Dear Sir,
What is it with Mortgage Introducer and your love of acronyms (LOA)?
Please desist (PD). You are doing my head in (YDMHI).
Some of your offerings are really getting out of hand. In one article we had CCD and UCPD, another, AHIPP. We then had the following treat. CSR, HIO, EPC, DLLG, PMPA, RICS, POSO and of course ODPM.
Does anyone actually refer to the Bank of England as BoE? It sounds like a rather nasty anti-social condition that even your best friend would be reluctant to tell you about.
If you are trying to save a few bob on ink costs then may I suggest that you stop giving a constant explanation for the acronyms that are in common use within our profession.
The Financial Services Authority (FSA) – give us a break (GUAB). We know that you are not referring to the Food Standards Agency, and if any professional adviser out there is not aware of what KFI, DIP or BTL stands for then they should be seeking other ways to earn a crust.
PS:
I actually really enjoy Mortgage Introducer.
Pete Conway
Mortgage and Finance Ltd
Editor: “Mortgage Introducer likes understanding views sent arousing certain reactions of notability, you’re most special (MILUVSACRONYMS).
Jumping on the bandwagon
Dear Sir,
I see Abbey is the latest lender to jump on the ‘low rate, high fee’ bandwagon. Its two-year fixed rate offering of 4.45 per cent carries a booking fee of £1,999.00. On a mortgage of £100,000, this is akin to adding virtually 1 per cent onto the charging rate for the first two years. That, of course, would make the rate profoundly unattractive. While I accept the fee can be added to the mortgage, it nevertheless has to be repaid over the mortgage term – with interest. I also accept that on much larger loans the fee becomes less significant.
Abbey is not, of course, the worst offenders. A number of lenders are charging anything between 1 per cent and 1.5 per cent of the mortgage amount required as an arrangement/
application/booking fee on certain ‘market leading’ products. I cannot see why a client would want to take such a deal nor why my colleagues in the broking profession would recommend the products, offering, as they do, an artificially low rate.
Since there has been much concern of late over lender exit fees, perhaps it’s time for the regulator to start looking into some of these deals which carry heavy entry fees and how they are being marketed and sold?
Regards
Brian Evans
Mortgage adviser
Making a tidy profit
Dear Sir,
I refer to a recent article. As a relatively new mortgage adviser I learned very quickly that lenders were making a handsome profit on Homebuyers Reports, etc, arranged through themselves.
Key Facts Illustrations (KFIs) refer to all sorts of lesser fees, but this is a ruse to distract customers on one hand while their pockets are being picked by the other hand. And it is a nice little earner for lenders.
To embrace ‘Treating Customers Fairly’ (TCF), fully the FSA should react and not ignore this longstanding sting.
Colin Liddle
Personal Mortgages
Deeds Release Fees
Nowhere to run and nowhere to hide
Dear Sir,
Having started my campaign against deeds release fees in February 2005, it’s now clear the day of reckoning is near for lenders who charge disproportionate deeds release and administration charges relative to the actual cost.
The FSA is due to report back shortly on its findings on deeds release fees after extensive discussions, and lenders apparent justification to the FSA for the huge rises in the fees, which they claim are cost-driven rather than penalties for leaving the lender.
However, as I always suspected, the truth of the real costs of closing a mortgage are out after an analyst by Defaqto on behalf of ING. This survey is close to my estimate of no more than £50 as being the true and fair cost all round, Defaqto indicates the real cost is £35.
Further evidence of lenders processing costs is also due out soon; Vertex is doing its yearly analysis of lenders’ processing and associated costs. Last year the survey showed lenders’ costs had risen from £89.67 a case in 2004 to £146.49 in 2005 – which was put down mainly to regulation, as the year before, processing costs had been reduced from £116 in 2003.
In the spirit of TCF, this issue is now going to be the watershed as to whether the FSA is prepared to put the consumer’s interests first and gain the respect of the market by bringing the lenders to heel and heavily fine those who have blatantly gone against the whole sprit and driven a ‘coach and horses’ through the whole ethos of TCF. If the lenders are not brought to heel nobody will have any confidence in the FSA and it will be seen by the market, and the public, as a ‘paper tiger’.
The lenders also will struggle to find any support from their trade body on this issue, as recently (24 June 2006) Michael Coogan the director-general of the Council of Mortgage Lenders (CML) made it clear on the Money Box programme, that the costs may vary from lender to lender, and that the charge will vary depending on what they do. He also went on to say that penalties aren’t allowed if you are charging a fee for the administrative service.
Danny Lovey
The Mortgage Practitioner
On a positive note
Dear Sir,
I can’t help but look at the evolution of the market, and how much it has grown over the past few years and wonder where the next few years will take us. Many will remember the day when it took weeks, even months to get a mortgage sorted out, but with the launch of new technology this process takes minutes, and is only set to get quicker.
New technology, new lenders, new product sectors, an increase in product knowledge from savvy potential borrower’s means our market is now saturated with opportunities. I even have to say that much of the regulation imposed by the FSA has meant that many of the cowboys associated with the market have disappeared, although it is a concern that there is a lack of new blood entering our lucrative marketplace.
Of course the continued rise in house prices will at some point stunt the market, and this will have to be dealt with, but the launch of HomeBuy initiatives and other schemes set to help aspiring first-time buyers step onto the property ladder should go some way to help allay these fears. The launch of graduate and professional mortgages also highlights the vast improvements the market has made, while the addition of new criteria break-downs for the non-conforming marketplace means that the market is now open to a whole raft of people, who previously would have had little to no chance of getting a property.
The past few years have been a real rollercoaster; long may it continue.
Chris
Via e-mail
