young people going to get on the property ladder without a period of stable or falling property prices?
Find a way to designate areas in which buy-to-let cannot operate, among other things. And we need ways to tax investors who buy property but do not live in it – especially in London and the big cities.