Whilst the vast majority of UK mortgage brokers stress their confidence in the future of the sub prime market (63%), a significant number indicated that they intended to change they way they do business as a result of the environment.
Of these 71% claim they will be more wary of dealing with certain lenders, particularly smaller, inexperienced lenders or those that withdraw ranges at short notice.
A further, one in ten feel that this instability - and the potential impact on some lenders - poses a threat to future business.
Almost three quarters of those respondents claim they would be more discerning about which lenders they do business with - indicating that experience, infrastructure and reliability are key criteria for them. Only 1% of the total sample claim they would no longer deal with sub prime lenders.
Whilst the research highlighted that the problems experienced in the US would make many intermediaries wary about which borrowers they would refer to lenders, they also feel that it is the lender’s role to have robust tools and systems in place to ensure that they continue to lend responsibly and communicate this clearly to their partners.
In addition, GE Money’s research found that the vast majority of brokers believe that the constant debate about instability was generally having a negative effect on their customers – with 68% claiming that consumers are worried about its impact upon them.
Ultimately, mortgage intermediaries feel that lenders need to be upfront and transparent in their words and actions – with over half believing lenders should openly declare their long-term commitment to the sector, ensuring that they are consistent and reliable with the deals they are offering.
Some brokers expressed concern about borrowers being left in the dark by lenders continually withdrawing ranges at very short notice, or those that were unclear about how they intend to deal with cases that are in the pipeline. In fact, a smaller proportion of brokers claim they would reconsider doing business with such lenders.
Duncan Berry, director of mortgages at GE Money Home Lending (GEMHL) said: “GE Money Home Lending is a prudent lender so we will always take necessary steps to ensure that we are lending responsibly to the right individuals and we monitor the market on an ongoing basis to ensure we continue to do so.
“Our research has overwhelmingly shown that brokers need clear communication and guidance from their lender partners at this time, as well as relevant tools, technology and expertise which will help them continue to refer appropriate customers to their lenders, despite the uncertainty.
“We are committed to maintaining clear communication with our intermediary partners, and we will make sure that they are given sufficient time to understand and absorb any changes moving forward.”
GEMHL has further illustrated its commitment to the non-conforming sector by updating its clients on the impending introduction of an online decisioning system (IDOL) and telephone DIP service, as well as point of sale credit scoring for loans in excess of 90% LTV on its First National range.
The firm has also revealed changes to rates and criteria on both the First National and igroup brands. These have been introduced to reflect current market conditions and focus on what GE Money Home Lending believes to be the responsible growth areas of the market over the coming months.
Key changes include:
- First National – some of the most competitive 3 year fixes in the market up to 95% LTV and 90% self cert, as well as a range of competitively priced 2 year discounted rate products. Buy to let portfolio to be repriced.
- Igroup – Criteria changes on LTM 1 & 2 and GEM 4, 5 and 6; revised rates, as well as a new 2 year ERC on all fixed rate products (£1,250 completion fee)
“However, our research shows that many brokers are clearly nervous about the potential impact recent events are having on some lenders and this is creating uncertainty. At this time it is crucial that experienced providers with solid financial strength and pedigree reassure their partners of their
long-term commitment to the non-conforming market, whilst ensuring that any changes to products, criteria or pricing are communicated in a timely, decisive and transparent fashion.”
