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Offer you can’t refuse

Admin: Hamptons Mortgages technical director Jonathan Cornell looks at why so few lenders keep brokers up to date on the progress of their clients’ applications

So how long does it take a lender to issue an offer letter? There is no easy answer to this as it depends on a multitude of factors.

Knowing the answer is one of the facets necessary to be a successful mortgage broker. Sadly, lenders’ head offices tend to be coy and either do not tell intermediaries how long applications are taking to process or only tell intermediaries when they are meeting or exceeding their timescales.

A couple of lenders are the exception to this rule.

Accord has a dashboard on its intermediary website which informs the world of what percentage of its applications are offered within 10 working days. This morning, it was 98 per cent of applications but there a caveat. This only applies to properly packaged applications and the rest are taking an average of 21 days to be offered.

Derbyshire Building Society puts a service update on all its rate emails.

A good BDM will keep its brokers informed on how long things are taking. This means being honest when standards are slipping. This may seem a strange thing to do as it may mean brokers will pass less business for a period but it can save a lot of wasted time as brokers could otherwise will submit applications which need urgent offers (or even offers within normal timescales), then the BDM and the broker will spend the next week or two trying to get it moved to the top of the pile.

Typically, one of the factors which affects the service most are the rates which the lender is offering, the better the rates (relative to their normal rates or the rest of the market) the slower the offer will be.

It is rare that a client can have a market-leading rate and a speedy offer.

The only factor which causes more delays than having good rates is withdrawing them. The more generous the withdrawal time, the more applications which will be submitted to the lender and the longer that offers will take.

Another factor is whether fasttracking is allowed. It never ceases to amaze me the lengths that some lenders go to to request confirmation of clients’ income. Some will want, payslips, P60s, bank statements and letters from employers. Others will base the documentation on either the LTV or the credit score and this makes great sense. Why waste time requesting things for low LTV applications for people who have proved they are responsible borrowers.

If lenders are not prepared to allow fasttracking, then having simple easy-to-understand documentation requirements will speed things up immeasurably.

The more complicated their requirements, the less likely brokers will supply these and the longer a client will wait for their offer.

Last week, RBS Intermediary Partners admitted that in the previous week, 60 per cent of the applications it received were not fully packaged. This creates an enormous strain on processing teams. Unless a lender has changed its mind and asked for more documentation, brokers only have themselves to blame for this.

No one will deny that technology plays a huge role in delivering a quick service. If brokers (or their administration) key in applications, then lenders do not have to wait for application to arrive in the post and then key them in. Online Dips allow lenders’ underwriting systems to be explicit on what documentation is needed from a client. Normally, a letter is printed with details of the loan, subject to submission of X,Y and Z, or sometimes just a completed application form.

BM Solutions has recently launched a system which means brokers can print offer letters from its website. However, technology can sometimes make life more difficult. If lenders build systems which do not allow manual intervention, then if problems crop up, for example, with an address, these can prove slow to resolve.

Another area which can get bogged down is the survey. Some lenders allow brokers to instruct valuations which means the survey can be booked as soon as the deal is agreed. This can save up to a week in the process. When a person buying a property has a survey arranged quickly, estate agents and vendors feel a lot happier and the buyer is much less likely to lose the property. Some lenders have implemented automated valuation models. AVMs make great sense for remortgages as, if the LTV is low and the value the clients have put on their property is realistic, then why wait for a surveyor? For property purchasers, unless the borrowers are arranging their own survey, I think they will still want to peace of mind of a surveyor telling them and the lender what the property is worth.

On many occasions when properties are downvalued by surveyors, the buyers manage to negotiate the purchase price down, I do not think they will have the same success if it was an AVM valuation and vendors get a certain peace of mind when they see a surveyor.

Theoretically, if signed declarations can be scanned or emailed, then a point of sale offer is possible and I do not think we will have to wait long before we see this innovation.

Some lenders will always choose to differentiate themselves from the rest of the pack on the basis of service. Abbey has a 10-day offer commitment for some applications.

Almost a year ago, BM Solutions’ average time to offer was nine days compared with an industry average of 13.7 days. BM’s excellent premier desk managed to get its offers out within an average six days. Not bad for a specialist lender.

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