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GMAC is first to get to the point

Guy Anker finds the arrival of point of sale offers is good for the market but discovers not everyone is rushing out to introduce the technology

GMAC stole a march on its rivals as the first lender to make a point of sale offer last week.

The move was hailed as a giant step forward for the market, with broker John Charcol saying it could bring dramatic changes for its business model.

More lenders are expected to follow GMAC’s lead, with Edeus ready to reveal its instant offer proposition when it launches.

But there are warnings from some in the market that the technology has to be spot-on to be effective, which explains why not every lender is making a dash to produce their own Poso just yet.

GMAC chairman Stephen Knight says: “The consumer wants everything now so we had to invest in the technology. It will be worth double the proc fee for the broker as they are doing less chasing around and they have more time to sell.”

Knight refuses to say how much GMAC spent on the service but insists any costs will not be passed onto the consumer, unlike Edeus, which will charge a premium.

Another comparison between the two offerings is that GMAC claims to be able to provide this fas-track service to 60 per cent of its customers to begin with and promises this figure will rise, especially when its buy-to-let product is added to the mix, while it is anticipated that a quarter of Edeus’ customers will have access to its service.

But regardless of who got there first, the arrival of Poso has been hailed as good for the market.

London & Country head of communications David Hollingworth says: “It is a massive step and it raises the bar for other lenders as it takes the market forward.”

John Charcol senior technical director Ray Boulger says: “This will have a major impact on our business model.”

Knight says customers who do not qualify for instant decisions will be those who, for example, are borrowing above 90 per cent loan to value or initially those with buy-to-let mortgages. These people will be told they are likely to hear from valuers within a few days.

With GMAC and Edeus having clearly signalled their intentions, which other lenders will follow?

BM Solutions, Kensington and Platform say they are looking at similar technology. BM Solutions director Tim Hague says: “We will have something in place by Christmas.”

Platform head of marketing Paul Hunt says: “We will look to improve our technology offering to intermediaries in the next 18 months and if brokers want this sort of thing, then it is something we would want to provide.”

Kensington spokesman Alex Hammond says: “We are working our way towards this sort of initiative but nothing is imminent. We think it is important to develop the technology with human involvement. We need to remember that the specialist market came because the mainstream market put people in boxes but we gave more individual underwriting when we arrived.”

Hollingworth says it will be difficult for many lenders to move to Posos quickly, given the complexities of creating online technology. He points to the problems that Royal Bank of Scotland in setting up an online application system after launching RBS Intermediary partners in February.

Hollingworth says: “There is a massive difference between where certain lenders are compared with others. The RBS example shows how even one of the big lenders can find it difficult to get its technology together, so, in such cases, attaching AVMs to an online decision system will take even longer. These things take a while to develop.”

Another question has been posed by Mortgage Times head of marketing Payam Azadi, who says that for all the positive reaction to Posos, there are still some doubts.

He warns: “It is a great innovation but there still needs to be caution, as the personal touch is taken out and there is a concern over valuations. For example, if I think a property is worth 400,000 and I need a 150,000 mortgage, I could be punished if the system does not have the right data – if it adds another 100,000, for example – or there is no background data available.”

The role of packagers could be in doubt despite the fact that Praxis was the first packager to offer a Poso. Many believe that the role of packagers is cut out by Poso technology.

The flip side to this is that if 75 per cent of Edeus’s business, for example, is not on an instant offer basis, it shows that there are still large swathes of mortgages where packagers can still play a part in getting to completion.

Praxis sales and marketing director Dudley Aldous says: “There is the possibility that packagers could suffer but it is up to the market to offer what it can, like good distribution and strong relationships. It could put some packagers out of business who do not rise to the challenge but overall this technology is a good thing.”

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