It might still seem some time off but if HML’s industry MMR roundtables are anything to go by lenders are at various stages within the journey in terms of the progress they have made towards compliance with the new requirement from the Financial Conduct Authority.
Mortgage brokers are a significant channel for lenders and the new mortgage application process for both is inextricably linked so it’s essential that the two closely work together and clearly communicate. One of the main obligations placed on lenders is that they need to verify a borrower’s income as well as make affordability assessments. However, they may rely on intermediaries to capture the key information required.
It is imperative that lenders and mortgage brokers are clear with each other about what their expectations are, and intermediaries feel assured that the information they capture is being effectively used by lenders and the borrower is recommended the most appropriate products.
Brokers will also benefit from knowing what new products their lender panels have on the horizon so they can tailor their operations accordingly.
This intermediary-lender relationship will be built upon trust, which is why it is so important for both parties to be realistic regarding the MMR preparations. With new lending levels climbing it is essential that brokers and lenders get organised well ahead of April to ensure they can cope with new regulatory demands, as well as increased mortgage application volumes.
According to the Council of Mortgage Lenders gross mortgage lending totalled £14.7bn in May, a 21% increase from April’s £12.2bn. This marks a significant leap and represents a 17 % lift from May 2012 - it is also the highest monthly estimate seen since October 2008 for gross mortgage lending.
With demand for mortgages increasing, particularly from first-time buyers, brokers need to be confident that lenders can balance this with their MMR responsibilities and ensure deals go through in a timely manner.
In some areas of the country, particularly the south-east, there is a valuation backlog which will also add pressure for lenders to be as efficient as possible.
Brokers will be the first port of call for many borrowers who want to know the progress of their application so it is important they can trust their lenders to keep the momentum going - one way could be to add more valuers to their panels.
Banks and building societies have service levels to meet but with brokers often the ‘face’ of these lenders they will primarily take the heat from borrowers if service is poor due to the extra distraction of additional regulation.
Let’s hope intermediaries and lenders really are shouldering this joint responsibility and are as prepared for the MMR ‘live’ date as they say they are.