Rob Clifford is chief executive of CENTURY 21 UK
The latest gross mortgage lending figures from the Council of Mortgage Lenders appear to show that predictions of a £200bn-plus mortgage market this year are still on track.
Indeed given we haven’t experienced a worse than expected slowdown in business volumes over the course of this MMR bedding-in period I believe the annual lending outcome is more likely to be in the region of £210bn, perhaps more.
Clearly the new affordability rules are providing something of a bump in the road for most market stakeholders however I’m of the opinion they are not a serious threat to total lending volumes particularly when we see a much more ‘common sense’ approach to MMR compliance from lenders in the months ahead.
I’m well aware that many brokers at the moment feel that some lenders have taken MMR and affordability validation far too far but perhaps the wise counsel of Lynda Blackwell of the FCA at last month’s Financial Services Expo will begin to hit home soon.
Blackwell was adamant that the MMR rules were ‘common sense’ and expressed surprise at some of the affordability questions being asked of potential borrowers by lenders.
She urged lenders to comply with the spirit of the rules particularly in the area of transitioning potentially ‘trapped’ existing borrowers onto non-SVR deals – ultimately saving them money.
Blackwell said: “It’s too easy to take advantage of your existing back book. Existing borrowers should not be unfairly prejudiced just because they are trapped. We would like lenders to follow the spirit of the rules but it’s difficult to do anything if they don’t.”
That said, the market is clearly not at the point of universal ‘common sense’ just yet –Charles Haresnape at Aldermore, while focusing on the positives that MMR will bring, recently admitted that “service has deteriorated in the wake of MMR” however also added that, “I think we should now forget about MMR and move on”.
Good advice in the wider scheme of things, and I am a firm believer that MMR is ultimately great news for intermediaries, perhaps not always the first thought when facing the current complexities and delays.
Lender processing times have lengthened considerably – I am aware of one lender that has gone from two to three days up to over three weeks to process an application – while some lenders have pulled their best broker deals but continue to offer the same products in their direct channels.
I appreciate this isn’t an uncommon scenario but does add to the growing frustration levels for brokers and the sooner we can get back to a more stable landscape, the better.
Overall however I agree with Charles – MMR has dominated thoughts and focus over the past six months in particular and to get back to a more ‘normalised’ footing will benefit lenders, intermediaries and consumers, but particularly the intermediary sector.
There is no other way to judge MMR than as being of benefit to advisers and to consumer protection –lenders are now most likely to take far less direct business, due to the complexities of MMR applying to their branch advisers, meaning it is highly probable that more and more consumers will turn to get proper, impartial guidance and broad expertise.
At this time mortgage advisers and intermediary firms need to be patient but they should also be looking at the marketing methods they can use to attract those clients who might ordinarily head into a bank branch for their mortgage.
To that end firms should be highlighting the service qualities and efficiencies clients can expect if they choose mortgage broking rather than going direct to lender.
Make some recent case studies available, pointing out their experience of trying the direct route before they chose intermediated advice – it all helps to build the picture of the clear benefits of having a broker guide the consumer through the complexities and vagaries of the lender landscape. Whether the unintended and unwelcome consequences of MMR, or more generally.