The mortgage industry in September felt a little bit like Parliament after the summer recess as there were stories galore hitting the press often contradicting each other.
Anything from bursting bubbles, to the RICS proposing a cap on house price inflation etc. However, from the intermediary mortgage perspective the two that caught my eye (not just because they were from two good friends) were about intermediary lending falling in the run up to the MMR and a call for increased proc fees. Again, you could argue, almost contradicting each other.
I have to say I was somewhat surprised that David Copeland (a mortgage product guru of mine) suggested that there could be a surge in retail based mortgage lending, in the run up to the MMR at the cost of the intermediary.
I gave this consideration for around 20 seconds and thought, what a load of rubbish. To be fair to Copey, he may have had advance warning of Avelo’s lenders research which said 60 per cent of lenders believe the broker mortgage market will decline as a result of MMR. Putting aside that the 60 per cent of lenders who suggested this, may not be the biggest lenders, the publishers did acknowledge that the MMR brings a number of challenges for lenders.
So what is the reality?
It is generally accepted that in 2013 we will finish at around £167bn gross lending and as a result of house price inflation, market momentum and Help to Buy, we will see an uplift of between 10 per cent to 12 per cent in 2014 in gross lending.
We also know that many lenders have seen a shift in intermediary based lending and the second half of the year could show that shift to be as much as 60 per cent in favour of intermediaries. Set against that, with the market uplift and the ban (pretty much) on non-advised sales, which will impact significantly on a number of banks and building societies, I do not think a client will be able to get a timely appointment on the High Street, even if they wanted to forego the choice and flexibility an intermediary gives.
As a final point, I recall in 2009 I wrote about lenders which do not dual price.
Many of those have stood by their pledges, with the likes of Coventry BS, Barclays, Virgin and Nationwide (with the exception of their Save to Buy scheme) continuing to support the intermediary; with the safeguard that the customer will not get a better deal by walking into a branch or calling them direct. In case there is any confusion as to where I stand on whether retail lending will overtake intermediary based lending in 2014, it aint going to happen!
On the point of proc fees, Nigel Stockton’s call for a proc fee increase, may well be good timing, especially if you agree with the view, as I’ve expressed, that there will be a further shift towards intermediary based lending.
However, it is important that this is carefully coordinated through the Association of Mortageg Intermediaries. There needs to be a scientific approach using data from AMI members to show the additional work and time the MMR will burden intermediaries with, as they must package the case to the lender’s standards.
In the meantime, intermediaries should hold back on any campaign and allow the AMI, the science and the facts to speak for them.
Dev Malle is group sales director at myhomemove