For all of us working and advising in the mortgage market, we have now experienced a significant series of events that completely changes how we are and how we will be doing mortgage business in the future.
With this in mind, at a recent conference where the major mortgage distributors were in attendance, we thought it appropriate to convey a message and hopefully a better understanding as to the decisions by the mortgage lenders that are affecting your existing clients and potentially new customers.
Our industry has now experienced an undersupply of very competitive innovative mortgage products in the space of six months. We could now be facing the prospect of a shortfall of funding throughout the full range of product sectors over the next 12 months.
This situation has not only led to lenders no longer providing the major distributors with exclusive products, but also to the withdrawal of their product range without any reasonable notice to us or you.
Some intermediaries have accused lenders of acting irresponsibly, and under TCF they should be referred to the FSA. This action by the lenders, in our opinion, does not constitute part of the TCF regime but more a commercial decision to protect their own liquidity position in keeping with running their business in a commercially sound way.
In fact, many of the lenders are now requested by the FSA to report their lending, saving and liquidity position on a daily basis.
Daily cashflow (DCF) by all lenders is now such a crucial element of their own survival, it does influence their lending policy which impacts on what and how they can lend.
As lenders are now increasingly reliant on their own deposits for lending, we can play our part by encouraging clients to save more regularly with your chosen institutions.
This immediate action will help to alleviate the existing problem, which hopefully will assist our industry to overcome these lending issues.
No lender wants to disrupt their relationships with the intermediary sector because we have developed our propositions together so successfully and built long-term relationships.
The above statement may confuse some intermediaries, as some lenders are currently promoting their products more cheaply through their branch networks. This, we understand, is because they can control lending more proficiently with limited funds than via the intermediary sector.
We do understand your concerns and issues with clients as to their understanding of the current situation, hopefully, with much more exposure now in the national press, your clients are aware of the current problems facing them when they are remortgaging or are obtaining finance to purchase.
Our best guess is that for the remainder of this year and into the first six months of 2009, the situation will not improve dramatically unless the Bank of England and Government intervene to restore confidence in the wholesale markets, and they have introduced their “quality standards” to encourage the investors back into the mortgage market.
John Malone, managing director, Premier Mortgage Service
David Copland, managing director, Pink Home Loans
John Cupis, managing director of mortgages and general insurance, Sesame
Dev Malle, sales director, Personal Touch
Mal McConechy, mortgage director, Home of Choice
Paul Shearman, mortgage proposition director, Openwork
Stephen Smith, housing director, Legal & General