With 26 April having passed, you might say that the “phoney MMR war” is over and the struggle of the new world begins.
It is, of course, very early days but there are already strong suggestions that this post-MMR period is not likely to be plain sailing for advisers despite the rules ultimately favouring the intermediary, whether or not that is an unintended consequence.
We are already seeing and feeling the consequences of many lenders having left their systems and process changes until relatively late in the day. This, coupled with a decision by many to maintain product pricing that has kept their offerings at the top of the sourcing lists, has meant that the ability of some lenders to deal with their growing pipeline of applications has been compromised.
This combination of factors has without doubt slowed down the speed of mortgage processing and resulted in growing delays in some lenders’ ability to issue mortgage offers. We now face a situation where some lenders, who were previously able to turn around cases in a couple of days, are now only just beginning to process cases submitted by intermediaries over a month ago. Add in the more discerning underwriting and documentary evidence required for post-MMR cases and you can begin to see how the business of getting our clients their mortgage offer is taking longer and longer.
Given the lengthening of application processing times, advisers probably find themselves between a rock and a hard place at the moment. While some lenders recently made the decision to tackle their backlogs by withdrawing leading products towards the end of April, others have not. We therefore have the situation where a number of lenders that are working through their pipelines are stil offering best buy rates.
This makes the adviser’s recommendation process more of a challenge. While the client often seeks the best rate, an adviser will know only too well the frustration a client feels (and will happily vent) if their mortgage offer is delayed as a result of being placed with a lender with poor service levels. The good adviser will provide transparent advice with regards to both pricing and processing efficiency so the client does not have unrealistic expectations.
It is disappointing that many industry folk are already discussing the negative impact of MMR so soon after its implementation It was reasonable to expect that new application volumes would have slowed as a result of MMR, a consequence of which might have been improved processing speeds, but this is not the case.
Instead, advisers are facing something of a perfect storm, with lenders implementing their system changes too late, having to adopt new underwriting requirements with haste and being seemingly unwilling to reprice products to stem new flow. No doubt the regulator and lenders will regard this as inevitable teething problems of a new regime but it’s entirely to the consumers’ advantage that the intermediary market is well-placed to manage expectations and minimise some of the significant inconvenience to borrowers, much of which could have been avoided.
Rob Clifford is chief executive of If I Were You