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Selling protection could ease mortgage pain

The future looks grim for mortgage brokers as £150bn of lending falls out of the market over the coming year, says Premier Mortgage Service managing director John Malone.

Speaking at the annual Bankhall conference, Malone warned that the market will remain unstable for the next two years and brokers will have to go back to basics to ride out the storm.

He said: “If you take £150bn of lending out of the mortgage market, you have got to replace that lost income. You cannot be as reliant on mortgages and must focus on the products that go around them. It is a case of advisers going back to the basics of how they were transacting business seven or eight years ago. If someone does not have permission to sell protection or general insurance, they have a major problem.”

Bankhall senior area manager Adrian Evans also highlighted the income stream available to advisers through the protection market. He said: “Moving from mortgages to mortgages and basic protection or full protection, you will potentially get somewhere between a 66 and 300 per cent growth in revenue. If you are going to spend 10 hours to earn £700, surely it is worth spending an extra hour and a half to secure the protection?”

Malone said: “Many borrowers have massive mortgages but no cover. You cannot rely on death in service or the product within your pension bec- ause a lot of these things are not now being sold and they are not available. You will have to give advice and will have to look at a reduced product rate as part of the overall package.”

He added that brokers will not be able to rely on new business referrals as they have done previously. “Now they have got to start generating business and some of them will find it very, very difficult,” he said.

Garden City IFA Paul Ashburton said: “I am a general IFA and last year around 30 per cent of my income came from mortgages. Perhaps next year it will only be 15 per cent but there are still mortgages to be done. There is obviously going to be polarisation in the sector and there are a lot of people that are going to feel a lot of pain.”


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Apple: a stellar technology story

By Ali Unwin, head of technology sector research

Apple recently announced the highest-ever recorded quarterly net profit ($18bn), with the sale of 74.4 million iPhones helping the company deliver $74.6bn of revenue for the quarter ending December 2014. These sales were largely driven by strong demand for the new iPhone 6 and iPhone 6 Plus. Highlights included Chinese iPhone sales doubling year-on-year and unit growth of 44% in the US — supposedly a well-penetrated market. Apple ended the quarter with $178bn in cash on its balance sheet, having generated a staggering $30bn in free cash flow during the quarter.

At Neptune, we have been long-term believers in the Apple story, and continue to hold the stock in a number of our portfolios based on the company’s long-term growth prospects. This is predicated on our belief that Apple has proved thus far that it can — unusually for a consumer electronics company — maintain high margins for a sustained period of time, even as adoption of new technology slows down and competitors produce similar-specification products.


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