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Human casualties

On balance, I really enjoy my job but currently I am throwing my toys out of the pram daily. Every day, my head spins attempting to establish where the market is and every day all I get is a constant stream of emails from lenders telling me, if I am lucky, that I have until the close of business that day to get the application in before rates get withdrawn and then go up.

On a good day maybe I have until they shut down their online system that evening but when they tell me it is to close at 5pm or even 1pm, then the chances of being able to do something is remote, unless you can get into the online system with half the market also trying to use it at the same time.

Add to this a constant changing of lenders criteria and lowering of loan to values and you can see why it is no fun.
Each time you do your research sourcing a mortgage for a client, it is often not there by the time you post it to the client. The clients really do not understand, nor do I expect them to and that is why I spend so much time writing to explain, ringing them to update and running around in ever decreasing circles.

The real thing I hate is the human casualties a bear market brings, many of whom were and are friends who I have time and respect for and right now they have done nothing wrong.

It’s those idiots on the other side of the pond who have brought this about with their manic and crazy selling of mortgages to those who could never afford them in the first place. They sneeze over there and we get pneumonia.

I have seen a liquidity crisis before, so there is nothing new in that respect. The thing that is different this time is the length of this turmoil and the depth of the lack of liquidity. Right now it feels like we still have more pain to go through, with firms closing down, big and small.

Those that will remain are left ticking over waiting for conditions to change.

Both packagers and broking firms are likely to bleed for some time and only those with a low cost base and or something special to offer or have existing client banks they can work are likely to survive. Cutting out brokers and offering cheaper products direct seems to be the game lenders are playing. But what will happen when eventually they need the intermediary market again and it has been decimated because the lenders were selfish and shortsighted and find that the infrastructure that brought them 70-80 per cent of their business has gone belly up?

Don’t ask me to give Lender’s any sympathy – they are certainly making hay whileliquidity remains thin.

The whole way this Government, the FSA and to an extent the Bank of England have handled what is essentially an American problem beggars belief.

What is so obvious to me, and I keep saying this Clinton-style, is – “it is liquidity stupid”. Reducing base rate to 5 per cent does nothing if three months Libor is trading 80 basis points above it.

I am not suggesting the BOE pumping money into the repo market infinitum is the answer long term but it would restore some liquidity and confidence in the short term until the Chancellor pulls his finger out and realises that his ‘working group’ on the liquidity of the market should have had their first meeting months ago.

He fiddles while our mortgage market infrastructure, one that has been the envy of the world, burns.


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