Mortgage Introducer February 2019

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MORTGAGE February 2019

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Young at heart Alan Young back in the conveyancing game ROBERT SINCLAIR

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Buy to Let Mortgages for complex cases Here at Precise Mortgages we’re proud to help landlords with complex lending needs as well as those who have been underserved by high street lenders. Whatever their circumstances we have a broad range of specialist lending solutions.

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MORTGAGE INTRODUCER February 2019 Issue 127

Printed & distributed in England by The Magazine Printing Company, using only paper from FSC/PEFC suppliers. www.magprint.co.uk WeWork c/o Mortgage Introducer, 41 Corsham St, London, N1 6DR Information carried in Mortgage Introducer is checked for accuracy but the views or opinions do not necessarily represent those of Mortgage Introducer Ltd.

Interesting times for the market The Brexit omnishambles just seems to keep rumbling on.

Another month closer to our alleged exit from the EU and we are still no closer to knowing what is happening.

Now Bank of England governor Mark Carney has urged MPs to solve the Brexit impasse whilst warning about growing threats to the global economy.

He said a no-deal Brexit would create an “economic shock” at a time international economies are growing and tensions are rising.

“It is in the interests of everyone, arguably everywhere” that a Brexit solution is found, he said.

You can say that again!

The Bank has already cut its UK growth forecasts, partly due to Brexit issues. Carney said trade tensions and Brexit are “manifestations of fundamental pressures to reorder globalisation”, and that quitting the bloc could undermine global expansion.

“It is possible that new rules of the road will be developed for a more inclusive and resilient global economy.

“At the same time, there is a risk that countries turn inwards, undercutting growth and prosperity for all.”

By the time the next issue of Mortgage Introducer comes through your letterbox, 29 March will be mere days away.

Hopefully for everyone’s sake this mess will have been resolved.

Alongside Brexit the intermediary market should also be keeping an eye on things closer to home. This month saw the Association of Mortgage Intermediaries call on UK Finance to disclose the split between intermediated, advised and execution-only product transfer lending.

AMI rightly believes that lenders need to review their policy on product transfer procuration fees to narrow the difference with those awarded on remortgage lending.

The trade association has warned that early signs from members suggest that the purchase market is “already feeling tricky while estate agents are noticeably quiet”.

It’s a positive that at least one trade body is actually championing the intermediary.

Hopefully UK Finance and lenders will take notice and take a closer look at this practice.

As the market continues to adapt to yet another new normal it is more important than ever for the entire market to work together to ensure things are fair and just. And thats for everyone - most importantly the consumer.

5 AMI Review 6 Market Review 8 Debt Review 10 High Net Worth Review 12 Brexit Review 17 Supply Review 18 Remortgage Review 22 Customer Service Review 23 Buy-to-let Review 29 General Insurance Review 33 Equity Release Review 35 Conveyancing Review 37 Technology Review 40 The Outlaw

The New Year Honours list

42 The Bigger Issue

The return of 100% LTV

44 Interview

Rob Gill talks Altura Mortgage Finance

46 Cover

Robyn Hall catches up with Alan Young of conveyancing firm Aventria

50 Round table

Our experts talk about the opportunities available in 2019

60 Interview

Alan Cleary of Precise on life in seconds

64 Specialist Finance Introducer Trade associations, bridging and development finance

67 The Last Word

The Mortgageforce awards round-up

70 The Hall of Fame

Being a good sport

The specialist lender you can bank on The specialist lender you can bank on

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Review: AMI

It’s time to get our heads around RealTek I have been listening intently to where we, as an industry, are on the technology journey with a wide range of firms investing in the future of how intermediaries interact with consumers and lenders.

Firstly, we have the traditional broking firms who are developing their own solutions or bolting in third party systems to enhance the customer journey and automate as many processes and feedback loops as possible. Some traditional brokers already have a fully automated and integrated customer fact find, sourcing and lender application process.

For others this can include integrating access to survey and conveyancing information.

Then we have the challenger brokers. Those who are relatively new to market who have built their models on automating as much of the journey as possible and are looking to try to digitise the advice process via algorithms. This might already be a dated approach to resolving the complexities of the process, which is frustrated by lenders varied approaches to criteria and applications.

Robert Sinclair chief executive, Association of Mortgage Intermediaries

There is also a category of the existing fintechs who serve our market who are looking to develop and enhance their offering to deliver a better end-to-end experience.

They are looking over their shoulder at experienced brokers firms who have branched into sourcing, criteria, financial, credit reference, AVM and other related data to try to help the broker and consumer get closer to the best deal earlier in the discussion. The more that can be data captured early the better.

Finally, there are the tech disruptors who are working to pick aspects of the consumer and broker journey and add value by simplifying and speeding the process.

In looking at all of this there is an explosion of views, options, alternatives and trials, all competing for traction and attraction. For some “Valhalla” might be if lenders give access to their decisioning via API’s which could be aggregated to deliver much more concrete Decisions in Principle. It is this option that might make redundant some of the advice algorithms already developed.

What is clear to AMI as the trade body with the importance of advice at its heart is that this is a rapidly evolving scenario. All participants are making strides forwards, all focused on helping the customer and broker journey. Our lender partners are doing their best to listen to the cacophony of demands from a wide range of “developers and disruptors” and trying to establish which will work best for their business.

Some in the wider market would like our regulator to intervene to give clarity and certainty. Since AMI first started looking in earnest at how tech might impact our market some three years ago, we have been singular in our view that we should let the market develop at its own pace, let it calculate the best solutions and that any indication of intervention would stop progress in its tracks until the market saw what was being proposed as the final solution.

Having sat through a series of awards judging over the last few days I was astonished at how far some firms have come and how deep their future plans are.

Putting equality and diversity in the spotlight Commission (EHRC), 76% of I’ve heard a firm say that employers have reported flexible equality and diversity isn’t working as improving staff an issue because they retention and staff motivation. ‘hire the best people for How a job is advertised should the job’. This narrow view also be considered. doesn’t recognise that if a An EHRC inquiry found that firm does not put equality FTSE 350 companies had failed and diversity at the heart of Aileen Lees to improve diversity at board their recruitment process, senior policy level, which was attributed to they might not be reaching adviser, the the diversity of applicants being a wide range of talent in Association of Mortgage limited by virtually no open the first place.

Intermediaries advertising of roles, instead Adverts are the starting relying on personal networks. point of whether someone Job descriptions also relied on decides to apply for a job vague terms like ‘chemistry’ and ‘fit’ or not. rather than clearly defined skills and Offering flexible working and experience, limiting the diversity of promoting a range of flexible working candidates and standing in the way practices will attract people from of chances of appointment. a more diverse pool. According There are lots of ways firms can to the Equality and Human Rights

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make sure they are reaching diverse talent.

Encourage applications from under-represented groups, such as through targeted advertising, and publicise roles through a wider range of channels. Offer a guaranteed interview scheme which shows a commitment to those with disabilities.

Become a Stonewall Diversity Champion to show to candidates that your workplace is LGBT inclusive. None of these actions mean not hiring the best person for the job.

Firms can use diversity monitoring forms to help them with recruitment.

If applications from those with the same background are being received, it is worth considering why.

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5

Review: Market

What lies beneath for the housing market Looking past some imminent weather warnings, Spring is not too far away. This is normally a period where we see an injection of activity within the housing and mortgage markets.

Of course, another well-publicised event is also looming which may temper this momentum but let’s look at how these sectors have performed leading up to this important season, and what might be ahead.

Craig Calder director of intermediaries, Barclays Mortgages

Housing

First-time buyers

It came as little surprise to see the UK housing market ending 2018 on a weak note with uncertainty in the air, a lack of affordable housing emerging and some affordability issues still lingering.

According to the RICS UK Residential Market Survey, December saw national sales volumes dwindle, although some areas of the UK saw a more positive trend (East Anglia, Wales, the North East and Northern Ireland).

“The 12-month outlook is a little more upbeat, suggesting that some of the near-term pessimism is linked to the lack of clarity around what form of departure the UK will make from the EU in March” Sales expectations for the next three months are predicted to be either flat or negative across all parts of the UK, with the headline net balance of -28% representing the poorest reading since the series was formed in 1999.

The 12-month outlook is a little more upbeat, suggesting that some of the near-term pessimism is linked to the lack of clarity around what form of departure the UK will make from the EU in March. In terms of prices, the headline indicator slipped slightly deeper into negative territory during December, falling to -19% from -11% in November, the fourth

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consecutive negative reading. Nevertheless, the UK-wide measure is still masking regional differences.

The end of the year/start of a new year is usually a quieter period for the housing market and it appears that 2018/19 is no different. We also can’t dismiss the numbers who are improving rather than moving, which means that business volumes will continue to rise within the remortgage market – especially for intermediaries.

FEBRUARY 2019

Despite this housing market lull, positive signs continue to emerge from the mortgage market with greater choice arising at higher LTV levels, heightened competition amongst lenders and improved accessibility for a range of borrowers.

Data from AmTrust’s latest quarterly mortgage LTV tracker found that the cost of mortgages has fallen for both 75% and 95% LTV firsttime buyers. The average mortgage rate for a high LTV mortgage product dropped from 3.61% in Q3 last year to 3.23%, while there was a very slight drop in average rates for 75% LTV borrowers, with a quarterly fall from 1.75% to 1.74%. The rate differential between 75% and 95% LTV loans has continued to narrow, down to 1.49% from 1.86% in Q3 and 2.21% in Q2 last year.

As demonstrated within these results it’s encouraging to see greater competition at higher LTV levels which is helping to drive down rates and close the rate gap between higher and lower LTV products, although we do need to maintain a little perspective.

First-time buyers with a 25% deposit still have access to over six times as many mortgage products as those who are only able to put down a 5% deposit. Of course, there remain many mitigating factors in terms of how we, as an industry, can extend higher LTV lending. However, its good to see that we are heading in the right direction and this is testament to the appetite of the lend-

ing community and the demand for such products, especially when it comes to longer-term fixed rate options. Demand which we hope will turn into strong levels of activity in Q1 and beyond.

Buy-to-let

Buy-to-let has proved just how robust it is after a challenging 1218 months and how important a healthy, well-governed sector is to the country as rental demand continues to grow.

This sustained growth was highlighted in the latest ONS data. Figures outlined that the number of households in the UK private rented sector rose from 2.8m in 2007 to 4.5m in 2017, an increase of 1.7m (63%) households.

It added that households are getting older; between 2007 and 2017, the proportion of households in the 45 to 54 years age group saw the biggest percentage increase from 11% in 2007 to 16% in 2017, an estimated increase of 384,000 households, while those aged 16 to 24 dropped from 17% to 12%.

As at the financial year ending 2017, 62% of households in the private rented sector had spent under three years in the same accommodation and only a small proportion (4%) had been in the same residence for 20 years or longer. While this may not give us a direct overview of the sector it does emphasise what we already know – that a greater proportion of the population are turning to the rental market. A fact which will result in even greater demands being made of buy-to-let in 2019.

The government appears to have gained a more realistic overview of how vital a role this type of tenure plays in recent times, so let’s hope that lenders, landlords and intermediaries can look forward to quieter year from a regulatory perspective.

And one in which lenders will be in a stronger position to secure funding lines to build on the solid foundations laid in 2018. www.mortgageintroducer.com

Review: Debt Consolidation

Brexit pause provides opportunity to lend a hand It’s safe to say that the ongoing uncertainty around the UK’s departure from the European Union is doing nothing to help the faltering property market. With a headline of “housing market on hold for now”, the December market survey from RICS said that the sales outlook for the next three months is the gloomiest it has been for 20 years.

Key activity indicators from surveyors continued to slip in December with sales volumes dwindling, and RICS said the headline net balance of -28% represents the poorest reading since the series was formed in 1999.

On a more positive note, the 12-month outlook was a little more upbeat, suggesting that some of the near-term pessimism is linked to the lack of clarity around Brexit. There’s no guarantee that we’ll achieve significantly more clarity any time soon of course, but indications are that there could be an uplift once we enter a more stable environment in whatever guise that takes.

Until then, however, there’s a good chance you could suffer from the pause in purchase activity for the immediate future. If this is the case, how will you sustain your business levels? When the going gets tough, it’s important to get back to basics and do the simple things well. In this case, a reduction in business finding its way to your desk means that you need to work harder to go out and find it.

Paul Adams sales director, Pepper Money

One way that you could help your clients to address the cost of servicing their unsecured debt is with debt consolidation and your clients could potentially lower their monthly outgoings by remortgaging their property to pay off their unsecured credit commitments. This could mean they are able to shift their balances onto a lower rate, but it is also important to remember that they’ll be converting unsecured debts to secured ones.

But there’s no doubt that, for some customers, a debt consolidation remortgage can deliver significant monthly savings.

New analysis published this January by the TUC found that household debt rose sharply over 2018, with unsecured debt reaching new highs.

Here are some of the headlines from the report:  Unsecured debt per household rose to £15,385 in the third quarter of 2018, which is up £886 on a year earlier.  Total unsecured debt rose to MORTGAGE INTRODUCER

This is particularly concerning because, in September 2008 when consumer credit balances stood at £208.3bn, the Bank of England Base Rate was 5.00% and interest rates were beginning a downward trend.

Today the Base Rate is 0.75%, with indication that the only way is up. So, the unprecedented mountain of debt is likely to become more expensive to service and, consequently, many borrowers could struggle to make payments on their credit commitments. So, what are their options?

A case for debt consolidation

New peak for debt mountain

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£428bn in the third quarter of 2018 – a record high, and well above the £286bn peak in 2008 ahead of the financial crisis.  Unsecured debt as a share of household income is now 30.4% – the highest it’s ever been, and above the level it reached in 2008 ahead of the financial crisis (27.5%).

Debt consolidation in action

Here’s an example of a married couple who realised significant benefit from a debt consolidation remortgage. The couple lived in South West England, in a home valued at £275,000. The outstanding mortgage on their property was only £148,000 but they had built up a large amount of unsecured credit and were strugFEBRUARY 2019

gling to meet the monthly commitment on these debts.

They had been through a period where they encountered unexpected and significant costs, and, without savings, they built up a large amount of unsecured debt across 22 separate credit agreements. Consequently, when the time came for them to remortgage, high street banks had turned them down because they failed a credit score, even though they had good incomes and a strong payment profile.

Our underwriters were able to consider their circumstances, including their incomes and payment profile. They considered the total interest cost to the customer by stretching the previously unsecured debt over the remaining term of the loan and were able to identify that this was a good option for the client as it enabled the couple to reduce their commitments by £800 a month, which meant they were in a better cashflow position to pay for childcare that they had previously been struggling to pay for. With these considerations in mind, we were able to issue a debt consolidation remortgage up to 85% LTV. This provided a sum of £85,000 that was advanced directly to their solicitor, who used the funds to pay off the outstanding unsecured credit balances.

Help your business by helping your clients

Many borrowers who have struggled with debt may not have the confidence to proactively contact you to discuss their options for lowering their monthly payment, so you could have a positive impact on their lives, and potentially on your business, by engaging with your client base to identify whether it includes any borrowers who could benefit from a debt consolidation remortgage.

It’s worth noting that debt consolidation may not always be the right option for some borrowers.

But receiving professional, independent advice could benefit all of your clients with outstanding unsecured credit balances and your proactive approach could help them identify the solutions for their requirements. www.mortgageintroducer.com

Review: High Net Worth

Will pent-up demand soon be unleashed?

For many high net worth clients, 2018 was about playing the waiting game.

Buyers anxiously waited in the wings as Brexit negotiations trudged on, while some sellers were apprehensive about putting their property on the market in a time of uncertainty.

It is however all too easy to get lost under the cloud of Brexit and the doom-mongering that surrounds it.

Even the most patient of clients tend to only bide their time for so long and once the Brexit storm has calmed, we may well start to see those who have held back make their move. And where one goes; others usually follow.

Peter Izard business development manager, Investec Private Bank

Pick-up in demand

Most of what will or won’t come to pass in the financial and property markets this year hinges on Brexit, which makes it hard to predict.

Yet in London especially, pent-up demand has been building for some time and there are already signs that those who have been holding off are perhaps becoming restless. Towards the end of 2018, Knight Frank reported an upturn of 14.1% in the number of registrations from prospective buyers in prime central and prime outer London.

Tom Bill, head of Knight Frank’s London Residential Research and author of its December Prime London Sales Index, comments in the report: “The number of new prospective buyers per new listing has risen in the second half of this year [2018], which may put upwards pressure on pricing once the current political uncertainty recedes.”

Since the EU referendum there have been numerous reports of sellers offering generous discounts in a bid to sell their London prime properties, and this may act as an incentive for buyers to act quickly and secure a good deal once demand does return.

Brexit may have caused a temporary blip in the capital’s house prices but the long-term outlook is still up-

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beat, with research from Jones Lang LaSalle and Savills predicting prime central London house prices will increase by between 10-15% over the next five years.

Our own Investec Prime Property Hotspots research indicates that even though the prime market suffered some setbacks in 2018, it was on track to end the year at £37.5bn - up 17% on 2017; with a projected £6.4bn generated by the sale of newbuilds - up from £5bn in 2017.

Looking forward, we anticipate demand will still continue for the traditional prime London hotspots such as Kensington and Chelsea but also further afield. Our research highlights that Bath is the location outside London where most high net worths would like to buy and that new build developments will increasingly push northern areas such as Liverpool into the prime fold, as well as up-and-coming outer areas of London such as Tower Hamlets.

Testing times for BTL

Prime buy-to-let will be an interesting area to watch in 2019. The last 12 months have seen a strong demand for rental properties in the capital but this demand has not always been matched by investors’ appetite.

The tax changes and Brexit both played a part in the slowdown of the market in 2018 and according to Knight Frank, the number of lettings listed in prime central London fell 18% in the year to September 2018.

A lack of supply has also resulted in an increase in average rental values. The number of tenancies agreed per Knight Frank office in prime outer London rose by 16.7% in the year to September compared to the previous 12 months.

Nevertheless, the market will face some testing times in the years ahead, according to Savills.

It predicts mortgaged BTL transactions will fall to 50,000 by 2023, down from 65,000 in 2019 and 60,000 in 2020. This it blames in part on the Stamp Duty hikes of 2016 but also the changes to mortgage-interFEBRUARY 2019

est tax relief for landlords.

The latest trend for many ultrahigh net worth clients in 2018 was to ‘try before they buy’, with some overseas buyers opting to give their London property a trial run before buying.

In the super-prime market where rents can command £5,000-plus a week, tenancies were 5% higher in the year to August 2018 than in the previous 12 months, according to Knight Frank, driven in part by would-be buyers choosing to rent instead of buy.

Although significant, the 5% increase was a slowdown on the 20% uplift the agency reported at the beginning of 2018. It will be interesting to see if this trend continues into 2019 when the furore around Brexit hopefully subsides.

Outperforming other assets

It is not just on the BTL side that the super-prime market has proved resilient in the midst of Brexit.

Knight Frank reported 121 transactions in the year to June 2018 in the London super-prime (£10m plus) market, compared to 133 in the previous 12-month period.

While the total number of prospective buyers in the £10m plus price bracket was 7% higher in the third quarter of 2018 compared to the same period in 2017 - illustrating the property market’s continued resilience.

Despite its ups and downs, residential property outperformed other asset classes in 2018, according to Knight Frank “Gold dropped 4.4% in the year to October while the FTSE 100 fell 5% over the same period”.

We are also likely to see a growing number of prospective prime buyers look to acquire in 2019, as the number of ultra-high net worth individuals in Britain continues to rise.

This level of buyer affluence coupled with the strong performance of the sector means whatever 2019 brings with Brexit, prime property will hold its appeal. www.mortgageintroducer.com

“Platform is my favourite lender” Sue Beeston, Broker We all know how valuable good working relationships are.

When you’re working alongside someone that takes the time to understand what you want to achieve, it makes business a lot easier. That’s exactly what we aim to do at Platform.

We bring a human touch

We’re transparent and fair

We know how much you value good customer service with a personal touch. That’s why we’ve increased the number of people in our support teams, to make sure you always get the best service possible. Whether you need a quick answer to a question or some help with your application, we’re here for you. Better still, we’ll answer your calls on average within 30 seconds.*

We know how precious your time is, so we won’t waste it. If we can’t accept your case, we’ll let you know upfront, to avoid any delays.

We’ll also give you 48 hours’ notice if there are any rate changes to any of our products.**

We’re always listening to you

We go the extra mile

Our service is built around you and your needs.

In fact, we continuously evolve our processes based on your feedback – which we ask for in real time. It’s why we’ve changed our Declaration Form process, and introduced new retention products like our Product Switch for brokers.

Our internal and external BDMs take the time to understand the pressures you face. That’s why we review DIP decisions, and look to find a way to say yes within our lending criteria, always keeping you informed. We’ve also put in place a dedicated team to review your applications. They’ll call you to go through your case and confirm the supporting information you need. It’s all about making sure your application goes through as smoothly as possible.

As part of The Co-operative Bank, we’re guided by the values and ethics laid down in our customer-led Ethical Policy. That means you can be certain how your mortgage is funded. It’s also what led us to go into partnership with Centrepoint, a charity that supports homeless young people. Every time you complete a mortgage with us, we make a donation to Centrepoint on your client’s behalf.

Just a few of the reasons brokers have voted us the No. 1 ‘Best Mortgage Desk Team’ for the third time running.^

Get in touch

0345 070 1999

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or talk to your BDM

Lines are open between 9am and 5pm Mon, Tue, Wed & Fri and between 10am and 5pm on Thur.

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We care about your community

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*Calls taken between Jan and Aug 2018 on Lending Policy queries and password resets on 0345 070 1999 were answered on average within 30 seconds. **Product rate changes only.^ Voted Best Mortgage Desk team by brokers who have recently placed a case with Platform, in the BVA BDRC survey in September and October 2018. †Calls to 03 numbers cost the same as calls to numbers starting with 01 and 02.

Calls may be monitored or recorded for security and training purposes. The Co-operative Bank p.l.c. is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (No. 121885). The Co-operative Bank, Platform, smile and Britannia are trading names of The Co-operative Bank p.l.c., P.O. Box 101, 1 Balloon Street, Manchester M60 4EP. Registered in England and Wales No.990937. Credit facilities are provided by The Co-operative Bank p.l.c. and are subject to status and our lending policy. The Bank reserves the right to decline any application for an account or credit facility. The Co-operative Bank p.l.c. subscribes to the Standards of Lending Practice which are monitored by the Lending Standards Board. Centrepoint is a registered charity in England & Wales, No. 292411.

Review: Brexit

London remains a world city “When a man is tired of London, he is tired of life”. So, famously, said Dr Samuel Johnson in 1777 and I’m inclined to agree. London can inspire conflicting feeling in its residents however – while it offers opportunity, innovation and excitement, it is also addressing issues that accompany having so many people in one space. Population density brings with it challenges for our civil infrastructure, our air quality, and living standards. It is a victim of its own success. It draws almost a quarter of all graduates leaving our universities for their first jobs.

It’s tempting to see the current political instability as heralding the end of things as we know them in the UK; it certainly presages change.

But I think it’s the fate of every generation to assume that their woes are bigger than previous generations.

It’s for this reason that I quote Dr Johnson, a man whose legacy – the codification of the English language and its grammar in the first dictionary - is extraordinary and provides us still with the building blocks of communication that have been exported across the globe.

History, it could be argued is on London’s side. It has been a global city since the times of the Romans. this dynamic sets it aside from other UK cities. The UK is not a young country, but the acceleration of globalistion, partly as a result of techno-

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Robin Johnson managing director, Kinleigh, Folkard and Hayward

FEBRUARY 2019

logical advances, has meant London has to an extent built on its first mover advantage as our capital to become more adrift from the rest of the UK. That said, London has always been a global city. The father of English literature Geoffrey Chaucer who set off to Italy in 1372 as Esquire to the King and brought back the new humanism to London began his Canterbury Tales in London. Consider the internationalism of England’s royal courts over the centuries with London its consistent home – its interaction with Rome shaped this country during another time of deep political instability under the reign of Charles I and his French queen. Consider far more recently the headquarters of the allies from America to Australian under Churchill beneath the streets of Westminster.

London is a city that is different from its other British counterparts.

It has always been so, for centuries.

It has more in common with New York, Paris, Toyko, Singapore, and Hong Kong than with Liverpool or Glasgow. It is its great strength, and I worry that perhaps there is a temptation to forget that amid the struggles posed by the UK’s exit from an economic union with the European trading bloc.

Much of our capital’s property stock is internationally owned, just as much is domestically owned.

Britain’s cultural institutions are un-

likely to abandon their international reputation for excellence because we trade under different terms with our European neighbours.

I am not underestimating the damage that this ongoing political uncertainty is doing to our country, its international reputation and our domestic economy. Far from it. However we are in the eye of the storm and it is perhaps hard to see what will come when we emerge from it. Given that London, its court and its attractiveness to people the world over, has endured for many hundreds of years through civil war and the blitz no less, I suspect that it will endure beyond Brexit, with its many positive attributes intact.

We have, perhaps understandably, been distracted by the rhetoric surrounding Mrs May’s deal with Brussels, but domestic policy hasn’t been entirely abandoned in the meantime.

In early December the Home Office u-turned on its previous decision to ban tier 1 investor visas five days after announcing their suspension by Sajid Javid, following reported pressure from the Cabinet.

This decision is significant; it confirms that Britain recognises the value of inward investment into its economy and into our cities. The visas have been criticised as ‘golden tickets’ for internationals seeking a respectable home for their money in exchange for residency. There have certainly been attempts to abuse the system and Mr Javid’s original move was marketed as an attempt to crack down on money laundering attempts. But that does not preclude the thousands of genuine investors who have seen the advantages of becoming part of Britain’s economy and the value of living in London.

So while Brexit is clearly having an effect on this city and its housing market, London is fundamentally a world city not a UK city. This is why London will thrive whatever the Brexit outcome. It is why people domicile here – our rule of law and education system, our health service and financial clout. That is not likely to change when the country exits its trade agreements with Europe, whenever and however that turns out to be. www.mortgageintroducer.com

Review: Brexit

Brexit - another ‘millennium bug’?

With just a short time to go until Brexit and Theresa May’s Chequers plan rejected by the EU, speculation about what is going to happen after March 29 is rife.

The Governor of the Bank of England, Mark Carney, has warned that a no deal Brexit would be as bad as the 2008 financial crisis, pushing house prices down, unemployment up and crippling the UK economy.

And while we still don’t know what will happen when we leave in March, the government is now preparing for the possibility that we will ‘Brexit’ with little or no agreement on trade with the rest of Europe.

As part of this preparation, the government has published positioning papers and no deal technical notices outlining the effect a no deal Brexit would have on a range of sectors, including financial services.

As we know, most UK homeowners have mortgages with UK-based lenders, so even with no deal, there would be no change for them. But

John Phillips operations director, Just Mortgages and Spicerhaart

the government is warning there could be a knock-on effect on the price of mortgages in the future.

The suggestion is that if we have a no deal Brexit, it will be more difficult to trade, and this could put pressure on UK lenders’ funding streams. Therefore, the pool of money available to UK banks would shrink, the cost of funding would go up and then lenders will then pass that cost onto borrowers in the form of higher rates.

The worry is that this will affect homeowners, who will see their rates increase, but also renters, who, as a result of their landlords’ buy to let mortgages becoming more expensive, will have to put their rents up to cover the cost.

But, this is all speculation. We don’t actually know what will happen at all and you’ve got to remember that back in June, following the vote, economists warned that we would see the pound plummet, the UK slide into recession with half

a million jobs lost. The pound did take a hit, but the economy remains strong and unemployment is at record lows.

And of course there was the millennium bug; as the clock ticked over from 1999 to 2000, experts warned our bank accounts would be wiped out, businesses would lose all their money, traffic lights wouldn’t work and the National Grid would stop working…..none of which actually happened.

At the moment, Brexit is an unknown, but what we do know is that, currently we have low mortgage rates and low unemployment. This means the mortgage market has a solid foundation.

Obviously I can’t say for sure what will or won’t happen, no one can, but what I can be sure of is that, no matter what happens after March, people will need to buy houses, and to do that they will need to get mortgages. And that is not going to change.

If London’s falling out of favour, why is lending so strong?

There has been a lot in the news recently about how London’s housing market could be heading for a huge crash, following a fall in house prices in the capital for the second year in a row.

There is a lot of talk about how Brexit seems to have put everything on hold in terms of buying and selling houses in the capital. And while this may be true of investors, the market in terms of people buying homes to actually live in is actually thriving.

According to the latest data from UK Finance, in November 2018, firsttime buyers in London reached its highest level since 2015.

There were 11,700 new firsttime buyer mortgages completed in London in the third quarter of 2018, which is 2.6% more than a year ago. In terms of lending, this was £3.55bn, which is 6% more year-on-year, and as house prices

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have actually fallen, this obviously supports the fact that purchases have actually gone up.

The average first-time buyer in London is 32 and has a gross household income of £70,000. And while the loan to income multiple has risen from 3.77 in 2015 to 4.01 now, repayments as a percentage of income has dropped from 19% to 18% making it more affordable for first-time buyers to have a mortgage in the capital than it was three years ago.

Remortgaging in the capital was up to – 3.4% more than in 2017 and in terms of volumes, the £4.76bn of remortgaging was 4.6% higher than in 2017.

Remortgaging has been holding the market up somewhat over the past year or so, and this is for a mixture of reasons - there are a large number of fixed-rate loans coming

to an end, so many borrowers are having to remortgage, while others are keen to lock in deals while rates are still low.

We can also see a boost in the number of people remortgaging in order to make home improvements.

Many residential homeowners are doing this instead of moving, while record numbers of landlords are remortgaging their buy to let properties to make home improvements – likely as a result of the new HMO rules.

The only form of lending that was down, was home mover mortgages, which were 4.7% fewer than in 2017. This would support the fact that those who want to move but don’t have to move are holding back, and either doing nothing or remortgaging in order to extend or make improvements to their current homes.

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MORTGAGE INTRODUCER

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Review: Housing Market

There is still work to be done It’s not often that you’ll find someone in the mortgage market looking to Warren Buffett for advice; typically, we leave that to the fund managers. That said, there is a very famous comment made by him that is particularly relevant in this challenging market environment.

Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Essentially, Buffet is echoing the sentiment of fixing the roof whilst the sun is shining.

With the seemingly endless Brexit debate now raging in Westminster, you’d be forgiven for thinking we’re in the eye of the storm; that we really ought to have got out the ladder and nailed down the roof tiles a while ago. Now, even though the sun may be hiding behind the clouds, I do believe there’s some mending we should be getting on with.

The latest property market figures don’t make for especially happy reading. ONS stats show average house prices continued to fall in November, down 0.1% on the previous month.

This makes the average UK property value now £230,630.

The North East performed well, with the greatest monthly price rise (up 1.2%), and Yorkshire and the Humber recorded the month’s biggest fall (down 1.3%). London also performed poorly, seeing the largest annual price fall, down by 0.7%.

Price changes don’t tell us everything about the environment, with transaction numbers helping us understand the underlying demand, and we are also seeing signs that people who don’t have to sell are holding fire.

RICS data for December showed a modest improvement in their new buyer enquiries balance from -20% in November to -17% in December, but this is a minor positive when looking at the backdrop of falling demand.

There wasn’t much positive news in RICS’ new sales instructions balance, however, which held broadly steady at -21%, meaning a fall in the number of homes coming onto the

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Steve Goodall chief executive, ULS Technology

FEBRUARY 2019

market. The outlook for 2019 isn’t much more optimistic, with Research house Capital Economics predicting that there will be little or no growth in transactions throughout the year.

This is being compounded by funding appetite. The Bank of England published its Credit Conditions Survey in late January, with the data showing a considerable fall in the share of mortgage applications actually being approved.

A balance of 26% of lenders reported a fall in this figure – the worst result since 2012 – and a balance of 23% of lenders reported tighter lending criteria in Q4. The availability of higher LTV lending also fell, suggesting that lenders are reining in their appetites as Brexit uncertainty bites.

Price competition may still be fierce in the residential market, but volumes are facing greater pressure, it seems. All this data points to one thing - an adjustment in the housing market.

Which, when you consider it’s been 12 years since the last significant ease, and that economic cycles tend to run between 10 and 15 years, is not a surprise.

These periods of lower prices and lower transactions are cyclical, but the drive for technological advancements in the mortgage industry will,

and must, continue. The need for a smoother transaction and more efficient process is arguably even more critical for lenders to distinguish themselves from one another in the pursuit of market share. Despite the cloudy outlook, we have an opportunity to ‘fix the roof ’, by encouraging and investing in technology.

This technological investment comes in many forms, and is already beginning to be embraced by the market. Open banking has laid the groundwork for us to build a better customer journey, lenders are increasingly making APIs available to allow for better connection and automation between underwriters and brokers, and fact finding for advised mortgages is increasingly an online led activity.

There is one area, though, which is ripe for technological innovation, to improve the customer experience when buying, selling or remortgaging their home. At the start of the year we launched DigitalMove, our secure, online platform that connects home movers, solicitors, brokers, estate agents and more.

DigitalMove connects these parties through a single portal for all communication, document exchange and storage, and addresses many of the concerns of home movers and policymakers of recent years.

www.mortgageintroducer.com

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Review: Supply

Affordability and lack of supply still hampering buyers We all know that improving the country’s housing supply is the key to unlocking homeownership for younger buyers, especially in areas of the country where supply is not keeping pace with demand. The problem with relying on increasing supply is, however, that takes time.

The latest figures published by the Ministry of Housing, Communities and Local Government at the start of 2019 revealed there were 166,400 new build dwellings started in the year to September 2018, a 1% increase from the year to September 2017. Private enterprise starts were up by 3% compared with the previous year. Housing association starts on the other hand, decreased by 8% compared with a year before.

These numbers, while still insufficient to meet the needs of Britain’s swelling population, are nevertheless encouraging.

Particularly at a time when the ongoing Brexit-fuelled uncertainty has stalled the wider housing market, with early signals showing a likely slowdown in transactions in the first quarter of this year, that builders are continuing to put spades in the ground is to be commended.

We must hope that they continue to see the value in keeping supply up long-term, even in the event that the economy takes a hit this year.

In the meantime, there is another threat to the housing market, though not one that has yet truly raised problems. Until the supply issue is addressed long-term, affordability continues to be the biggest challenge for younger buyers. This needs our attention too because it can paralyse a market just like lack of supply. Often this is cited as a key issue for those in London and the South, where prices are undoubtedly very out of kilter with average wages. But it is a national problem.

A lengthy report published by the Office for National Statistics last year showed that the average home in www.mortgageintroducer.com

Stuart Miller customer director, Newcastle Building Society

England and Wales now costs a fulltime worker 7.8 times their salary. In 1997, the average home in England and Wales cost 3.55 times earnings making it less than half as expensive as it is now. I don’t need to expound on the role that Help to Buy played in supporting first-time buyers into homeownership, but I do think it’s worth remembering that lenders need to remain committed to lending, especially at the higher end of the loan-to-value scale, in spite of it. Not least given the growth of selfemployed workers in the UK, many of whom would prefer to commit lower capital outlays to provide better flexibility for other areas of their financial lives. The pressure on lenders is set to intensify over the coming six months, I suspect, with house price inflation slowing down noticeably across the country. The most recent forecast from Halifax suggests house prices will rise by 2% to 4% in 2019, however, in some parts of the country they are already falling slightly with London definitely experiencing a buyer’s market.

Following the Bank of England governor’s warning in Autumn last year, that lenders must stress lend-

FEBRUARY 2019

ing to withstand a potential 30% drop in residential property values, the market is facing an interesting set of circumstances. On the one hand, we must lend responsibly. A repeat of the excesses in 2007 that resulted in over a decade of negative equity for homeowners is to be strictly guarded against. So too is the over-commitment of bank and building society capital to high LTV loans. But on the other, we must not let fear conquer common sense.

The state of the market is NOT bad. There is capital available and mortgage rates are very competitive making payments more affordable than rents in many parts of the country. House prices are moving in line with consumer price inflation – something that has to be a good thing for affordability longer term. With the prospect of further base rate rises this year and next, the majority of borrowers are choosing to fix their mortgage rate, often for five years. This builds in significant capital protection for lenders lending to those with smaller deposits. A lot can happen to an economy and country in two years (as is painfully clear at the moment) and long-run house price trends show inflation.

Yes things are feeling a bit unknowable at the moment; but housing is a long-term thing. For those who own it, live in it and lend against it. Long-term, let’s not lose our heads.

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Review: Technology

Brokers – a reflection of 21st century life Back in the 1980s, lending rates in the double figures were not uncommon. However, it didn’t deter thousands from becoming homeowners, fuelled by the ability to purchase council housing for the first time. In recent years, there has been a reduction in homeownership due, in part, to a reduction of first-time buyers.

According to the English Housing Survey, in1991, 67% of the 25 to 34 age group were homeowners. By the financial year ending 2014, this had declined to 36%. There were also reductions in home ownership over the same period for the 16 to 24 age group (from 36% to 9%) and for the 35 to 44 age group (from 78% to 59%). By contrast, home ownership has increased among older age groups.

So how can mortgage brokers help boost these numbers and accurately reflect the lives of many of us in the 21st century?

First, the working world has changed for many of us. According to the ONS, the number of selfemployed people increased from 3.3 million people (12.0% of the labour force) in 2001 to 4.8 million (15.1% of the labour force) in 2017.

This is not just a rise in people starting their own business as a self-employed electrician for example, but also a rise in the popularity of the gig economy and gig work. In fact, since 2010, there has been a 25% increase in non-employer businesses within the UK’s private sector. This is a greater and faster rate of employment growth than in other private sectors.

Alongside the rise of the gig economy, there has been a rise in the number of people with second incomes. Figures from The Office of National Statistics (ONS)show that over 1.1 million people in the UK now have a second job and they work on average nearly 10 hours a week. With a rise of different types of work than the standard 35-hour

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Simon Bath chief executive, When You Move

FEBRUARY 2019

week, traditional lenders have been slow to adapt to the changing employment environment, and the self-employed, contractors, and gig economy workers have struggled to borrow for a property. However, brokers are in the unique position of giving these workers access to different mortgage options, potentially opening the homeownership door to thousands of people.

Furthermore, families and the family dynamic is changing. The Office for National Statistics revealed that women in their 40s are now the only age group with a rising pregnancy rate, up 2%. Numbers have more than doubled since the 1990s, reaching 28,744 in 2016, or 15.4 conceptions per 1,000. According to Yvonne Roberts in the Guardian, in the US, this group is inelegantly labelled Moneyed Older Moms. Research says they are likely to be more affluent, better educated, more stable and with better jobs than younger mothers. This could mean that many younger people are no longer looking to purchase their ‘forever’ home from the outset, and the second step home could be the most important purchase for them.

However, 25-year terms on their mortgage may not be the best option for people looking to purchase family homes during their midlife years.

Mortgage brokers have the ability to

offer more flexible lending to suit the needs people across their working life and could prove vital in the second stepping stage for professionals starting a family later in life.

Further to this, many of us are working for longer. With the state pension age for women rising to 66, and according to Willis Towers Watson, almost a third of workers now expects to be employed after their 70th birthday, our working timeline is changing. This is up from only 17% in 2010. Once again, traditional lenders have been slow to react to these changes, so mortgage brokers have an opportunity to fill the void left by these mortgage providers. Until all lenders recognise this change in our working life, many who are able to afford to repay mortgages comfortable maybe outcasted by the lending arena.

With many putting career first, whether that be via flexible working, or moving from city to city, and not having children in their twenties, the age and type of property that people are looking to purchase is changing.

As our lives change, our property needs change. To enable this, lenders have to be adaptable and flexible to fit in with the average Brits’ 21stcentury life. As many high-street and traditional lenders fail to react fast enough to these changes, mortgage brokers are faced with a unique challenge and opportunity to find the correct lending criteria that suits the needs of the modern worker.

If the industry thrives under these challenges, it will make the property market more accessible for thousands across the country.

www.mortgageintroducer.com

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Visit bmsolutions.co.uk If you do not have professional experience, you should not rely on the information contained in this communication. If you are a professional and you reproduce any part of the information contained in this communication to be used with or to advise private clients, you must ensure it conforms to the Financial Conduct Authority’s advising and selling rules. Birmingham Midshires is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628. This information is correct as of February 2019 and is relevant to Birmingham Midshires products and services only.

Review: Remortgages

Expect a remortgage-heavy year So, how has 2019 kicked off for you?

If we are to believe some of the market commentary that has sprung up since the start of the year then we might well believe we’re all going to hell in a hand cart.

However, from our perspective, nothing could be further from the truth. 2018 was a record year for our business – and I’m sure there are advisory firms up and down the land who are able to say the same thing.

Clearly, this is a market fuelled by remortgage activity, and that will continue to be the case, but we’ve definitely seen more clients looking to move this year, as compared to last, and anticipate this will continue throughout the year.

Market sentiment can be such a subjective thing though and when it comes to a market view, momentum can build up so that it appears to be the norm. Take house prices, for instance, which are incredibly regionspecific – of course there has been a correction in the London market but that appears to have been played out, while in other areas/regions prices have risen significantly.

Sebastian Murphy head of mortgage finance,JLM Mortgage Services and Rory Joseph director, JLM Mortgage Services

War of attrition

From an outsider’s perspective the market may however appear to be imploding – clearly the Brexit uncertainty is having an impact when it comes to those who might ordinarily be looking to sell or buy, but we should not blithely assume that this is a ‘one size fits all’ for the entire sector.

Much of the purchase focus and outlook tends to be generated by a view of the estate agent market, and we might well conclude that it appears to be going through a war of attrition with itself. Supply-side issues dominate here, plus of course the rise of the online agent, the arguments therein about fee charging, and – coupled with Brexit – it begins to look like a very depressed situation.

But, homes are being put up for sale and where priced correctly are selling. There are however often

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FEBRUARY 2019

complex decisions being wrestled with. We had a recent client who had received an offer for her property which she was comfortable with but there were no properties she wanted to buy in the areas she wanted to live in.

Her conundrum is commonplace – should she go through with the sale of her property, and rent until she finds a place to purchase, or should she sit tight and hope that when a property becomes available, she can secure it, plus also sell her home at the same time? It’s on such dilemmas that a market can either begin to free itself up or continue stuck in a cycle.

Of course for advisers we are fortunate in that we are not totally reliant on purchase activity and we are benefiting from a high demand for remortgages plus a very competitive mortgage market to choose from.

This is a point which often seems to get overlooked in the search for ‘housing market misery’ and you can’t help feel that there is a space here for an organisation/association to be talking up the mortgage market at present, particularly the appetite to lend, the quality of the advice, and its highly competitive nature.

We’re not asking for a market cheerleader but it’s clear that the market is ‘open for business’ and those borrowers who are seeking

stability for the next three-five years will find a very healthy mortgage choice to choose from. With advisers’ help of course.

This is an important point in the context of Brexit, economic uncertainty and what might happen next.

Rather than allowing borrowers to wait, advisers have an opportunity here to get out and secure those longer-term deals in order to deliver peace of mind. That’s certainly the personal service we have been providing, and unless the client is, for example, looking to raise capital to fund home improvements and the like which might suit a shorter two-year deal, then we continue to recommend three to five-year deals, especially as no-one quite knows what is coming over the horizon politically or economically.

Review and reconsider

If advisers are doing this, they also have to be aware of what this means to their overall business volume flow. Less two-year deals now mean potentially less remortgage opportunities in two years time, and it may well be the case that with longerterm deals becoming more prevalent we see something of a resurgence in the second charge sector. Borrowers might still need to capital raise but they may also wish to keep their longer-term mortgage deals in place, therefore advisory firms might well need to review and reconsider their access and advice around second charges.

Overall, while a lot of the media mood music might seem rather sombre, it should be possible to see the possibilities and opportunities that exist, especially if you have a highly effective and consistent remortgage proposition.

This year is likely to be remortgage-heavy, even more so than last year, with perhaps some later life lending and more first-time buyer activity rolled in, so getting the basics right and making the most of this strong sector should be the ongoing goal for all firms. www.mortgageintroducer.com

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Review: Customer Service

Customer experience is more important than ever Finding the right mortgage is no longer just about getting the numbers right. Customers increasingly want something more personal and tailored to them. Figures have revealed mortgage brokers enjoyed a 23% leap in fees in 2016-2017 as more and more people turn to them for advice. This shift towards brokerled deals is further backed up by research from KPMG who reported that two thirds of mortgages are now arranged through brokers.

The shift towards a more customer-centric experience is impacting the way deals are done - purely transactional arrangements are being replaced by rapid, tailored services with the focus on the client while mortgage lenders are taking a much closer look at their relationship with brokers.

In the battle to acquire clients, it’s clear the lines are being drawn between those who offer a great experience and those who don’t. I firmly believe it’s the brokers that go the extra mile that will grow and thrive.

Anita Arch head of mortgage sales, Saffron Building Society

Why the shift towards customer experience?

There are several reasons why house buyers are gravitating towards bro-

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kers, not least of which was the financial crisis of 2007/8. The subsequent tightening of lending criteria, combined with much tougher rules introduced under the Mortgage Market Review is in part responsible for the increasing use of brokers. Clients want clarity and certainty that their application will be successful as well as an expert to steer them through complex legislation.

In addition, the consumer has become more powerful than ever before thanks to the dominance of social media and the internet.

Disgruntled customers now have a voice which can be heard by thousands, or even millions of people online. If they don’t like the service they receive, they will post about it and review it for others to see.

United Airlines saw US$1.4bn wiped off its share price last year after a video of a passenger being forcibly removed from a plane went viral. Businesses, who don’t focus on customer experience or have customers share their bad experiences online, whether mortgage lenders or otherwise, risk serious financial and brand damage.

First impressions count

Brokers are on the front line when it comes to mortgage applications and they have the power to demystify the process for applicants. How they behave from the start will shape the way the relationship proceeds. Successful brokers know they are there to meet the needs of their clients, explain jargon and make the whole application as smooth as possible. They also know that in order to stand out from the competition they need to differentiate themselves.

As employment patterns become increasingly complex with zero hours contracts, self-employment, and multiple jobs, a broker can act as trusted support - someone who can navigate their way through the many products on the market and identify FEBRUARY 2019

lenders flexible enough to help.

Improving the mortgage lender/ broker relationship

In order for brokers to be able to carry out their job properly they have certain expectations of the lenders they work with. And lenders, if they want to increase market share need to be mindful of the way they interact with brokers.

According to a report by KPMG, there are two key things that brokers need from lenders – the ease of dealing with a lender and certainty of decision.

What they don’t want is to go back and forth between client and lender in a long, drawn-out process which aggravates the client and creates a negative experience. They want straightforward advice on the information they need to make an application and they only want to have to ask the client once about it. They also want to be able to conduct deals at speed and get clarity on the lending criteria. At Saffron, we believe that flexibility is key to making this happen.

Is the future really customer-centric?

In short, yes, and there are three essential capabilities lenders and brokers need to develop to deliver improved customer experience.  Flexibility to make judgements on complex applications rather than relying on a robo-advice  The ability to quickly assess the customer’s circumstances and provide quick decisions on applications  A commitment to keep applicants fully informed during the process so that customers are not left frustrated during the stresses of a house move. This includes the ability to communicate in the way the applicants request – whether this is by email, phone, text, live chat, etc...

In 2019 and beyond, both mortgage lenders and brokers need to understand the expectations of the client and how they can best manage them. As customer expectations rise, so must the offerings from lenders, and brokers are an integral part of that. www.mortgageintroducer.com

Review: Buy-to-let

The buy-to-let conundrum We all know the Benjamin Franklin quote: “In this world nothing can be said to be certain, except death and taxes.”

This seems somehow apt for buyto-let, because many are predicting the demise of the smaller end of the market and the so-called ‘amateur landlords’, those with one-to-three properties, have just received a major shock in the form of their 2019 tax return. But don’t be fooled into thinking these are the only people affected, because many ‘professional landlords’ will also have been caught unaware as to just how much the legislative changes will leave them out of pocket.

And let us not forget this is just the start.

It ultimately means that every landlord, regardless of size, needs to consider Income Tax, Corporation

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Tax, Stamp Duty Land Tax , Inheritance Tax and Annual Tax on Enveloped Dwellings, as all of these could affect the tax efficiency of a property business.

Jo Breeden managing director, Crystal Specialist Finance

Sensible solutions

Since the start of last year – but moreso in the last few months – our phones have been off the hook with landlords looking for solutions.

For the first time we witnessed a substantial number of amateur and professional landlords looking for a bridging loan to cover their January tax payments while they look to sell off properties. I would suspect to see a similar demand in July due to a slowing purchase market.

Others are asking what steps they can take to minimise HRMC payments going forward. I implore everyone to create an advisory team to

FEBRUARY 2019

review the current portfolio and look at each and every possible eventuality, whether that be buy, sell or stick.

As a starter-for-ten I would expect to see the following professionals in place: mortgage broker; accountant; solicitor; financial planner.

All is not lost

For the sole-trader or self-employed landlords it may be that there are benefits to continue in the sector and a professional team will be able to develop a plan to set-up to 2020 and beyond, for the portfolio landlords it may be the creation of a limited company.

To quote another famous Franklin line: “Tell me and I forget, teach me and I may remember, involve me and I learn.”

Buy-to-let is still an active space and there are many opportunities to be had, and now it is more important than ever to help landlords find the best solutions, and the right team is the first step in that journey.

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Review: Buy-to-Let

Extraordinary times but the fundamentals are the same We are now well into 2019 and, in any ‘normal year’ you might be able to see some themes developing and to get some sort of understanding of how the market might pan out over the next 11 or so months.

This year is however some way away from a ‘normal’ year – whatever that really means – and it’s very difficult to look beyond March 29 given this is the date when the UK is due to formally leave the EU. When written down like that, it appears straightforward but I think we all know that isn’t the case in any way whatsoever.

In the two years or so it has taken to get to this point, we look closer to leaving the EU without a deal than ever before – although I freely admit that by the time you read this, that could all have changed. Whatever side of the fence you sit on, and however you might perceive the impact of ‘no deal’, it’s fair to say that the likelihood of us getting ‘business as usual’ after it is somewhat slim. Indeed, if we are to believe some of the more pessimistic forecasts, things could get very tough indeed across all manner of sectors.

There has been some suggestion that the UK’s leaving of the EU would not impact too much on our mortgage market, and while I certainly believe that we are a tenacious bunch and we can work through any potential impact, there could be some considerable impact on the people most important to us – our clients and customers. And, that being the case, we are likely to feel what they are feeling – whether that is incredibly negative and hardhitting remains to be seen, but it will certainly filter through to us.

From a mortgage market perspective, that impact is being felt already, perhaps in the residential sector with potential purchasers/sellers waiting to see what happens rather than making their moves. However, in the remortgage space, the uncertainty

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Bob Young chief executive officer of Fleet Mortgages

appears to be having the opposite impact, acting as a catalyst for those who wish to secure mortgage payment certainty over the next two/ three/five years, with the hope that all this change will have ‘come out in the wash’ by the end of that term.

It’s not really so different in the buy-to-let space, albeit we might argue that the impact of Brexit (up until now) has not been as great as the regulatory and taxation changes that have been foisted on the sector over the past few years. Many suggested, prior to the start of this year, 2019 would be the year when landlords would truly begin to feel the most pain because it was the first year that the taxation changes would really hit home, but my impression is that landlords have been prepared for this for some time and, when you know it’s coming, and you’re a professional/portfolio player you can put things in place to deal with it.

Certainly, from an ‘amateur landlord’ perspective, all these changes plus Brexit uncertainty do not exactly make for a fertile environment for any new investments, although the ‘mass exodus’ that was predicted doesn’t seem to have happened in such a big way. Clearly, there are landlords who have decided to sell their investments and get out while they can, but if you’ve opted for a long-term approach, if you chose your property well, if you can still

tap into the tenant demand, plus at the same time cover any increase in costs, then investment in property remains a good option. What it might have curtailed is your ambition and desire to add to your portfolio, and given that stamp duty costs have increased so dramatically, then we should perhaps not be surprised to see purchase activity going along the same lines as it is in the residential space. However, for the professionals it is a rather different landscape and environment. One in which the use of limited company vehicles has increased, one in which there are deals to be done and opportunities to be had to add to portfolios, particularly in higher-yielding property types such as HMOs/ multi-unit blocks and the like, plus that tenant demand that we talked about earlier, does not appear to be dissipating anytime soon.

The other good news is around lender activity and appetite which has been very strong for some time, and the competition that exists in the market is driving pricing down, whilst (as mentioned) lenders are opening up to other sectors and products that they might previously not have considered. In that sense, advisers should have plenty of options to present clients, particularly those looking to remortgage to capital raise in order to add to portfolios.

These are, to some extent, extraordinary times but the fundamentals of property advice, of advice and of lending still remain the same. That level of certainty is there in the sector and we believe those who are able to, should take advantage of it now.

“Advisers should have plenty of options to present clients”

FEBRUARY 2019

www.mortgageintroducer.com

Review: Buy-to-Let

No need for negativity As is often my wont, I was recently scanning the internet for stories involving the buy-to-let sector – well it’s usually either that or anything to do with Liverpool FC – but on this occasion the source of my interest was purely BTL. Only a few minutes into this search I quickly noticed a pattern which kept diverting me to the same website – a provider of financial advice for investors. I was somewhat taken aback to see the sheer volume of articles produced over the course of the last four to six weeks which included “forget buyto-let” (as an investment vehicle in 2019) in the headlines or words to that effect.

As a passionate advocate of this sector it’s never easy to see such a swathe of negativity. It’s certainly not unreasonable to prompt investors and landlords to be questioning the value attached to BTL commitments – in 2019 and beyond – and the deeper lying content may well be relevant for some investors. However, it just seems a shame to generate such an abundance of headlines which only serve to tarnish a particular sector rather than focusing on highlighting the potential benefits of a range of investment areas.

Pure clickbait or relevant advice?

I’ll leave that for you to decide.

Ying Tan founder and chief executive, Buy to Let Club

oughly some councils investigated offenses and sought to bring offenders to justice.

Which leads to the question: will 2019 be the year local authorities really start to get tough?

We have certainly seen wider government recognition regarding the private rental sector being an acceptable form of tenure, which is a good start. And, with housing minister Heather Wheeler recently announcing £2.4m of extra funding to crack down on rogue landlords, its increased focus on ensuring that it is fit for purpose continues this positive trend.

In fairness, the government has already moved to equip local authorities with stronger powers to tackle criminal landlords, ranging from fines to outright bans for the worst offenders. This new funding will be used to back a range of projects to arm councils with greater resources which will allow them to implement even more robust action plans against criminal landlords.

Cracking down on rogue landlords

Towards the back end of 2018, research from the Residential Landlords Association (RLA) suggested that two-thirds of councils in England and Wales brought no prosecutions against private landlords in 2017/18. It added that nearly a fifth of councils didn’t even issue any Improvement Notices which order a landlord to carry out certain repairs or improvements to a property. In response to this it called for a renewed focus on enforcing the powers already available to councils.

This followed a Guardian and ITV News investigation which revealed weaknesses in the legislation governing the private rented market. It also raised questions around how thorwww.mortgageintroducer.com

FEBRUARY 2019

With recent ONS figures reporting that the number of households in the UK private rented sector rose from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households, this is a much-needed boost for a growing rental population in the battle against rogue landlords, but is it enough?

There is no doubt that tenants need better protection and whilst we must remember that rogue landlords remain few and far between, the damage they do to tenants, and the reputation of other landlords, can often be devastating. All in all, this is an interesting story to follow.

It is an area which the government, individual local authorities and the BTL sector will need to closely monitor to ensure that the required levels of action are being correctly implemented.

Specialist lending sales on the up

Staying upbeat, it was good to see research from Masthaven highlight that – despite ongoing Brexit negotiations – 75% of intermediaries expect specialist lending sales to increase in 2019. It outlined that intermediaries believe lending criteria (35%), regulation (27%) and lack of innovation (18%) will be the biggest growth challenges in the year ahead but also emphasised that only 2.5% expected sales to decline.

When asked about customers’ needs for 2019, respondents noted that more complex circumstances mean that clients have requirements beyond simply getting a cheap deal.

Almost a quarter (23%) said customers were more likely to prioritise flexible lending criteria, and only 5% believed low fees to be a priority for customers.

I can’t disagree with any of the figures above and, I suspect, neither would any lender operating within the specialist lending arena. Borrowers will continue turning to specialist lending options in 2019 as the needs of all too many are being ignored by high street lenders. And intermediaries who are active in these markets remain in the best position to benefit from this growing demand over the course of the next 12 months.

MORTGAGE INTRODUCER

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Review: Buy-to-Let

The truth is out there It was reported recently that landlord confidence was at an all-time low. Given all the political uncertainty that surrounds us (particularly at the time of writing) this is somewhat unsurprising. On top of that, there is talk of potential slowdown in GDP growth – or worse still, recession – driven not just by the fall out of Brexit, but a result of global economic woes.

We live in extraordinary times

But when the going gets tough, we need to do more than just roll our sleeves up; we need to think smarter and do the right things and the right things well. When it comes to the buy-to-let market, yes confidence is at low ebb, yes it was already impacted by regulatory changes and yes, this may deter some landlords from expanding their portfolios in 2019.

But remember, in this country we do like to focus on the negative; after all, good news is no news in my book.

The power of positive thinking

The buy-to-let market is not going to disappear in 2019; there is plenty of business available to intermediaries. According to research by BVA BDRC (the source of the landlord confidence story) it shows that 30% of landlords plan to remortgage in 2019. That sounds like a reasonable chunk of business to me. The majority plan to do so because their fixed rates are coming to an end but others are looking to raise capital.

Another 10% of landlords are not sure about their plans, with the remaining 60% being clear that they have no plans to remortgage.

However, with the recent PRA changes, many landlords believe that it is now a lot of hassle to secure a mortgage, with fewer products available to boot. That is perhaps why, according to BVA BDRC’s research, that 12% of non-portfolio landlords stated that they are likely to stick with their existing lender. For portfolio landlords, this figure rises to 20%.

The research does not state www.mortgageintroducer.com

Jeff Knight marketing director, Foundation Home Loans

whether these landlords will stick with their current lender without contacting their intermediary or not. But I think intermediaries should not take the risk. There is still plenty of business out there – but in a tougher market doing the right things well is important. And one of those things is client contact.

Contact has been made

Did you know it costs up to four times more to obtain a new client than retain one. Client retention is vital; even more so in these extraordinary times. The key to this is regular communication, which I have written about countless times before but the point is still valid. Communication makes sure it is not a case of out of sight and out of mind. Moreover, you can shift misconceptions about the current buy-to-let market. There are so many products to choose from, from so many lenders in a very competitive market. And lenders have invested in technology to make the portfolio landlord application process as simple as possible.

You may think this message is biased, given my career in marketing, but I believe communication is vital.

What about sellers and buyers?

You may see press stories about landlords selling up, a bit of scaremongering potentially. Yes there will be landlords selling properties this year; but that is no different to other years. Landlords do not keep properties forever. The BVA BDRC report shows just under one in four landlords are thinking of selling a property this year. The perspective here is that this is not much different to previous years to be honest.

Similarly, the bulk of landlords (60%+) are either ‘not sure’ or are planning no change to their portfolios. They are probably waiting for the political (and economic) situation to settle down before acting. We’ll see.

In terms of buying property, the figure is about 15%. The buy-tolet purchase market fell back a few years ago, and this intention to buy FEBRUARY 2019

is no different to last year. And of those buying, they intend to buy nearly three properties. And different reasons were cited for the expansion but one quote stood out for me “I want to increase the cashflow from my portfolio to reduce the reliance on my day job. There is a gap in the market for professional but personable landlords”. The landlord market is changing, which is why opportunities will continue to exist.

So with perspective glasses on, whilst landlord confidence is at a low ebb – there will be landlords buying up new property and there are other landlords remortgaging. Just like in other years. Most importantly, there is no mass exodus planned from the market in 2019.

Limited companies

In 2018, at Foundation Home Loans we experienced a 60% growth in limited company buy-to-let applications and this option has not lost its appeal. Referring to the same research cited above, of those landlords looking to buy properties in 2019, 44% plan to do so as a limited company. When it comes to portfolio landlords, the figure is much higher at 64%. This is good news for intermediaries as I believe these types of cases are the ones where landlords are more likely to make contact with you.

Regional snapshot

Looking across the regions, only Yorkshire and Humberside showed that more landlords (25%) were planning to increase their portfolios than decrease them (19%). In the West Midlands, however, fewer landlords said they plan to increase their portfolios.

The truth is out there

We are living in extraordinary times.

Uncertainty is surrounding us which will undoubtedly have an impact on our mortgage market. Nonetheless the world will need to keep spinning and opportunities are out there. Intermediaries just need to remind their landlord clients – and other landlords – that they too are out there and can help them through the buy-to-let maze.

MORTGAGE INTRODUCER

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Review: Buy-to-let

Remortgage opportunities in buy-to-let As the Brexit deadline gets closer, industry pundits are trying to gauge what may happen in the buy-to-let mortgage market in 2019. Certainly in 2018 there was a noticeable decrease in purchase transactions from landlords with numerous surveys and research showing a reticence among some to pursue expanding their portfolios. This didn’t signify a mass exodus from the buy-to-let property market, but more likely a cautiousness and ‘let’s wait and see’ attitude while watching how the government’s negotiations play out.

Certainly there is the possibility that Brexit could unsettle the UK economy and the prospect of a rise in interest rates is realistic, leading to more investors looking to fix their monthly mortgage payments.

For this reason, it could be beneficial for landlords to examine

Jane Simpson managing director, TBMC

their current portfolios this year and make the most of some very attractive deals being offered. There is no shortage of lender and product options as providers of buy-tolet finance still seem very keen for business. There are also plenty of remortgage products that come with incentives such as a free valuation or free legal fees.

The buy-to-let remortgage market could be a profitable place for brokers. Following the theme of remortgaging, it may not always be in a client’s best interest to seek a different lender for their refinance options. There have been so many changes over the last couple of years, namely the PRA regulations that came into force in 2017, that have had a significant effect on the underwriting approach from buy-tolet lenders. This has included more

stringent rent stress tests and stricter underwriting for portfolio landlords which may limit options for some.

With the PRA regulations resulting in such significant changes to buy-to-let underwriting there have been more cases of legitimate applicants falling short of the current rental stress tests despite being able to afford monthly payments on their mortgages. For this reason, we have seen more lenders offering a ‘top slicing’ or ‘rental top up’ facility to their buy-to-let propositions to support viable applicants who may have a shortfall of rent for the given rent stress test but have provable surplus income that verifies their suitability for finance. TBMC has a good selection of lenders on panel to help with this scenario and is well placed to help place tricky cases in the buy-tolet mortgage market.

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FEBRUARY 2019

www.mortgageintroducer.com

Review: General Insurance

Realise more value from your remortgage business There is little for mortgage advisers to get excited about when it comes to the outlook for the property market.

In 2018 RICS reported new buyer enquiries, new instructions and average stock on estate agents’ books to be record lows and with the latest figures for new appraisals showing a downward trend, it’s hard to see the market picking up any time soon.

However, as property sales have slowed, remortgaging has boomed, and UK Finance reported that remortgage business had reached its highest level in almost a decade towards the end of last year.

There were 50,500 new homeowner remortgages completed November, which was nearly 25% more than in the same month a year earlier.

Product transfers are also a rich source of business. According to UK Finance, nearly 300,000 homeowners switched product with their existing provider in the third quarter of 2018 and well over half of these were advised sales. However, whereas typical proc fees range between 0.35% and 0.50%, product transfer proc fees tend to be between 0.20% and 0.30%.

So how can you make sure that you are getting the most value from

James Watson sales director, Paymentshield

essential markets, including home insurance, mortgages and savings, were being penalised for remaining with their existing provider. If your client hasn’t reviewed their cover recently, there is a chance that they are being penalised.

Not all loyal customers are penalised on price of course. At Paymentshield, for example, we have a panel of insurers and will automatically rebroke a policy across our panel to try to find the client a better price or better cover if the cost of the client’s policy jumps up at renewal.

your product transfer and remortgage business? Without the distraction and time pressures of a property purchase, a remortgage provides an excellent opportunity to review your client’s overall financial situation and protection requirements.

They probably already have cover in place, but as we know from last year’s Citizens Advice super-complaint and the FCA focus into the price of customer loyalty, there is a good chance that you could improve your client’s situation by sourcing them a cheaper policy or better cover. Here are three questions that could help you to stimulate a conversation that converts into a general insurance sale that improves your client’s position and boosts your income.

Have you heard about the FCA market study into how some insurance providers charge their customers?

The regulator’s market study will focus on pricing practices and their impact on customer outcomes, fairness and competition. It follows a super-complaint that was lodged

by Citizens Advice in September, suggesting loyal customers in five

Is your cover still fit for purpose?

Ask your clients to bring their existing home insurance policy along to your meeting with them so that you can see who they’re currently getting their insurance from, what they’re paying and anything else you need to know. By doing this you can check the product they have is fit for purpose.

“Ask questions to strike up a conversation about their wider financial situation, plans and aspirations”

Turn a remortgage into recurring revenue A typical general insurance case takes around half an hour and the average commission is just over £80 each year.

If the policy stays in place over the course of five years, this adds up to a total payment for that half hour’s work of £400.

The latest Mortgage Market Tracker from IMLA found that advisers write an average of 90 cases per year.

So, if you were able to make successful general insurance sales on around 40% of mortgage completions, just three submissions a month, you could expect to earn around £3,000 in commission in the

www.mortgageintroducer.com

first year and then each year those policies stay in place.

Assuming you make the same number of general insurance sales in year two, even factoring in some client attrition, you could expect to earn around £6,000 then £8,500 in year three and so on.

The cumulative effect of general insurance commission quickly adds up and delivers real embedded value within a business as future earnings can become more predictable. Over the course of five years, total earnings from doing just three cases a month could be more than £40,000.

FEBRUARY 2019

Would you like me to save you time?

Nobody really enjoys sorting their insurance, which why so many people stay with their existing provider even if the cost of their cover increases significantly. You can save your clients time and hassle by arranging their insurance for them, and you can make sure they get the cover they actually need.

The stagnant property market might be uninspiring currently but, with the right approach you could inspire your clients to look beyond their remortgage or product transfer. Ask questions to strike up a conversation about their wider financial situation, plans and aspirations outside of their mortgage requirements and you could realise more value from your remortgage business.

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Review: Protection

Cohabitee complications Almost half (46%) of people in England and Wales mistakenly believe that unmarried couples who live together have a common law marriage and enjoy the same rights as couples that are legally married.

This misconception makes financial advice for this cohort an absolute must. This year’s British Social Attitudes Survey, commissioned by the University of Exeter and carried out by the National Centre for Social Research, finds that cohabiting couples now account for the fastest growing type of household. Yet people’s attitudes and government policy have failed to keep up with the times.

Anne Barlow, professor of family law and policy at the University of Exeter, says: “The result is often severe hardship for the more vulnerable party in the event of separation, such as women who have interrupted their career to raise children.”

Johnny Timpson, Scottish Widows’ financial protection technical & industry affairs manager, adds that this makes taking appropriate financial advice essential for cohabiting couples and families. “Neither working age welfare bereavement benefits, IHT nor intestacy rules

Kevin Carr chief executive, Protection Review and managing director of Carr Consulting & Communications

currently recognise cohabiting relationships,” he says.

“This is in sharp contrast to other working and pension age benefits that do.

“Being in a cohabiting relationship, separated or divorced means that on partner / former spouse death you and your dependent children are ineligible for bereavement benefit welfare support.

Whilst the Supreme Court have found that this discriminates against the children in a cohabiting relationship, we await the DWP’s response to this ruling.”

Easy peasy VitalityLife’s new plan, designed specifically to protect mortgages, aims to help advisers make protection an integral part of the mortgage discussion. A simplified underwriting process promises that clients will be fully covered within minutes.

Underwritten by just five medical questions, the plan can also include life cover, income protection, serious illness cover for children and waiver of premium.

Roy McLoughlin, Associate Director at Cavendish Ware, comments: “It’s imperative that the majority of mortgage customers have some form of protection against the loan.

“Brokers should be encouraged by the speed and ease of application afforded

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by VitalityLife’s streamlined underwriting process. It will mean that more mortgage customers will be able to access cover quickly. Usually - in the case of all insurers - it takes around 15 minutes to ask all the medical questions at underwriting stage.”

The serious illness cover takes a severity-based approach covering 145 conditions. Of those, 77 conditions are paid out at 100% of the sum assured to fully cover the mortgage after suffering from the most severe conditions. This includes heart attack, cancer and stroke.

A further 66 conditions are paid out on a severity basis at between 15% and 75% of the plan amount. These claims do not reduce the amount of life or serious illness cover remaining for future claims.

FEBRUARY 2019

News in brief • Aviva has expanded its bereavement support for families of life insurance customers with estate administration services and a practical guide to legal and financial assistance for bereaved families.

• January saw a number of IP mutuals announcing their 2018 claims statistics ahead of the rest: - British Friendly paid 94.7% of all claims, citing musculoskeletal conditions as the main cause of claims. Of the declined claims, 1.3% were for non-disclosure and 4% were for not meeting the definition of incapacity.

- Holloway Friendly announced it paid 98% of claims, revealing: the average annual claims payment was £10,800; the average age was 44; and the main causes of claims were (in order) accident and injury, musculoskeletal, mental health. It added that e-signatures to support claim payments have improved process.

- Cirencester Friendly says that it paid 95.2% of claims last year, highlighting the main reasons for claim rejections as follows: inability to provide proof of earnings or medical evidence; no loss of earnings following illness or injury; and nondisclosure.

• LV= has now made its ‘personal sick pay’ IP product available through iPipeline’s sourcing system SolutionBuilder and its Assureweb portal.

• F&TRC has launched a child critical illness policy comparison tool.

• The market has seen a rise in the number of private renters, particularly those in mid-life, according to the latest figures from the Office for National Statistics.

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Review: Protection

Let’s get income protection up the agenda If we were setting our protection objectives for 2019 then high up the list would be income protection, which continues to be a poor relation in comparison to life cover.

Much of this protection business imbalance is historical, and doesn’t really reflect the realities of how people live and work today. Because the fact is that what the state will provide is diminishing, and is likely to result in a significant drop in income for most people, which continues to drive the increasing need for income protection.

Furthermore, for medium to high earners the financial impact is likely to be even more pronounced in percentage terms given the relatively low level of state benefits available.

So the only way that people can be sure of looking after themselves financially in the event of incapacity

Jeff Woods campaigns and propositions director, Sesame Bankhall Group

is by having the right cover in place.

Advisers can be at the forefront of helping to solve this problem, but it all comes down to having the protection conversation with customers.

We also shouldn’t lose sight of the important role that employers can play, by making information available so that people fully appreciate the financial consequences of ill health. Employers can also put a group income protection scheme in place to help their employees receive financial support for longer. This in turn has a positive knock on effect by enabling employees to more readily afford their own personal cover, over and above what their employer provides. Even if an employer offers a group policy which incorporates a deferred payment period, it means the individual is more likely to be able to afford their own per-

sonal cover because they are adding to the cover being provided by their employer and filling in gaps rather than starting from scratch.

As for advisers, don’t forget that there’s lots of support available to assist you. For example, there are some very good risk calculators available which advisers can use with their clients.

The other point to remember is that there are a wide range of products available that give advisers the flexibility to adjust features such as the payment period, deferred period and amount of benefit in order to make income protection cover appropriate and affordable.

There’s almost always a way for advisers to offer this valuable cover to their clients who need it, so let’s work together to get income protection higher up the agenda in 2019.

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sales@oblixcapital.com

FEBRUARY 2019

www.oblixcapital.com

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Review: Equity Release

Equity release and the future of retirement planning Do we ever stop learning? Even masters in their field can put in another hour, train a little harder, or discover something they never knew. Albert Einstein, who I think we can all agree was a master in his field, put it perfectly: ‘Once you stop learning, you start dying’. And I think this is something to live by.

However, learning is not a solitary act and learning together is often best for everyone. Now, this isn’t a philosophy or physics lecture, and I promise to avoid any digressions on general relativity, but I think this point is very important for every industry. Teamwork works. Which is why I applaud Legal & General’s recent announcement that they are launching their own CII-accredited adviser workshops. After all, helping train new advisers and enhance the general knowledge of everyone in our industry is what will keep equity release thriving and here at Bower we take ongoing education of our advisers very seriously.

Ever since they joined the market, L&G have shown real confidence in equity release and a commitment to take the industry as a whole into the mainstream. For years, I have been supporting lenders who push the boundaries, launch exciting new products, and look to support our industry in any way. And this is another perfect example. If we are to reach the heights I know we can, knowledge and education is essential - and this has to be supported by everyone and not left up to the individual.

This isn’t to say that our current adviser population isn’t incredibly knowledgeable. They absolutely are.

But to go to the next level we need to keep going, and initiatives like this are what can make that happen. What’s more, having an industry that supports and fosters our advisers’ training will lead to more ambitious individuals looking to specialise in equity release, which is www.mortgageintroducer.com

Andrea Rozario chief corporate officer, Bower Retirement

something we need to happen. After all, regardless of our recent success, we still need to increase our adviser numbers to meet the levels of demand we will be seeing over the coming years. So, any new advisers need to be as well trained and versed in the nuances of equity release and how to deliver good advice as our current crop, and nothing can be overlooked. Nevertheless it is important for any potential new advisers to understand the level of work and commitment required to advise in this field If this training initiative is to work, however, the goal needs to be to go beyond qualifications and look to deep learning and understanding.

Equity release has evolved and improved so much in the last decade or so that achieving any sort of expert understanding has become harder.

Essentially, surface level learning will not suffice, and we need advisers to continue to improve on a deeper level.

Soft skills, for example, need to be a focus. Our side of the mortgage

FEBRUARY 2019

arena is concerned can be involved with a vulnerable, elderly customer pool, and a different set of skills is essential for delivering the advice they need. So, if we are to teach our advisers how to deliver the best advice possible, soft skills and a deep understanding of their customers situations is essential.

Time will tell how L&G’s workshops will pan out, but one thing is certain: they send the right message.

2018 was another record year for equity release, but there are no signs of us slowing down.

Our lenders are not just committed to completing as much business as possible, they are also showing a firm commitment to supporting the long-term growth of our market.

Ultimately, only through constant training, learning and education will we continue with our success.

For this year, it would be fantastic to see this commitment stretch beyond our market and reach those in government. Every year we are becoming harder and harder to ignore, but those in Westminster are still finding a way.

A serious discussion about how equity release can fit into the future of retirement planning needs to be had, especially now our market has firmly proved that we are here to stay.

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Review: Equity Release

Are advisers ready for growing demand?

2018 was another strong year for equity release. While focus typically falls on the impressive headline gains the market sees annually – with last year seeing another billion-pound boost, almost hitting the £4bn milestone – we also saw a surge in the number of customers taking out equity release. Over 82,000 homeowners were in the market by the end of 2018, up 24% on the 67,000 who released some of their property’s value in 2017.

This is a trend we expect to continue in 2019. The growing comfort people have with using property wealth isn’t just down to shifting attitudes around viewing wealth holistically. Every extra customer is an example to others of the opportunities equity release can open up.

For someone considering equity release, seeing a friend, family member or next-door neighbour use it to

Alice Watson

head of marketing and communications, Canada Life Home Finance

“When we asked advisers what was needed to make equity release more accessible in 2019, 40% said more support to help IFAs become equity releasequalified”

Canada Life. When we asked advisers what was needed to make equity release more accessible in 2019, 40% said more support to help IFAs become equity release-qualified.

There is positive news – our research found just one in eight (13%) advisers aren’t equity release-qualified. But, sadly, we know that there is already a significant advice gap.

There are approximately 33,000 registered advisers in the UK, compared with around 700,000 people who reach retirement age each year.

Added to that, 7,000 advisers are thought to be likely to leave the industry in the next five years, and a high proportion aren’t actively engaged in the equity release market, increasing the advice gap further.

If action isn’t taken now, we may see customers held back from equity release just because they can’t find an adviser who can help them access it.

That’s why we’re pleased to announce that we’ll be hosting another round of our nationwide equity re-

lease exam workshops this year. We believe providers have a key part to play in making sure advisers can tap into equity release’s growing popularity. We know the enthusiasm is there to make the most of support

“We believe providers have a key part to play in making sure advisers can tap into equity release’s growing popularity” offered: our similar round of workshops last year saw over 300 unqualified IFAS attending fully-booked sessions. Advisers are correct to identify the crucial role they play in growing the later-life lending market. At Canada Life, we’re committed to helping provide the support they need to do so.

refurbish their home, help a relative onto the housing ladder or go on their dream holiday, helps eradicate misconceptions and shows the freedom and flexibility equity release products can offer. As more people come to see the benefits, we should see property wealth play a more prominent role in helping people live the retirement lifestyles they want.

But it is important that this growth in demand is supported by a growth in supply: which means we need more advisers qualified to offer equity release. That’s not just our view at

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www.mortgageintroducer.com

Review: Conveyancing

Hopes not high for 2019 purchase market Despite optimism around gross mortgage lending levels by UK Finance for 2019 – the trade body suggests figures will outstrip 2018 – there is one, rather important, area of the market where most stakeholders and commentators are not anticipating similar levels of growth.

The purchase market – whether that be residential or buy-to-let – has improved slightly in some parts, for example, first-time buyer activity but overall we’re still at a level which might best be described as ‘bouncing along the bottom’. The latest figures from The Royal Institution of Chartered Surveyors (RICS) set out the stark realities for housing purchase transactions which is unlikely to be news to anyone in the market, particularly estate agents.

Sales decrease

RICS’s latest data for December 2018 shows that the number of inquiries, the number of agreed sales and the number of new instructions all fell, while looking ahead, surveyors overwhelmingly believe there will be further decreases in sales over the first quarter of 2019. Indeed, since the survey was bagan back in 1999 the difference between those who think there will be increases compared to those who think the opposite has never been lower with a balance of -28%.

The rather worrying thing is that this is not a situation which has suddenly cropped up overnight. Part of our business is focused specifically on estate agents and they will tell you that purchase activity has been like this for some time. Some parts of the market have been constant – firsttime buyer purchasing, for example, - but where you would normally have this backed-up by investor purchasing, that has pretty much been decimated by the series of taxation and lending changes that have been pushed onto the sector over the last few years. www.mortgageintroducer.com

Harpal Singh managing director, Broker Conveyancing

The irony of these latest figures is that agents themselves are rather sanguine about them. They know this has been the case for some time – in a sense they know their business is unlikely to fall much further because, quite frankly, there isn’t much further to fall. Currently, large numbers of agents are surviving on those clients who have to move or sell or purchase, for example, because of a death or a divorce or the fact that they have a bigger family.

What has happened is that this client type is the one responsible for pretty much all purchase business at present, and those who may only be moving or purchasing because they want to – rather than have to – are sitting on their hands because, like all of us, they have no clue about what is going to happen to the housing market or the wider UK economy while the Brexit ‘debate/row’ rumbles on.

By the time you read this, the political situation around Brexit might have changed completely, so I’m loathed to go into too much detail.

But the fact of the matter is that potential movers/purchasers have read headlines about ‘30% house price drops’ – even if they’re only worstcase scenarios – and they have decided to stay put and wait for far greater certainty.

Therefore, when it comes to the outlook for this year, we can’t discount the purchase market because it is likely to continue along a very similar route, but I suspect that most housing market stakeholders will be thinking they cannot rely on an uptick in purchasing to push their business transactions forward. The likelihood is it will not materialise and perhaps they should therefore be doing all they can in the remortgage/product transfer sector, and ensuring they cover every single client need via quality diversification in order to bag every bit of business that is available.

FEBRUARY 2019

Sometimes you make a decision about your own business that you think is right and it turns out to be a roaring success; sometimes you’re utterly convinced a decision is right, only to find out later that you couldn’t be more wrong.

Retention, retention, retention

There are fine margins in this business, especially in such a competitive field and when there are so many intangibles. As mentioned above, the housing market is subject to so many changes, from so many different sources, that even if you have the right process, the right brand, the right employees, the right everything, political and/or regulatory intervention can make you the wrong company at the wrong time. Just ask the sub-prime lenders of pre-2008.

However, unless you are just establishing a business, what you will have is a current roster of clients.

And, in my view, it’s how you look after them that will ultimately make the difference between whether you’re successful or not. Of course, you will need to bring in new blood/ clients, but when I talk to most advisers and ask them where they source that new business from, the vast majority say ‘referrals’.

So, it’s your existing clients recommending your services to others in order to generate your next generation of new clients. There will be other ways of marketing your business, and there will be other successful ways of securing new business, but I suspect none will be as effective as a testimonial from an existing client.

They have been there, done it and got the t-shirt with you as their adviser, and if they’re happy to recommend you, then why wouldn’t a friend or colleague or acquaintance also contact you regarding your services.

It’s utterly common sense but can sometimes get overlooked in the quest for new business – the greatest chance of getting new business is through the clients you have.

Treat them well, deliver what they want, and they are likely to help you grow your business far into the future.

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Review: Conveyancing

Human interaction still reigns supreme There was an interesting observation to be made in the Council of Licensed Conveyancers’ latest survey, The Annual Regulatory Return (ARR) for 2017/18, which seems to sum up the differences in outlook between Alternative Business Structure (ABS) conveyancing firms and non-ABS firms. ABS firms are licensed conveyancing firms which are allowed to have non-lawyers as investors or owners.

ABS firms were nearly twice as likely to anticipate growth over the next 12 months – 62% to 33% and 17% of ABSs thought this would be down to increased access to more of the marketplace, compared to 5% of non-ABSs, and they were also more likely to identify opportunities from greater use of IT (15%; non-ABSs 3%).

In line with this, ABSs were six times more likely to offer clients access to an online portal (29% of them did so, compared to 5% of nonABSs), and four times more likely to make use of data from online review platforms such as Trustpilot.

The results suggest that not only is the culture in ABS firms more positive and outward looking when assessing prospects for the future, but also that they make better use of technology to improve service to customers. It does tend to confirm that firms with non-lawyer owners or investors are more entrepreneurial than those that are strictly lawyer owned and run.

Obviously, there are law firms that I could name that are non-ABS and very successful in the conveyancing space, but the survey does seem to reflect, at the very least, a decided split between the more entrepreneurial, optimistic and forwardthinking ABS firms and the more restrained, conservative approach by non-ABS firms.

Whether that makes them a better bet for advisers, I will leave you to judge. But if I was still broking, I would be looking to do business with the firms that are positive in outlook and committed to customer

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Kevin Tunnicliffe CEO, SortRefer

FEBRUARY 2019

service using the latest in technology to deliver it.

I started SortRefer nearly 10 years ago this year. Having been a mortgage broker, continually let down by the variable quality of the conveyancing service available at the time.

I wanted to bring a new service to the intermediary sector, based on a select number of conveyancing firms with transparent pricing, consistent service and, what was revolutionary at the time, delivered via an online portal to instruct conveyancing work and to receive regular 24/7 updates.

Harnessing the knowledge and expertise of individual law firms and providing them with access to business in volumes, where they can offer a consistent service and link them to an IT portal that not only delivers a better level of service but cuts their processing time, continues to be a very successful formula.

Returning to the observation about conveyancing businesses, which are part or fully owned by non- lawyers, one conclusion that can be made is that the whole edifice of conveyancing has benefitted from the introduction of business conscious procedures.

Starting with the breaking of the solicitors’ monopoly on conveyancing in 1985, there has been a steady recognition that conveyancing must change from being an activity which strangles innovation and procedural reform to become one which serves rather than impedes the house buying process. It has taken a long time to reach the point where we are now.

While there are still gripes, most of which are the result of individual firms being unable to find a mechanism to maintain standards in the face of sudden peaks, the truth is that conveyancing is fit for purpose and will become more so, with the continued implementation of new technology.

Every piece of technology that can help to compress the time it takes to reach a satisfactory conclusion is worth the investment. Communica-

tion between customer, lender, adviser and conveyancing firm and the ability to ensure that each party is immediately aware of items required and the exact point reached, are key requirements. Technology allied to a proven process, overseen by a professional and knowledgeable team, is the holy grail of conveyancing.

This is why I would always choose a firm, be it a solicitor practice or a specialist conveyancer, which can demonstrate its effectiveness by the way that it has embraced and implemented the technology which is now available. Heaven forbid, I come across any who are still insisting on using fax machines!

“Harnessing the knowledge and expertise of individual law firms and providing them with access to business in volumes, continues to be a very successful formula” It might come as a surprise, given all the gloom, that lending in the UK actually rose in 2018 when compared with the previous year.

However, it will not surprise good advisers that robo advice is not the all conquering, adviser killing phenomenon that some quarters of the press have been quick to amplify.

Advice given by a human being is still what the majority of customers, looking for mortgages and other personal finance, want. The adviser, who takes advantage of the technology available for their own use to improve their service, is more than a match for any computer program or algorithm. It might be that in time, AI will produce the perfect robot adviser. However, that time is not now and will not be for some time to come. www.mortgageintroducer.com

Review: Technology

Strap yourselves in and get on board the digital express If anyone thought that the pace of digital change would calm down in 2019, think again.

Across the board from banks to insurers to intermediaries, the race to embrace new technologies to update and automate our processes, increase efficiencies and our bottom line – oh, and make life easier for our customers – is speeding up.

So what are some of the tech trends that will shape our industry over the next 12 to 24 months? Where could we be, come the year 2020?

Artificial intelligence

Artificial intelligence – or AI as it is more commonly referred to – has moved from being the realms of sci-fi films and novels to playing an increasingly important role across a swathe of industry sectors, including financial services.

Robo-advice might not be a universally liked term and the advance of this technology has not been without challenge, but these online investment services that guide consumers into ready-made bundles of investment or portfolios will continue to gain traction in the UK. Their focus on clarity and a smooth user experience have put many traditional investment players to shame.

Digital advisers have established a foothold in the mortgage market with the likes of Trussle, Habito and Mortgage Gym becoming well known.

Increasing regulation around the mortgage process has resulted in mounting paperwork and time, so digital advisers will play a greater role in helping intermediaries improve efficiency – but will remain a hybrid proposition rather than replacing human input.

And insurers are increasingly using AI to do the heavy lifting when it comes to the mundane processes that surround the purchase, administration and claims www.mortgageintroducer.com

Kevin Paterson managing director, Source Insurance

against an insurance policy.

AI has perhaps been the plaything of bigger companies, but as the likes of Amazon and Google develop machine-learning tools based in the cloud, the power of AI will be opened up to a far broader audience. Come 2020, expect to see the AI revolution spreading more broadly, not just throughout the financial services sector but through different parts of the entire economy and being adopted by smaller companies.

The internet of things

The penetration of smart home devices has been slower than anticipated, but the growing adoption of systems like Google’s Home and Amazon’s Alexa has seen IoT beginning to carve a niche for itself in everyday life.

These devices will continue to integrate more aspects of the home into one system utilising the internet to allow users to control anything from heating to security via voice control or their smartphone.

After a hesitant start, insurers are starting to tap into the potential of IoT. Just recently Aviva acquired a majority stake in the connected home insurtech, Neos, here in the UK. In the US, a huge insurer recently partnered with Amazon, selling smart home kits and devices to its customers and offering discounts on home insurance policies when they make a purchase.

These kits include security cameras, water sensors, motion detectors and smart home hubs. It intends to introduce Alexa’s skills for billing information and home maintenance initially and bulk up more skills over time.

This demonstrates how just one part of the financial services sector is teaming up with a digital expert to help customers manage risk. Others are sure to follow.

FEBRUARY 2019

Digital platforms

Google and Amazon: these brands feature in pretty much every element of the key developments that I see taking place over the coming months.

The presence of these digital titans is only going to increase in the financial services sector as they leverage their scale and analytics know-how to extend their reach even further. They already bring together vast communities of customers, suppliers and partners.

They already leverage big data and analytics to optimise matches between them.

In a recent survey of insurers and intermediaries, two thirds of respondents expect that in as little as five years, it will be mainstream for digital natives to manage all of their affairs from financial services and utilities to day-to-day shopping through a single online lifestyle portal linked to their personal data stores.

Application programming interfaces

The sheer speed at which these digital platforms innovate is staggering.

Much of this is possible because they allow third parties to plug into their platforms using APIs. APIs are the glue that allows different software programmes to easily interact and share data with each other, and facilitate the development of new services.

The UK’s Open Banking Initiative is one example of how open APIs are being encouraged by our regulator to foster competition and ensure better deals for customers.

The likes of Starling Bank and Monzo are among the frontrunners, setting up their own financial services marketplaces allowing customers to tap into and manage a range of financial services products from pensions and investments to mortgages and insurance.

Expect to see more of these financial ecosystems by 2020.

So strap yourselves in and get on board the digital express because it’s only going to speed up as we draw nearer to the close of the second decade of the millennia!

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Review: Technology

Tech needs to prove consistency and efficiency The mortgage industry has arguably been behind the broader technology curve for years. It is largely accepted that automating the process of applying for and approving a mortgage is complex, still disproportionately reliant on people exchanging bits of paper and therefore, is a long way off. That said, enormous progress has been made by lenders, and others, often behind the scenes. When you start to discuss the details, it can sound deeply uninteresting but it’s important stuff that will lay the foundations for the future.

The trouble is, it’s just not that sexy. This is in sharp contrast with the pastel speech bubble chats that various mortgage brokers are now managing to have with their customers via slick mobile apps. But, I suspect, many of the claims to have reached the heady heights of machine learning and artificial intelligence – even in firms that style themselves as tech-based platforms – remain rather distant in reality.

As one person put it to me recently, a lot of the so-called robo firms are a bit like R2D2. A box with a man inside working all of the controls. Academics refer to the more classical example of the Mechanical Turk - an 18th century chess playing machine commissioned by the then Austrian Empress which operated in a similar way.

This is not unusual: businesses often have a big vision for how to incorporate AI and machine learning into their processes but knowing how to start implementing is far harder. A recent survey of chief information officers in businesses around the world by research firm Gartner revealed that just 4% of CIOs had actually done what they intended when it came to using AI successfully. That compares with almost half of CIOs who know they want to do it.

The mortgage market is in an interesting place just now. Open bank-

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Kevin Webb managing director, Legal & General Surveying Services

FEBRUARY 2019

ing has created an environment where it is possible for customers to share their personal banking data with third parties. Integration of APIs to enable automated information exchange exists – at least in some parts of the market. In theory, automatically underwriting a mortgage using data from the borrower perspective is an achievable goal. Yet the reality is that no-one in the market is there. Yet. The vision that I think many people in this industry share - of making the whole process of applying for and getting a mortgage a lot easier and more convenient for customers - will come together. But we are still on a path towards it and I think it’s helpful to remind ourselves of that.

As children, we crawl before we walk and walk before we run. The framework exists to help us move along this path, and at speed if we choose to invest and work together as an industry to join things up. But I think assessing the borrower is probably a little further on in terms of data access and automation than the other big risk that lenders have to keep in mind.

There are many, many moving parts in the mortgage process and the borrower makes up just one side of the risk assessment for a lender.

The security is also crucial.

AVMs have been around for over a decade now, and they certainly have a role to play in the delivery of sensible automated risk evaluation when it comes to the value of a property.

They are at their heart algorithms, however. They rely on the data that can be put into the model to produce an answer within specific constraints. Many also rely on historical data for a specific home combining that with broader market trends. A property’s condition remains something that requires a physical valuer to visit a property to assess.

Bearing in mind that we should aim to warm up before setting off on

a 100m sprint, focusing our initial efforts on using technology to augment what people are capable of is worthwhile. We should be (and are at LGSS) investing in developing better technology that can use big data from a variety of sources to understand the make-up of a property’s situation and its effect on value. But we should not forget that this does not have to be at the expense of the expertise and experience that exists in our people.

Machines are constrained by the data they have; perhaps people are similarly constrained. But they are, for the moment, far better placed to interpret unexpected and anomalous information to improve the analysis done by machines. How often when the machines get it wrong do we hear the refrain ‘it was an ex-

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“A lot of the so-called robo firms are a bit like R2D2. A box with a man inside working all of the controls.

Academics refer to the more classical example of the Mechanical Turk – an 18th century chess playing machine commissioned by the then Austrian Empress which operated in a similar way” ceptional time’? We live now arguably in very exceptional times and may be at a Turing point in the credit cycle. Will the machines of today be able to predict the effect of a No Deal Brexit?

People, enhanced by machines is a more accurate vision. This is how we see this market developing in the near future: technology’s first job is to provide consistency and efficiency; for the moment, let’s leave judgement to people. www.mortgageintroducer.com

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Review: The The Month Month That That Was Was Review:

Each month month The The Outlaw Outlaw Each draws some some tongue-intongue-indraws cheek parallels parallels between between cheek society at at large large and and aa society mortgage market market in in flux flux mortgage

The Good, The Good, the Bad, the Bad, the Boring the Boring & the Vulgar

& the Vulgar

Right. Thank ***k that’s outta the way for another year (I speak of course of the Christmas TV snorefest and the subsequent dry January. I don’t know which was the more insipid of the two, especially as I fell pretty hard from the wagon in the early hours of 1 Feb! A disgraceful overdose on Bombay Sapphire.

Live ‘n learn.

The evenings are drawing out, Spring is almost in the air, it’s only six weeks ‘til the US Masters and we’re all back on the transaction treadmill again, evidenced by confident pronouncements from lenders and the first intermediary acquisition of the year. Which of course featured two long time industry stalwarts in LSL and PTFS. On the face of it, five million quid appears to be a good deal for LSL although of course watchful punters rarely get to see what is actually under the bonnet in deals of this kind.

For sure, some regulatory liabilities and potential provisions might feature but, notwithstanding, my hunch is that the team at LSL will have recovered their initial outlay in under three years and quite possibly two. A clever bloke that Jon Round and whilst it was amusing to read that three celebrated baggies fans in the industry now “controlled over 25% of its distribution” (admittedly tongue-in-cheek, I accept!) that story may have less resonance once / if the Lord’s David Duffy: Shepherd that is Alan Pardew leads their flock into Quietly dynamic the Championship.

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FEBRUARY 2018

Jon Round: clever bloke

Countrywide: Doing a Pep

The Outlaw actually met Pardew once. He spent most of the conversation looking over my shoulder into a mirror at himself... former players used to call him Chocolate, as Alan apparently loved ‘Pards’ so Natwest: Damascus-like much that he’d even lick and eat himself.

But well done LSL. Back of the net. Cyril style, RIP. “Duffy is grossly needs to dosupermore.

Remaining in theoverpaid, waters of and estate agency Especially on an annual remuneration of £4m at and tankers, it might now take the management in the contextaoffew theaeons company’s 38% sharetheir price Countrywide to turn around own reduction October…” vessel.

It’ssince not exactly listing but it’s lost some Not my words words I’mCEO not sure I’ll bouyancy of late.(and The indeed departure of its could ever utter).

But they recentlytouttered by critics of surely not have beenwere a surprise those within CYBG’s CEO, David whocertainly has been challenged the organisation and Duffy LSL are doing to over the scaleright of his benefits certainly Countrywide now what package.

GuardiolaHe is doing isn’t the first and won’t be last. thing but I take to Moaninho.

Hindsight is the a facile myinpart, I don’t begrudge thetime quietly dynamic noFor merit having remarked at the that the Duffy his rewards. despite ill-considered some service-orientated appointment was aFor curiously one. frustrations recent years Clydesdale been one Executivesin from other sectors such have as Healthcare of the sector’s resounding success stories of the past can indeed sometimes make a difference in financial decade. Fresh ideas etc. But more often than not services.

And“retailing in Duffy’sand slip customer-centric” stream are the likesplays of Charles these don’t Durose and Hornby, his teamanyone?). who have made a real difference. work (Andy Furthermore, picking up the Virgin Money brand Estate agency is about a relentless water-on-ausageapproach. for just £12m an absolute master stroke. stone It’s was unforgiving, uber-competitive It willpretty makemuch a huge the high street and a difference hormonal in sales-fest.

Not a to place Clydesdale. for anyone without tenacity and some cutting edges.

Talking a difference, and scenarios, amid the Oscars And as is of somaking often the case in these season, it’s an opportune moment to accolade a the individuals who originally annointed the ‘David few other leading lights. Firsthave up, Santander’s Moyes’ styled appointment long left theMiguel scene Sard and Brad Fordham. twoany curiously almost of their misjudgement andThese without financial loss share the sameincurred. birthday but there’s certainly no lack to themselves ofIncongruency Santander’s approach.team Their arecent any event,inI wish the Countrywide swift results showcased lender which is still folk veryinmuch resurgence as therea are some talented that on the (Creffield, front foot (especially the FTB sector)but and stable Curran andinLaker to name the mortgage business is behemoth clearly out-too three) and allowing LSLatorthe anybank other performing non-homeloans much slack other is notcommercial healthy for and the sector. departments.

Feliz Cumpleanos to both.

Turning to the lenders, Santander’s results didn’t NatWest willbut be alert this. A yearimpressed. on from meThey totally sparkle they to nonetheless saying lastconceded February, these lendersmarket remainshare may so have some two miniscule the undeniable market on atheir fully balanced but 2017 was theleaders year when January 9 scorecard.

(Though both and Barclays announcement onNationwide PT’s domino’d to become might laythe claim being emergent supporting gift to that keptthe onmost giving, and then some. acts of late.)

It’s quaint isn’t it... how down through the Indeed,years NatWest ‘s ascent of the debacle we can recall out some epicRBS periods has to bewhere the Damascus parable of thewent last 10 years. two scuffling lenders head-toWhich brings us neatly to the New Year’s Honours head.

List and that of former RBS executive, Jayne- Anne Before buy-to-let became mainstream Gadhia who five years there and with regulatory Fred ‘The (and served then went needlessly Shred’ feral Goodwin. under the PRA!) it was the Birmingham Gadhia has been made a dame dueThere to herwas the Midshires versus TMW slugfest. “contribution to women in theofindustry”. mutual hara-kiri outcome the RBS Hhhmmmm. versus HBOS In the interests complete equality therefore, does tear-up and weofalso saw several years of Charcol this mean thatLondon we will shortly see as knighthoods mixing it with & Country a duopolyfor before various men for their contributions to men in the www.mortgageintroducer.com

industry? As a colleague and a leading female executive in our sector recently remarked to me… “this is both patronising and embarrassing to women”. I couldn’t agree more.

In completely unconnected and separate news, the BBC has denied that women are being promoted and salaried according to diversity targets. We are told that appointments are made purely on grounds of talent. That being the case, then somebody there in the human resources department needs to try to enjoy their cornflakes one morning despite watching the over-rated and peacocking likes of Steph McGovern, Sally Nugent and Naga Munchetty totally fail to live up to the previously elevated standards set

by Suzanna Reid, Sian Williams (and indeed by the present anchor, Louise Mincham).

For God’s sake, has the world now got so PC paranoid that the actual BEST candidate for a given role rarely gets the job anymore???!!! And determinants such as creed, colour, gender and age are the common default settings. I despair.

Which is also the most appropriate emotion to Photo: Rwendland summarise this month’s award for vulgarity. Step forward, the driver of the country’s foremost gravy train. Gordon Taylor at the PFA. This dinosaur still trousers £2.3m a year, which is FOUR times what the PFA (with £50m in the bank) paid in benevolent grants to former players who’d suffered lifedebilitating occurrences.

Next month of course Outlaw will be re-visiting the beloved Phillip Green (I don’t use the ‘Sir’ moniker any more as he abrogated that privilege years ago) .

And also, his gobby rent-a-quote sycophant Karren Brady, who refuses to resign from her crassly overpaid role at one of Green’s businesses.

And yet she still champions women’s rights whilst writing in the daily tabloid that made her a page three girl once. You couldn’t make it up!

Back to our world. Where despite the continuation of Project Fear Mk II, the economy is holding up nicely. Witness an annual market projection of almost Miguel Sard: Feliz Cumpleanos

John Major: Captain of the B team

£280 bn, the year on year rise in FTB applicants (+7%), 32 million folk now in work , and almost a million job vacancies.

Even the FCA is getting in on the good news. It has finally agreed to address in greater urgency (!!) the still unresolved matter of mortgage prisoners, and in a separate announcement it is actually going to consult smaller DA firms for their views on the market.

Less positive was the news that sector behemoth, LSL, was closing over 100 agency outlets . In an increasingly digital world this won’t surprise anyone and is good news for those looking to open a vape shop or a nail bar and of course also for those punters looking for mortgage advice which is truly nondependent on a property’s offer being accepted (don’t insult our intelligence, estate agents, by claiming that this still doesn’t go on!!)

The final word (as ever!!) has to go to Brexit. Are we almost there? Under 40 days to go now before the next finger of fudge. And to the latest callow attempt at obstruction which comes from that ever so bland ex-Prime Minister, John Major (yep, the captain of the B Team, and close friend of Edwina Currie.)

I do genuinely lay awake at night dreaming of our exit from this chaotic madness and the “place in hell where that sulky and un-elected buffoon Donald Tusk somehow thinks we will all be roasting our chestnuts.

And you know, I’ve even dreamt up a 93rd minute piece of footie commentary for the early hours of March 30.

All together now (and in the infamous style of the Norwegian commentator Bjorge Lillelien after Norway beat England 2-1!).

“Anna Soubry, Bob Geldoff, George Osborne, Lilly Allen, John Bercow, The BBC, Gary Lineker, Donald Tusk, Leo Varadkar, Benedict Cumberbatch… YOUR BOYS TOOK A BLOODY GOOD BEATING!!!).

Alas, it won’t be a resounding or clean result. But sometimes you just have to take a scruffy 1-0 win in extra time on a mud heap somewhere!?

I’ll be seeing you…

FEBRUARY 2019

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The Bigger Issue

Lloyds Bank has launched a 100% LTV mortgage

Is it a good thing that 100% L Is it a good thing that 100% mortgages have returned to the market? Let me rephrase that and ask, do you think it’s a good thing that fascism is on the rise once again in Europe?

Or, is it good that Smallpox is, Martin Stewart at long last, starting to re-establish itself as a main disease for the 21st director, century? Or try this one, is it good London Money that Manchester United are slowly starting to resemble a half decent football team once again?

Of course, the answer to all four questions is no.

And the main reason for that is the old adage of ‘you should never ever, EVER go “A good lesson back’.

I know many will decry is one that ‘but 100% mortgages were teaches you available before!’ Well yes, and so was the burning something, a of witches and the ability bad mistake is to go to war as a 12-yearold but I don’t see anyone what happens clamouring for a return to when it those halcyon days.

We forget too easily, fail doesn’t” to learn adequately and as result are doomed to continue to dance the human shuffle – two steps forward, one step back.

There is nothing wrong with learning valuable lessons. It is what got us out of the sea and travelling among the stars. A good lesson is one that teaches you something, a bad mistake is what happens when it doesn’t.

We have seen all too well what lax and manic lending can do to the financial system so let’s not go back there.

If you want something, contribute toward it. I daresay you have all purchased something with a sticker on saying ‘only 10% down!’ Well, a house is no different in my opinion. If you want all the upsides that home ownership brings then it is only fair to expect a contribution on your part.

As Thatcher, an architect of private home ownership once said to Europe, we must also say to 100% gearing of any asset: “No, no, no”.

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The average first-time buyer deposit is now more than £33,000, and finding this cash is a huge issue. And while 100% mortgages sound like a solution, the Lloyds Bank mortgage only works if you have a family member able – and willing – to stump up the cash.

John Phillips And if you have that then surely group they would just lend you the monoperations ey for a deposit? I suppose the director, argument is that house prices may Just fall, and the Lloyds deal puts the Mortgages family members’ cash in a 2.5% savings account for the 3-year term, which could well make them much more money than the first-time buyer will make on the house.

There is also the risk that bringing 100% mortgages back could take us back to where we were in the runup to the financial crash which saw lenders offering 125% mortgages to first-time buyers, leaving many in negative equity after the crash.

And there is the potential issue of negative equity.

First-time buyers looking to purchase now, with a 100% mortgage, may find that in three years’ time, when their fixed-rate deal is up, that the house has fallen in value and they owe more “Arguably than the house is worth. this 100% And with economists predicting that following March mortgage is 29 house prices will fall, it is actually less a very real threat.

But first-time buyers risky” drive the whole market, and without them coming in nothing else can move. Therefore, we need to address the biggest challenge – finding a deposit – and this product offers a solution.

This is not the same as 2008, the risk is much lower than the 100% mortgages offered then. Arguably this 100% mortgage is actually less risky than a standard 95% or 90% LTV, because it is only available with a guarantor, so the risk is not all with the first-time buyer.

It won’t work for everyone, but it will help a large proportion of first-time buyers who have that ambition – like their parents before them – to own their own home, and that can only be a good thing.

www.mortgageintroducer.com

% LTV has made a return?

For many it’s a distant aspiration with ever-increasing prices and a short supply of homes. For many prospective borrowers it remains a daunting task to raise the money needed for a deposit, particularly those who are trying to save for a Cammy Amaira deposit whilst paying out rent.

The pressure on parents and sales and family members to help children marketing with deposits is unrelenting. Last director, the year, a Building Societies AssociaTipton Building tion (BSA) report found that 87% Society of its members were expecting the ‘Bank of Mum and Dad’ to help out children with housing deposits in 2019.

With this in mind, it would seem imperative “It is that the mortgage industry does more to help first-time encouraging buyers with affordability and that some it is encouraging that some lenders have already taken lenders have the initiative. taken the We recently enhanced our Family Assist mortgage initiative” to help first-time buyers onto the property ladder.

We now accept a cash deposit from a family member into a specific savings account. With this option, the property is secured and the parent earns interest on the deposit and can withdraw it once the property reaches 80% LTV – subject to an independent valuation. Alternatively, the parent can secure their child’s property against their own home with what’s known as a ‘collateral charge’.

These options offer something for those parents who don’t have cash funds available and for those who do. Alternatively, parents and family members could consider our joint borrower sole proprietor approach, which takes into account both the parent and child’s income, but only names the child on the deeds – thus avoiding an additional stamp duty bill for the parent.

We take the view that our Family Assist mortgage provides a viable solution to first-time buyers whose parents want to help, without gifting large sums for a deposit.

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Whichever way you look at it 100% mortgages are contentious and rightly generating debate in the market and beyond. No one should forget the pre-financial crash where 100% mortgages were common, in a market which also featured selfcertification and an erroneous belief Paul by some that house prices could Broadhead only go one way. Lessons were head of learned then that rightly give major mortgage pause for thought now. But today policy, Building we also have a whole generation of Societies young people, many of whom may Association never become homeowners due to incomes that aren’t keeping pace with inflation, coupled with high house prices driven by a chronic lack of housing supply. Let’s start with the fact that 86% of us want to own our own homes and that 70% of the public see homes for young people as one of the biggest issues in the UK today. Add to this the decline in homeownership, down from 71% to 64%, and that’s a potent mix. Whether it’s for consumers or based on self-interest the market needs to explore solutions – the reason we commissioned our report into intergenerational mortgages.

For those fortunate enough to have financial support from family – the so-called Bank of Mum & Dad – 100% mortgages are already available. While straight financial gifts may “The search for be most prevalent, collateral ways to help charge, guarantor and joint borrower, sole proprietor will continue. products are being actively 100% lending marketed and work well.

It is harder to assist those is not it” without financial support who need a no-deposit loan, a topic that we are exploring with Frank Field MP. It is difficult to explain to an individual whose monthly rent exceeds the mortgage payment they would pay if they bought, why they can’t have a mortgage. For lenders, risk appetite, regulatory ceilings, the cost and availability of MIG insurance, stress tests and the risk of negative equity are genuine bars. The debate and search for ways to help these would-be home owners will continue – general 100% lending is not it.

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Interview

It’s who you know In January ex-Coreco director Rob Gill unveiled Altura Mortgage Finance, a brokerage focusing on international clients.

Ryan Bembridge caught up with him shortly after the launch Rob Gill is a man of varied experience. After studying economics at university he worked in investment banking for Japanese company Nomura between 1997 and 2005, covering markets including Hong Kong, Singapore, Taiwan and South Korea. He went on to provide mortgage advice to professionals and high net worth buyers at Cobalt Capital between 2006 and 2009 before joining forces with five others to co-found city brokerage Coreco Group, where he worked for nine years until last year.

After a spell working in foreign exchange for Mercury FX in April 2018 he started his new venture, Altura Mortgage Finance, this year.

The proposition

Altura will have a strong focus on overseas customers looking to purchase UK property, while it will also cater for mainstream residential and buy-to-let clients.

“International clients will be a nice niche that’s interesting,” Gill says. “They will be higher value cases even if they’re not big cases because we will charge higher fees for a specialist service.”

He says expats primarily target London and the South East, while investors in Asia are likely to look at Manchester and Liverpool for the best yields. He reckons international investors have heard of the latter two cities because of their football teams and musical legacies. Despite this international angle, Gill says he’d be foolhardy to neglect UK customers which, he says, will be the base of the

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firm’s pyramid.

The company was named Altura because it means ‘altitude’ in some languages, which Gill feels has connotations with adventure and altruism.

Leaving Coreco

While Gill may be most recognisable in these pages as a former director of Coreco, he stresses that the intention of Altura is to find its own market rather than trying to emulate his former business.

“I very much enjoyed the startup process of Coreco,” he says.

“We started in a very tough time in April 2009; I’m very proud that in a relatively short period of time we became one of the betterknown mortgage brokers.”

All good things come to an end however and he left in April 2018.

“We had a good clean break,” Gill adds. “I haven’t spoken to any of them in a year or so, but they all wished me luck when I left and Monty [Andrew Montlake] wished me luck with the new venture.”

Mercury FX

Mercury FX, a Coreco client, approached Gill after he left the broker.

“They said ‘we enjoyed working with Coreco but we don’t really have any other mortgage brokers or property people that we deal with… we’d love more mortgage brokers’,” Gill remembers. He signed up around 30 business partners, mainly mortgage brokers, wanting to use the foreign

exchange service.

Gill’s time at Mercury reinforced the idea that there was an opportunity to cater for the mortgage needs of international clients.

Many would tell him ‘I need to get a mortgage as well’ but he couldn’t help them because he was working in foreign exchange rather than as a broker.

At the time of speaking to Gill he was handing over his role, which included managing these referral relationships, to other members of staff at Mercury.

However, Gill plans to keep the link with the firm alive, as international clients commonly need to exchange currencies.

He currently has a virtual office within its London HQ – he has a desk, a phone, five hours of meeting rooms per week, while the company that services the office handles his post.

Gill co-founded Altura Mortgage Finance with James Hughes, whom he knew from his time in investment banking.

Hughes has had a varied career of his own, working in Hong Kong, where he still has a stake in two wealth managers, before launching financial planning business City Trading Post, now Black Swan Capital. He also started a private equity business called Buchanan Capital, where the model is to work with global SMEs and IFA wealth managers.

It was Hughes who first introduced Gill to Mercury FX. “We were friends, contacts and occasional discussers of business,” Gill says. “When I left

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Interview

Coreco he saw an opportunity to start a new business to service these clients.”

Gill says Hughes – who is still based in Hong Kong – is involved in logistical support, driving much of the international focus for Altura.

Brexit vote mean some properties in Central London are around 40% cheaper compared to 2014.

The only question is whether the pound’s value will fall further or strengthen, depending on what happens with the UK’s departure from the European Union.

Hong Kong and China

Dutch link

Gill is looking to take referrals from Hong Kong with the help of Hughes.

Despite Hong Kong’s population being between 7-8 million the expat part is relatively small and the community tends to know each other, according to Gill.

He quips that Hong Kong is quite an aggressive environment.

In the past he’s landed in the city at 5pm on a Sunday and had his first meeting at 7:30pm, followed by meetings from breakfast to dinner all the following week.

“Things can happen quickly and I’m confident we’ll get referrals through quickly,” Gill says. “A lot of people who move to Hong Kong as expats are very keen to retain strong links to the UK.” Expats commonly spend six months in Hong Kong and six months in the UK after retiring to avoid the bad weather in both places.

Gill had already came across such a client, but they’d bought a property in the UK before Altura came along – with a relatively expensive mortgage from an expat lender.

“It shows why they should be going with a broker rather than direct,” Gill adds.

Gill has also set up a partnership with specialist packager Thistle Finance, launched in 2017 by director Mark Dyason, to help Chinese clients.

The pair are working with an introducer in Shanghai called Alethaa Finance, with around 200 clients who want to complete on new build property this year.

Gill reckons this is a good time for overseas clients to buy in the UK. Price falls and the devaluation of the pound following the

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Gill is in talks with a wealth manager based in Amsterdam, as well as the second biggest broker of expat mortgages there, to target the expat market. The plan is to service the Netherlands and Belgium as well as potentially other EU countries.

Speaking of the EU, Gill says Brexit will make this European link potentially more profitable.

“Brits are moving to Amsterdam because of Brexit,” he adds.

“Some neighbours of ours are moving because their business needs an EU hub. They moved there in the summer.”

Early deals

Gill says his first Altura mortgage deal is likely to be for a firm in Portsmouth with a large lending requirement requiring a private bank. This is a residential mortgage with capital raising for business purposes.

Secondly, he plans to help his sister purchase a new home; after that he expects to have expat deals from IFAs in Hong Kong and the Netherlands.

While it’s early days for Altura, Gill currently operates from three places in London: Mercury FX’s office near Bank, at home in Finsbury Park and in a co-working space called Work.Life in Camden. As his son goes to school in Camden the latter space allows him to effectively turn the school run into a commute.

This may change depending on how many staff Gill takes on this year. The plan is to have six to eight advisers within 12 to 18 months, though currently Gill is the sole adviser.

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Other partnerships

Gill has revived his relationship with SortRefer for remortgage business after he originally helped sign up the conveyancing portal while at Coreco. He is also working with London-based Leadenhall Law Group LLP, which itself has an international focus, while being in talks with an insurance agency for protection and potentially general insurance. He also has an agreement in the pipeline with a broker in London who, he says, would be a good fit for expat clients in Hong Kong and Singapore.

And technology-wise Altura will use Twenty7Tec’s MortgageApply system, while Gill is using 360 Dot Net’s client portal so customers can complete an online fact find in their own time.

“My ethos at Coreco was that you need to maximise opportunities when clients come to you,” Gill explains. “If you can, refer them to a good insurance partner, a good solicitor and a good surveying partner.”

Who you know

They say life is about who you know and Gill is a case in point.

He says he’s learnt there are more ways you can work with brokers than simply employing them. He wants to revive the practice of wealth managers dealing with mortgages through referrals, joking that he’d rather work with them than estate agents.

“I have some good contacts in mortgage broking,” Gill says.”Generating referrals is what we want to do.”

His aim is to establish Altura as a one stop shop for international clients. Should things go his way, clients with Altura will be able to remortgage in England, get a mortgage on a house overseas, deal with currency exchange via Mercury FX and move pensions and investments to another country.

It’s a lofty ambition and it remains to be seen how Gill and Altura fare in 2019 and beyond.

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Cover

A Young man’s game Robyn Hall talks lending, broking and covenyancing with Aventria chief corporate officer Alan Young The tail end of 2018 saw the return of Alan Young to the conveyancing market as chief commercial officer of Aventria Group.

Young is well known in conveyancing circles, and beyond, having spent nearly seven years at ULS Technology.

And if you don’t recognise him from his spell at ULS as business development director or as regional sales manager at GMACRFC, you may know him from his time on the pitch.

Before getting into financial services Young was a professional footballer who played for Swindon Town and had a stint at Celtic before an ankle ligament injury drastically halted his progress. He eventually retired aged 22.

He’s now hoping to put in a winning performance with Aventria - a conveyancing panel management solution.

Robyn Hall caught up with Young to find out what makes him tick.

finished playing football in 2002/3 following an injury. I had been out on loan at Celtic playing under Kenny Dalglish as well as playing for the England under 18’s and 20’s, and all was good.

There was even talk in the local press that Arsenal was going to come in and make an offer form me. As you can imagine I was getting excited about it.

However, when I went back to Swindon I dislocated my right ankle in a practice match.

Once that happened it became too easy for players to catch me – which was something they couldn’t do before – and training became painful.

The person that took me out was a Scottish trialist coming to the end of his career; I was quite quick around his toes and think he got the hump and just took me out. He was given his marching orders and told to pack his bags and leave.

After that I knew that there had to be something more to life than this. I’d not been to college or university, so I started to look at my options.

Robyn Hall: Before you joined the finance world you played professional football. What happened to make you change career?

RH: So how did you get into financial services?

Alan Young: It came about after I

AY: My Dad had been in the

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industry for a long time and was very close friends with Stephen Knight, who was chairman of GMAC. As the story goes my Dad had a meeting with him and Barry Searle (managing director of operations at GMAC) and they asked to see how I was doing and about coming to see me play football.

Dad explained that I had had an injury and was looking to come out of football; Stephen asked what it is he wants to do to which Dad replied, “he has no idea”.

Stephen offered me the chance to come in and have an interview with GMAC. At this time I had no clue what a mortgage was!

RH: So obviously the interview at GMAC went well. How was your time there?

AY: I was living in Swindon and the job was based in Bracknell so I was probably spending more money on petrol than I was getting paid. But it was worth it for me it was all about learning a new trade, getting out of the Swindon bubble as I did.

One of the key things for me is that I did not want to be seen as an injured footballer.

It worked really well and I had 

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Alan Young, chief corporate officer, Aventria OCTOBER 2018

MORTGAGE INTRODUCER

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a good nine to 10 months in the call centre answering calls from brokers to solicitors to customers.

The role gave me a good grounding and helped me understand the wants and needs of both the stakeholders in the process and customers.

RH: So how did you make the move to sales?

AY: Once I started working at GMAC I realised that the sales side of the business was something that I would like to get in involved in. So when a telesales role came up I jumped at the chance.

I worked covering the north of England as a back up to the BDMs. It was a role that I did for around seven to eight months in total. It was at that stage I started looking at sales as a career rather than just a 9 to 5 job.

RH: How did you make the step from office-based telesales to BDM? AY: Godfrey Blight (managing director for sales and marketing at GMAC) called me in one day to ask me what I knew about Nottingham. At that stage my knowledge extended to the fact that I had played football against Nottingham.

Godfrey told me that there was the opportunity to become a BDM covering that area along with Derby, Leicester and Stoke.

He said I could go away and discuss it with my family but I took the job straight away. I relocated and loved it.

It also made me the youngest BDM to work for GMAC which was a great achievement.

incredible company to work for.

My time there helped me learn how a business is run and I feel that I was able to both learn an take certain qualities from the different individuals.

RH: In 2008 you joined McCurrach as a business development manager. How big a change from GMAC was that?

RH: So how did you find your time in the midlands?

AY: My brokers became my friends and effectively the business flourished was fantastic. The experience we had behind us with the likes of Stephen Knight, Godfrey Blight, Peter Izard and Barry Searle made GMAC and

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AY: McCurrach is effectively an outsourced sales team and companies go to them as they have a team of BDMs that can fit with your business. Although I was at McCurrach I was working for MGM Advantage.

MGM Advantage was a pensions and annuities provider so it was great for me as I was still dealing with IFAs and brokers.

However, it also helped me learn a different skill set and a whole new way of doing things.

AT MGM I mainly worked with IFAs who were experienced in investments and pensions.

They have a different character compared to a mortgage broker.

It was a great learning experience but I knew it was not something I wanted to stay in if I am honest.

RH: So how did you enter the conveyancing space?

AY: It came around a little by accident. I had a game of golf with Nigel Hoath, the founder of eConveyancer and we hit it off. We found that we both liked the same things such as football and have very similar personalities.

By about the 16th hole he said he had the idea of eConveyancer, which would subsequently become ULS, and had asked me to head up the sales. That was where the journey started.

RH: So how was it when eConveyancer came to market?

AY: It was a great job to have as nobody else was out there doing conveyancing in the way that we

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did. Now you have the likes of Sort Refer and Broker Conveyancing but back in 2009 you only really had eConveyancer and Goldsmith Williams.

Back then it was about making brokers aware that they could have another revenue from conveyancing.

Once we landed Sesame and Openwork it snowballed. I didn’t have to sell it, people came to me.

RH: Did you ever ask your Dad to help you open doors?

AY: To be honest I think the product stood up for itself. Brokers want to make more money and it was a great opportunity to do just that.

Don’t get me wrong it was great for me that my Dad was so highly thought of in the industry.

Of course, a lot of people knew him so they would talk to me about their relationship with him.

To an extent relationship were built instantaneously and there was a trust there. However, personalities and families will get you only so far. You need to know what you are talking about as well.

RH: You were at ULS when it floated. How was that as an experience?

AY: When we floated it was an amazing experience. We were pretty much the first broker business to float and as you can imagine it was a really interesting time to be involved in the business.

Also as part of that process Ben Thompson joined ULS. I spent about two and a half years working with him and he is another person I was able to learn a great deal from.

RH: So why did you leave ULS? AY: Post float businesses are very different, so I had to decide where I wanted to go. I had the mortgage lending experience from GMAC,

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the conveyancing side from ULS and all I was missing was the broker side. It’s always been a side of the business that has fascinated me so when the opportunity to join John Charcol came up I was obviously interested.

I initially joined as director of partnerships before being promoted to chief commercial officer. It was great to see the broker side of the industry and be on the board of a regulated business.

RH: How big a business is Aventria?

AY: Well we have our own asset management and probate business alongside the conveyancing team.

We employ 27 staff in total and we are continuing to grow as a business.

However the conveyancing panel management system and asset panel management system are run as separate businesses.

It’s amazing how things grow and develop.

We are looking forward to replicating our current success on a bigger scale.

RH: So how do brokers use the system?

AY: Well L&C use us as an API integration. The broker does a fact find with their customer and in th background it will come up with client name, loan amount etc and generate the price of the conveyancing instantly.

There is no having to log in to different systems and having to re-enter information to get a quote. It can be labour intensive with some systems. We take away the pain on that front.

There is more to come from us so watch this space.

RH: What else would you say makes Aventria an attractive proposition to brokers?

AY: With conveyancing it is about having the right relationships with FEBRUARY 2018

both the introducers and suppliers.

For the introducers it is about getting the best outcome for their customers.

The whole ethos around Aventria is that it’s a fair approach for all.

RH: Where do you see the future of the mortgage market?

AY: Broker distribution will continue to grow. I look at the baby boomers, peoples buying habits have changed massively, people want to make an informed decision.

That is where you see the likes of MoneySuperMarket and Compare the Market flourish as platforms. Gone are the days of people staying loyal to the one bank they have been with for 25 years thinking they must have a great mortgage.

Brokers have a great future ahead of them.

RH: How do you see the remortgage market?

AY: It’s all cyclical. When I was at John Charcol we could see remortgage business growing month-on-month. It will level out eventually.

Everyone is currently sat on their hands with the uncertainty around Brexit. We are seeing lenders reducing their rates to make it more attractive for customers to lock in. They are dipping in and dipping out to fill up their loan books.

RH: You mentioned the B word - what impact will it have on the mortgage market and your business?

AY: I wish I had a crystal ball! What I will say is that in general there has been a spike in business as people look to make sure they are in the best position they can be before it happens.

It’s all still in the air so all we can do is wait and see. Maybe if we did have a crystal ball we would all be a lot better off!  MORTGAGE INTRODUCER

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Round-table

Market matters Our panel of experts assess the opportunities for 2019 and talk about lending levels, mortgage rates and regulatory hurdles Ryan Bembridge: In January the FCA unveiled plans to introduce ‘relative’ stress tests to help ‘mortgage prisoners’. These are prisoners with lenders who are inactive or not taking on new business. Do you support the proposal, and do you have any reservations?

as one reason for not doing it.

Ray Boulger: I would be surprised if anybody here doesn’t. It’s always been nonsense that lenders can say to somebody ‘you can’t remortgage onto this cheaper deal because you can’t afford it’. But it’s also worth looking at the porting side of it too.

There was an interesting case in The Sunday Times where HSBC wouldn’t allow a customer with a 5-year fix who wanted to have a smaller mortgage to port a mortgage when moving home. HSBC didn’t allow them to because after they took out the original mortgage they had a child which mucked up the affordability calculations, so HSBC effectively said ‘you can either stay in this property with your current mortgage which we think will be even less affordable than the one we won’t let you have and if you want to stay with us, that’s your only option’.

That’s a stupid situation and the FCA needs to look at the porting system.

If they’re going to change the rules for remortgaging it would be logical to change them for porting too.

RBembridge: Is that down to the FCA or individual lenders?

RBoulger: A bit of both. Clearly lenders would have the option of using the new rules or not. I suspect HSBC would’ve used the FCA’s rules

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Craig Calder: I agree. There’s no good reason for a customer to take a smaller mortgage if they’re falling foul of the rules, providing the LTV is increasing and the mortgage decreasing. It’s common sense for the lender to do that. The only piece for me that doesn’t quite work potentially with the new rules is if there are customers with negative equity because they can’t go anywhere. So with the lenders that no longer do new business, what’s going to happen with these guys that might get a cheaper rate elsewhere but are in negative equity? So I’m not sure if the rules pick up on that.

120,000 are dissatisfied, a proportion are and quite rightly so, especially when it goes against common sense.

AS: It’s currently difficult for lenders to put common sense practices into their lending though.

Aaron Strutt: You just know these 120,000 people must be unhappy with their situation.

RBoulger: I don’t see why. The FCA needs to give lenders the ability to exercise common sense if they want to and then lenders are confused if they want to or not.

The computer-driven lenders may find that more challenging than the smaller lenders but that’s fine, we don’t need every lender to do everything, we just need them to have the ability to do it. I think the government needs to accept some culpability in this. Although I find the 120,000 figure surprisingly quite low, a significant proportion of people that are stuck with inactive lenders are stuck because the government chose to sell their book, their mortgage, to a lender who was inactive or unable to offer a product transfer. In my view there’s a conflict between what the FCA are trying to achieve in terms of treating customers fairly and what the government want to achieve in maximising proceeds for the taxpayer.

BP: Going back to the Market Study and those with active lenders, there was an even larger cohort of borrowers paying higher rates and not thinking about refinancing. And sometimes that may be reasonable like if they have a low outstanding balance. It’s not necessarily the case that all

CC: If you’re with a lender with an on-sale book, you can’t hide behind the common-sense argument. You shouldn’t be putting someone through the affordability test if they’re just doing the product transfer with you. It’s trickier with those guys underserved that no lender would take on because they

Bob Pannell: You’ll have a situation where people’s circumstances will have changed between taking out the original loan and wanting to refinance. And this won’t be a blanket solution for everyone but clearly it’s a nudge in the right direction. We don’t know the circumstances of the 120,000 mortgage prisoners and nor does the FCA in great detail.

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Round-table

(From L to R) Dale Jannels, Impact Specialist Finance; Alan Young, Aventria Group; Bob Pannell, Intermediary Mortgage Lenders Association; Rachel Geddes, Mortgage Advice Bureau; Ashley Jones, Mortgages for Business; Ray Boulger, John Charcol; Aaron Strutt, Trinity Financial

have no money coming in. Even if you relax the rules if they have no income coming in, they can’t afford the mortgage so there’s chunks out of these books that have to be taken into account.

RBoulger: And for some of those borrowers the only solution may be selling the property.

RBembridge: The FCA also said it depends on lenders making a commercial decision about taking on these customers. Do you expect the mainstream lenders like Barclays to take them?

CC: I’d need to see what the rules look like. It’s not a yes or no answer, there’s lots of cohorts that sit within.

Whatever happens, the customer still should be able to afford their mortgage, at some sort of stress rate given the economic uncertainty.

Whether the stress rate of north of 7% is right for those customers is a different question. I think we need to see what the rules are then adjust accordingly. I think there’s a place for most lenders to take a slice of those customers on.

AS: At the moment it’s the building

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societies that would probably help some of them rather than the bigger banks.

CC: We all have the same stress tests for affordability. Is it the rate you have to stress the incoming mortgage on or the types of income you can take into account?

It depends on what the rules will be.

RBembridge: What do you think will come out of the consultation?

Ashley Jones: People might be getting a bit frustrated that they’re on an awful rate and the stress test doesn’t allow them to get away from that. If they’ve been on that rate for seven or eight years and have paid those payments then why shouldn’t they be allowed to move away from it?

CC: It’s the same as the FCA not allowing you to take rental history into account. You could have paid £15,000 rent for years and the mortgage is £900 a month but if they fail the affordability test they can’t get the mortgage. That needs to be worked out and I think that will come up in this.

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Alan Young: I’ve got friends that have rented for years and now have the deposit but aren’t taking this into consideration. I think it’s a ticking timebomb.

RBoulger: There was one lender until the banking crisis who was prepared to use rent as a way of underwriting a mortgage. Saffron had a product whereby if you paid rent for 12 months you could have a mortgage, a 5-year fix rate. I thought that was perfectly sensible.

One of the problems with the current affordability test is it assumes everyone is only prepared to allocate the same proportion of their income to their mortgage as everyone else. If someone is prepared to pay half their income on the mortgage and have no holidays why shouldn’t the FCA allow them to do that? Allowing people who’ve demonstrated they’re prepared to spend more of their income on housing by paying more rent is a good opportunity to widen this out with the consultation.

AY: If someone’s paid that on an ongoing basis and they’ve never missed it, that’s an absolute  MORTGAGE INTRODUCER

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perfect opportunity for them to say they’re a good customer to lend to.

ately pass that through our test.

RBoulger: The flexibility lenders have on stressing fixed rates on 5-years and above isn’t used by many for residential cases but is used quite a bit for buy-to-let so lenders have some flexibility they aren’t using. I think one of the reasons for that is the rule you can’t do more than 15% of lending above four and a half times income.

CC: I think the FCA published a response, saying if you pay monthly rent it doesn’t take into account property repairs, maintenance, ground rents, which is fine but you can still build all that into the affordability test.

BP: The PRA would counter by saying although interest rates aren’t likely to rise by much over the next few years there are other adverse changes and circumstances where you might need extra slack. But you’re right, there are those who’d like to be able to pay more to their mortgage if they could but the PRA is looking at this macro picture and what if scenarios, like if there’s significant unemployment and loss of income.

CC: No, you can cap your income multiple separately to your affordability. You can have little affordability and qualify for four and a half times income but the affordability means you’re capping them at three and a half times income. The two are linked but you can apply one rule over the other.

RBembridge: Why do you think it’s taken them so long to do anything about this?

CC: There’s no difference in applying the current stress test to other scenarios. You might apply a stress of 7% to a mortgage now but if someone’s income disappears it doesn’t matter what you stress it at, they can’t afford it.

RBoulger: The FCA said it’s down to the Mortgage Credit Directive.

They’re now saying they have more flexibility under this than they previously did.

AY: But what’s the purpose of this 3% stress test rule?

BP: It used to be calibrated around how much people’s income would be earmarked to people’s mortgage payments.

AY: But that’s changed a lot so it hasn’t evolved as time has moved on.

CC: The MCD is much clearer to say you shouldn’t be applying any discretion, but I don’t know whether they’ll use something that trumps it. It’s down to how they define mortgage prisoner.

Dale Jannels: Is this also down to how the transition rules didn’t really take off as they were supposed to?

CC: Possibly. The transition rules as a lender were very hard to work through.

DJ: We need everyone to be encouraged by the FCA to take this on board because otherwise only a few lenders would want to do it. The FCA can’t mandate that but could give a decent reason to.

CC: I think the reason will be real clarity on the rules on what you can do, but they’ll still be an overlay on the types of customers you can take because you wanted to see the longevity of the customer. The size of the market means they’ll be different players at different strengths.

Rachel Geddes: When comparing like-for-like remortgages on residential, there are some lenders like Santander that are giving higher income multiples they’d normally offer to allow customers to get the income they need on the stress testing to get a better rate.

Some lenders are finding a way around it.

CC: It’s the affordability, not the income multiple. If they’re saying you need to be able to afford this mortgage at a stress rate of 3% above your SVR then that will be capping customers on affordability on most cases, not the income multiple. If you can’t afford it on a

RBoulger: I think The Bank of England should reassess the stress test whenever there’s a Base Rate change.

CC: We have to almost immedi-

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stress test then it doesn’t matter how much they earn.

2019 the key will be the level of housing transactions and that looks like it’ll remain flat. Whether we end up leaving on March 29 or not, that’s just the first stage, there’s still another 21 months where the real negotiations happen. If transactions are low because of uncertainty, that’ll continue for about two years. I think housing transaction levels will remain fairly flat and with flat house prices, that suggests purchase lending will be flat and of the £10bn increase or so of lending we’re expecting, most of that will be from remortgages.

RG: There’s some flexibility from lenders but that’s the minority RBoulger: And you can judge it by not treating some items of expenditure as committed expenditure. There are a number of opportunities lenders have to improve the situation.

CC: School fees and childcare are contentious ones. The PRA for buy-to-let says school fees should be taken as commitment while the residential rules don’t suggest whether they should or not be.

RBembridge: Will mortgage lending by value increase or decrease from 2018 given the uncertain conditions in the market?

BP: We’re now in difficult territory and not solely because of Brexit. In 2008 the market in some senses was flattered by a very buoyant refinancing market, both remortgages and product transfers. I’m sure we’ll continue to see some growth in refinancing this year, although it might not be the same rates of growth we saw in 2018.

There’s still quite an attractive refinancing market with low rates, competition and lots of good opportunities to refinance. The house purchase has been softening for a number of years and even for first-time buyers the numbers look fairly flat in the second half of 2018. With Brexit different surveys talk about the dramatic effect it has on sentiment and people have been largely sitting on their hands. None of us know how long this Brexit uncertainty will continue. People can’t

put their lives on hold forever so at some point if activity is being held back currently, some of that may be served, whether in the second half of this year or later. It’ll be a strange year where refinancing is robust and house purchase activity is caught up in all these wider uncertainties but has the potential perhaps in the second half to show a more resilient side, so lending numbers overall are hard to predict.

CC: There’s so many outcomes.

Nothing could happen and the market stays the same. Some think it looks awful but the remortgage market is strong with people looking to longer-term fixes, or the purchase market may pick up.

RBembridge: Given that you hear 5-year fixes are now more popular, could that spell trouble for brokers who are used to getting business every two years?

RBoulger: UK Finance has forecasted a sharp reduction in 2020 for that reason. Looking at

AS: Every lender that’s come to see us over the last few years have said their lending targets are up and they’ll meet them by lowering criteria and rates. That can’t go on forever.

AY: The other opportunity is for the good brokers to make hay with remortgages, when you’re working with rate roll-offs and referrals. If a 5-year fix is right for the customer, absolutely but you need to work the rate roll-off too.

The stronger will survive and get bigger and better while the smaller ones trying to pay for purchase leads won’t get there. More will go directly to brokers because people’s buying habits have changed massively and there’s a mistrust now with banks direct.

Price comparison sites have been successful as people want to be able to make an informed decision and there’s never been a better time for brokers to have the whole of market independent.

DJ: The world of technology now is making it so easy when coming to the end of a rate product. We had one where a client was four

Day 1 remortgage applications available on residential cases

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months out from their product maturity date and they were given a three week deadline by their lender to make a decision. If the client is naïve and doesn’t know what they’re doing, they’re just seeing a deadline to get the product. I’m raising it with AMI because I think it’s wrong and they shouldn’t be pressurised.

AS: Some of them can’t move though, like if they’ve had children.

CC: That’s different, I mean in a like-for-like way – that’s a disservice.

RG: During the recession brokers were desperate for business so we were all regularly talking to clients.

It’s a half decent market and brokers have got lazy again, not keeping their retention. The ones that continue doing it are the ones that did it during the recession and will continue doing it. We talk to clients six months before their deal expires in case their circumstances have changed or they want to move.

RG: A lot of brokers still won’t contact their clients until the end of the product.

AY: At my old company John Charcol we were starting off at six, four months. It’s that mindset.

Many brokers are so bad at doing that and are just expecting it to come to their desk and it’s amazing how many do that. I think the best brokers who can contact their clients in advance will continue to flourish.

it. If they land on an SVR we’ll get the blame. We don’t say you have to come to us, we say there’s phone, branch, broker and internet, choose your channel. The important thing for us is for them to do something, not just land on an SVR.

RG: In this uncertain market clients are nervous and are just seeing negativity. You need to review what they’re looking to do. We stay in contact with our clients three months after completions four or five times a year because circumstances can change and if you’re not in close contact with your clients you’ll lose them. Brokers need to take the responsibility and go back to owning their clients.

RBoulger: The fact it’s easy for customers to just go online and click is a challenge to brokers but there’s an opportunity for brokers in the product transfer market because the split between advised and execution-only is quite close to 50:50. Even in a flat market of total lending I think there’s an opportunity for brokers to focus on the product transfer market. We’ll give the advice and the comparison.

DJ: I agree but you’re the exception. In the retail market people go to a shop, see something, then buy it online. I don’t agree the number of mortgages going through brokers will reduce but I don’t think it’ll increase either at the moment.

CC: I don’t know how brokers advise clients to go to lenders that have product transfer rates at 30 basis points higher unless it’s an affordability issue. Some of these lenders have great success with brokers because they pay a full proc fee or are just introducer proc fees.

CC: We do write to customers three months out because that’s our duty of care, not all brokers do

Help to Buy Equity clients can select a product from our standard range

CC: I know a broker who doesn’t deal with new clients and has a client bank of about 5,000 and only does remortgages and product transfers with them. He knows he has enough business before retirement.

AS: I was around during the last recession and it was a nightmare.

Those brokers who were around then don’t want the same thing to happen again so they’ll try harder to get cases through. I think it’s probably some of the younger brokers that don’t realise some lenders have sent emails saying they’re not lending anymore.

RBembridge: There was a Bank of England report published last year about where customers are in terms of debt levels and being resistant to economic shocks. What did you make of it?

BP: Looking back over the last 10-11 years post financial crisis, most of the debt metrics are hugely better than what they were.

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Mortgage credit growth is positive.

It’s taken a long time to grow quite modestly. It’s a very well-behaved mortgage market in terms of growth. Arrears are the lowest in 30 years, the BoE was saying there’s less exposure to high debt income ratios and high debt service payments so there’s a relatively small number of households registering in the survey as having immediate problems or pressure. Mortgaged households are also in a much better position than those renting as they tend to have a wider range of coping strategies and now much more borrowing is on fixed rates and there’s much lower rates so easier debt servicing costs.

There are much more stringent affordability tests. Debt levels are in a reasonably positive shape.

Whatever Brexit scenario you favour the likelihood is we’ll see policy rates being low for longer. It looks like over the next few years they’ll be a process of gradual rate increases that won’t dramatically stress large numbers of households. Unsecured debt levels have grown quite strongly over recent years and some of that is beginning to abate again and some is spread over mortgaged households. There’ll always be pockets of greater sensitivity to adverse shocks and interest rate rises but it feels like mortgaged households are at a reasonably resilient place.

If there’s interest rate increases most are on a fixed rate. The vast majority of people will overcome most things that’ll arise over the next few years.

extent by swap rates. Gilt yield rates are mostly the same to a year ago except short-term gilt yields have gone up a bit, reflecting the Bank Rate increase of 0.5%.

Long-term gilt yield are mostly unchanged year-on-year, so 5-year fixes are looking more attractive because the spread between short and long-term rates has narrowed.

I think it’s an open question as to whether the next base rate move will be up or down and if it is up it’s quite likely it won’t be this year. One of the positives from Brexit for borrowers is mortgage rates will remain low for longer.

CC: I think the differential between a 2 and 5-year are so low now that it’s a bit of a no-brainer to pay a few basis points more.

AY: If a customer is coming off a 2-year fix and looking to do a product transfer, it’s a great way to talk to a broker. Mortgages are sold and not bought. Two years can still be a long time, circumstances can change.

DJ: I think the 5-year fix is more of

RBembridge: How will mortgage rates shift this year?

RBoulger: The pricing of fixed rates will be dictated to a large

a hit on the buy-to-let side because they need to hit the rental incomes and any broker who’s just purely doing buy-to-let will have a gap at some point if they’re not careful, because there’s only so many 5-year fixes they can do for their clients.

AJ: I think we’ve seen especially from specialist areas like holiday lets, some lenders have lower stress rates for 5-year fixes which is interesting. If you’re predominantly going towards 5-year fixes you have to be smarter with your business, generating your leads.

The newsletter we do is really successful and works – we get phone calls off it and it generates some interest.

DJ: You have to keep your customers aware and there’s a few 5-year fixes out there with only 3-year ERCs which gets the best of both worlds, you can have the longer-term deal and move on a short-term.

AY: You keep your customers up to date which is because you’re good. A lot don’t.

RBoulger: Or even better, a 5-year fixed with no ERCs. I think Coventry is the only lender that consistently does that. It only charges 20 basis points to have no ERCs which for most borrowers is a price worth paying. It’s looking where lenders can do something that makes them a bit different, like maybe a 10-year fix with no ERCs. You could have a slightly higher rate for it.

RG: And brokers would be happy with that because it’s giving them the flexibility they want but taking away the uncertainty of the next 

Up to 90% LTV available for like-for-like remortgages

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three years or so where we don’t know what’ll happen.

service its clients and then came back in when the time was right.

AY: And that’s where the broker becomes invaluable to make clients aware of the options.

RBoulger: The money Fleet had must’ve been used up quicker than expected, so it surprised me it didn’t put rates up to slow it down because that’d be better than pulling out of the market, which makes me wonder if they expected to sign this new deal quicker than they did.

RG: Some brokers just rely purely on lender sourcing systems for information. Brokers still have to be brokers and have to be good at what they do and be consistent and keep in contact with clients.

You have to keep in contact with clients and do what you should be doing on a regular basis, not just when it’s gone wrong or quiet.

AS: Is there still positivity for the sector?

RBembridge: It looks like Secure Trust Bank will be exiting the market for now and Fleet stopped lending and is set to start again. Is this the start of a trend or shouldn’t it be blown out of proportion?

AY: People like Bob have lived through the recession and I think it’s a coincidence it was one day after another.

DJ: And I think right now that type of market that some of these lenders are going or leaving temporarily is actually the biggest opportunity the mortgage industry has right now, with the complex side, the heavy complex buy-tolets, confusing scenarios, adverse and so on.

DJ: I think it’s unknown. Seeing two lenders withdrawing funds and pulling out of the market was a real déjà vu of 2007/2008, but now the status of some lenders and the way they get their funding is totally different and they’re a lot more stable. This news is just proof of what uncertainty in the marketplace is providing some lenders with cost of funds.

RBembridge: And some mainstream lenders are going into those areas.

AY: Secure Trust Bank dipped its toe in with a ‘let’s see what happens’ approach while Bob Young is very wise and experienced. I believe what he says, that they’re just waiting to get a new funding line. I think it was just timing. Secure Trust made an announcement and then the next day Fleet made another announcement. Having lived through the recession and seeing what lenders do, I have no concern at all.

DJ: Absolutely, which is what they did in 2008.

RBoulger: The number of lenders operating in that market Secure Trust was going for has increased substantially so it’s a sector that three years ago there wasn’t much competition and now there is.

AS: I know it’s a different situation, but Paragon pulled out of the market for quite a long time to

Contact your Barclays support team or visit barclays.co.uk/intermediaries for more details

RBoulger: For brokers it’s looking for areas where there’s scope to expand. The other area, although a relatively small sector, but percentage wise there’s a lot of potential for growth, is the later life market.

Retirement interest-only mortgages haven’t taken off yet as the few lenders that have entered into it have gone for higher margins rather than growth, but I think that’ll change over this year with more entrants coming in and more products. That’ll stimulate the market. Brokers need to be in a position to give good advice when there will be some sectors like equity release that they’re not authorised to advise on.

AY: We’re in a good position with conveyancing as it’s pretty much recession-proof because brokers have to maximise case value, so we see brokers selling more conveyancing. We’re in communication with two RIO lenders going to market. Rather than margin they’re trying to build a sustainable product that’s more criteria-based than just making the money; different things they’re trying to do to think outside the box. It’s amazing how many brokers don’t want to give advice on that. 

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Loan Introducer

Seconds options Darren Perry, head of second charge mortgages at Brightstar Financial on when to consider a second charge mortgage In March 2016 the Mortgage Credit Directive (MCD) was introduced and for the first time, there was a requirement for brokers to consider a second charge alongside a remortgage when identifying the most suitable product for clients looking to raise funds on their property. It can, however, be difficult to recognise when a second charge loan is the best solution for a borrower – so when should you consider a second charge mortgage?

To begin with, there are often situations where a client might be unable to secure a first charge mortgage, perhaps because they have adverse credit, are recently self-employed or their situation has changed since they took out their mortgage. Some second charge lenders have more flexible criteria than the first charge market so, if your client is struggling to release equity from their property with a remortgage, a second charge could be the answer.

Second charge loans however shouldn’t just be considered when a client can’t access the first charge market – there are many situations when a second charge loan can be more cost effective, perhaps due to the client being in the early repayment charge period on their mortgage.

There are also many borrowers on a lifetime tracker or variable rate that is so low that they would be unable to match their current rate by remortgaging. For clients in this situation who want to raise extra money from their property, it can sometimes be more cost effective to use a second charge loan to borrow the money rather than shift the entire balance onto a

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more expensive rate.

The same principle also applies to those on an existing interest only mortgage. A second charge loan can enable borrowers in this situation to borrow money on their home and keep their existing interest only mortgage in place.

In a similar way, if the borrower is looking to carry out home improvements which are likely to result in a significant increase in their house price, a second charge may allow them to remortgage further down the line, possibly resulting in a lower LTV. Borrowers who have a large amount of unsecured debt may also benefit by moving the balances onto a cheaper second charge loan. Borrowers can immediately relieve some of the strain while they work towards

a long-term solution to manage their debts, but always remember to talk to clients about the considerations involved in moving unsecured debt to secured debt.

With stress test limitations on buy-to-let mortgages, we are also seeing clients accessing larger chunks of equity in their residential property, with a second charge loan, to put down a bigger deposit. It’s also possible to use a second charge loan to raise funds to pay a tax bill. A lender will generally want to know why the client didn’t have provision to pay the bill and that they are in a position to pay future bills.

Second charge loans are generally faster and more convenient, which in some circumstances might be the most important consideration for your client.

Case study – Second charge for Right to Buy clients with unfinished building work Our clients had purchased a council house on the Right to Buy scheme, borrowing a little more to renovate the property. Unfortunately, their builder messed them around – costs ran out of hand, and the builder left with the project unfinished.

The couple had spent their contingency budget on the unfinished work and also borrowed on credit cards and purchased a kitchen on a ‘buy now pay later’ basis.

The cumulative effect of these circumstances was that their finances were stretched each month, even before payments were due on the kitchen, and the house was not in an adequate state to secure an

FEBRUARY 2019

appropriate remortgage. Any solution also needed to consider that the property was purchased using the right-to-buy scheme and still within the pre-emption period.

In this instance, it made sense for the couple to take a second charge loan, spread over a 25-year term, to keep the monthly costs low. This could ease the immediate strain on cashflow and provide funds to pay off the credit card, kitchen and complete the building work. Once the couple had completed the home they set out to build, they could then remortgage to pay off the second charge loan and switch the debt onto a lower interest rate over the long term.

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Rude health Tim Wheeldon, chief operating officer, Fluent Money says reports of the death of seconds have been greatly exaggerated I bet you didn’t know that cresttailed mulgara, a pocket-sized predator, once believed extinct, has now been rediscovered in the Australian outback? Perhaps not as earth shattering as discovering that Harry Redknapp has willingly submitted himself to the torture, both for us and him, of ‘I’m a Celebrity, Get Me Out of Here’, but one of those interesting facts that makes people wonder how we can actually lose a whole species?

In the grand scheme of things, it might not seem such a big deal, except to the aforesaid marsupial!

The amazing progress of homo sapiens means that we can now get from London to Australia in 16 hours and 27 minutes non-stop but we can’t seem to help knocking off another part of the Earth’s biodiversity as we go.

While we are at it, they reckon there are another five species that have been rediscovered. Omura’s whale is one. You might have hoped that Mr Omura would have been more careful where he left it?

Then there is the Coelacanth, apparently some kind of ugly fish over whose reported demise no one would have spilt any tears.

The other three include the New Zealand storm petrel, a type of stick insect named after Lord Howe, no, not the late Chancellor of the Exchequer, and finally my favourite, a Mount Diablo Buckwheat – some kind of plant I am told.

“What has this got to do with secured loans?”, you may ask.

The parallel I am drawing has much to do with the widely held belief that somehow second charge lending has ceased to be.

Certainly, there’s still a body of

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intermediaries who must think it is extinct, because as far as they are concerned, the only possible capital raising option for their customers is remortgaging.

Amazingly, rather like the Mount Diablo Buckwheat, second charge lending has been alive and well all this time and some have clearly not been looking hard enough in the right places.

How could it be so? After MCD, second charge mortgages came under the same rulebook as their first charge cousins. The FCA may have expected advisers at this point to begin to inform their customers of all alternatives for capital raising.

Sadly, this has not been the case. So, because advisers chose not to follow through or provide any more information to their customers, then second charge might as well have been extinct, regardless of whether it could have been a better alternative.

I would hasten to add that I am not anti remortgages. Far from it.

However, it’s frustrating that even though the industry has done a lot of work to remind advisers that our sector is not defunct, there remains much to do to promote second charge lending so that advisers can see where it works.

Far from being extinct however, the FLA announced that not only was new business 11% higher year-on-year, but that it had pushed through the £1bn barrier for the first time.

I think that is a highly significant landmark.

Although the sector is dwarfed in terms of size by its remortgage cousin, reaching the £1bn pound FEBRUARY 2019

mark will hopefully make advisers take second charge more seriously and that can only be a good thing for promoting healthy diversity in the capital raising market.

There’s much to be said for the principle of natural selection and like the many species, including the dinosaur and the dodo, many have not been able to compete with a changing climate, habitat or predators.

However, the second charge sector has not only survived, it is flourishing. Why? It is because it has adapted to meet the conditions it finds itself in. Like every successful species faced with change, it has reinvented itself.

My belief is that second charge business will increase among advisers as they respond to a market that is growing and whose attributes and characteristics bear no resemblance to the sector many think they remember.

However, perhaps because second charge has been ignored as if it was extinct, it has had time to develop USPs which we are keen for intermediaries to understand.

Our sector has proved to be tough and resilient and a survivor.

Like the crest-tailed mulgara, second charge lending has surprised many that it is still there and in rude health. My prediction is that we will see further growth in the sector, supported by a growing number of advisers, who recognise the valid reasons where a secured loan can trump a remortgage.

As Mark Twain said on reading his obituary in the newspaper – “The reports of my death have been greatly exaggerated.”

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When to consider a second charge mortgage He has succeeded where other lenders have failed: - by successfully offering not only a first charge but also a second charge mortgage proposition. Loan Introducer catches up with Alan Cleary, managing director of Precise Mortgages to talk broker fees, visits from the regulator and what part technology can play in the second charge sector’s growth.

Which areas of the second charge market do you think will see growth in 2019?

I expect to see more broker direct enquiries as knowledge and confidence increases and the value that second charges can bring is further appreciated. There are now 4.85m self-employed workers in the UK – more than ever before – and lenders need to be aware of the nature of self-employed income and simplify how self-employed income is validated.

Do you feel technology can help the second charge market grow?

Certainly, yes. In recent years we’ve seen improvement from the three well- known sourcing systems which has definitely acted as a reminder/prompt to brokers who want to find the most appropriate solution for their customers. Further integration in the area of affordability will ensure results are more accurate and is a natural development to sourcing.

2018 also saw significant investment from some high-profile master brokers in developing second charge sourcing software, and in some cases offering it free of charge to intermediaries, which is a welcome addition to the market.

It has almost been three years since the FCA took over regulation seconds. How is it going?

Without exception, it has been a positive change for

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the market. The Mortgage Credit Directive also facilitated the ability for lenders to deal directly with advisers.

Do you think the FCA should be concerned about any of the practices in the sector?

As the regulator visits more businesses this year, firms who have historically only written second charge cases may find they need to capture more information around evidencing suitability.

Where do you stand regarding master broker fees, do you think they need to be capped?

It is not our role, as a lender, to dictate an agreed fee between the customer and any master broker or advisers.

As a lender who has the advantage of working in both the first and second charge markets, what do you feel is the fundamental reason some mortgage brokers have still not embraced seconds?

I think there are three main reasons why some brokers are not engaging with second charges: 1. First charge market - an extremely competitive first charge market, a remortgage can often be the best option.

2. Distribution – Appointed Representative brokers can become disengaged with second charges as they’re forced to use a certain master broker, particularly when the master brokers’ fees scales are considered excessive/not in line with what an adviser would normally charge.

If the broker is conducting the advice, they feel they should be able to select an appropriate firm for the packaging.

3. Lack of understating – Brokers who have not used second charges before can potentially miss opportunities, because an assumption is made that a second charge lender cannot help, because a first charge was unavailable.

The sector was worth an estimated £1.06bn in 2018 according to the Finance & Leasing Association, do you feel it will grow further?

There will be opportunities for the market to grow over the next 12 months including:  With the increase in popularity of longer-term fixed rate mortgages, there are a growing number of customers two or three years into a five-year fixed rate who need to capital raise and can’t access a further advance for their lender.  Parents are using second charges to free up equity in their property to help pay school fees or to help their children pay for a deposit on their first home.

You have made a success of offering seconds where perhaps other lenders have struggled, why do you think this is?

There is space for all current lenders in the market, but where we have excelled is in our direct to broker proposition.

This has been particularly successful because the process is more familiar to an adviser who is used to writing first charge business.

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Loan Introducer

A more equitable system Are equitable charges the solution to helping those blocked from second charge borrowing by their first charge lender secure a loan? Natalie Thomas investigates Most master brokers and indeed lenders will recognise this scenario only too well: - You’ve compiled the necessary paperwork, carried out the affordability checks, all is ready to go. Then the first-charge lender throws a spanner in the works by declining your client’s application in its final throes.

Second charge clients have long been at the mercy of first-charge lenders and the power they wield over an application.

For the most part, this shouldn’t create an issue if all parties are on same page and recognise what is in the client’s best interest.

But what is to be done when a first-charge lender appears to adopt a ‘computer says no’ mentality to a second-charge; or worse still, the lender is no longer trading and the mortgage book is effectively closed and permission can’t be granted.

One phrase that is increasingly cropping up as a solution to this problem is an ‘equitable charge’.

Equitable charges are nothing new and their origins in the seconds market can be traced back to 2005, when former Prestige Finance director Simon Stern is believed to have pioneered their use in the sector.

So how can they help clients and the sector to move forward and do they hold the key to helping borrowers who are blocked from taking out a second-charge

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by their first-charge lender.

Loan Introducer finds out….

The problem

It may seem a strange state of affairs but the first-charge lender is often the one who can make or break a second-charge loan application.

While a small number of first-charge mortgage contracts contain conditions that stipulate no extra borrowing is allowed, the majority of contracts do not. So, it can be a cause of frustration for clients and those involved in the application process for a secondcharge if it is turned down and the reasoning behind the decline is not clear.

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries and Association of Finance Brokers, says a first-charge lender is not legally obliged to give any reason as to why it has declined an application for a second charge and there may be some lenders who simply “just don’t like” second charges.

“The mortgage contract is a legal contract, not just purely regulatory,” he says.

“Some mortgage contracts are flexible and allow for additional borrowing by borrowers. If this is the case, some first-charge lenders might not want a second charge against that because if a further advance is made further down the line, it would sit behind

a second charge as a third charge against the property.”

Tim Wheeldon, chief operating office of Fluent Money Group, says there are some first-charge lenders who will not allow a second charge at all, “Others will allow but under certain circumstances,” he says, “such as holding a first charge for a certain length of time, or as long as the total loan is not for a house purchase, buy-to-let or for consolidation. It varies from lender to lender.”

Marie Grundy, sales director at West One Loans would like to see more first charge mortgage lenders being held to account where consent to register a second charge is declined and this is not linked to the conduct of the account.

“This has a significant impact on borrowers who may not have access to further borrowing from their existing lender,” she says.

“For example, where further advances are not offered or do not meet their borrowing needs, and where they are tied into their current first charge deal so they cannot remortgage without incurring early repayment charges - which of course can lead to customer detriment.”

She adds: “Another scenario frustrating for borrowers is where flexible mortgage conditions prevail but first mortgagees are unwilling to provide the total

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Loan Introducer

maximum lending liability, which prevents second charge lenders from making prudent lending decisions as the overall LTV exposure is unknown.”

She says the issue is very much central to the ongoing debate around the creation of mortgage prisoners.

“Borrowers are often unaware of the restrictions placed upon them when it comes to options for further borrowing,” Grundy adds.

Anna Bennett, marketing director at Positive Lending, would also like to see a streamlining of the process.

“Perhaps by a clause in the first charge lender’s mortgage offer, stipulating that a second charge consent will be granted subject to certain conditions being met,” she says. “This would be incredibly helpful for borrowers looking to secure funding quickly and improve the customer journey.”

Buy-to-let struggles

There is one sector of the market in particular where this problem seems to resonate more than others: buy-to-let.

“The mainstream lenders don’t cause too much of a problem except where they have no consent conditions in the mortgage, often due to it being a flexible or an open-type mortgage,” says Steve Walker, managing director of Promise Solutions.

“The main problem areas are with buy-to-let first charge lenders and specialised lenders where the book has been sold on,” he says.

Walker says there are definitely scenarios where borrowers are getting a worse deal because of the restrictions placed on them by the first charge lender.

Sinclair believes that the issue is especially prevalent where the buy-to-let mortgage is on an interest-only basis.

“The lender has already made a judgement about the affordability of the mortgage and the capital outstanding and they struggle to work out how anybody else can be lending against it,” he says.

www.mortgageintroducer.com

So, is an equitable charge the answer to the problem?

Darren Perry, head of second charge mortgages at Brightstar, says an increasing number of second charge lenders are registering their charge as an equitable charge, rather than by a second legal charge.

“An equitable charge is where a lender does not take a legal stake in the property but instead is given the right for a judicial process of recovery. This means an equitable charge can be used where the first charge lender would usually decline its consent to a second charge being registered,” he says.

As legal consent is not required by the first charge lender, this can speed up the application process, Perry explains, and for those that use electronic valuations give clients even faster access to their funds.

“Equitable charges have the potential for so many uses that we think it could be the Swiss Army Knife of second charge lending,” he adds.

So, could the concept of an equitable charge be rolled out across all second charge lenders?

Walker says there are currently only a handful of second charge lenders which offer ‘no-consent’ products and these are mainly buy-to-let lenders. The terms however are limited, typically regarding LTV and rate for example, which he says is perhaps understandable as the risk to the second charge lender is greater.

“Most of the prime second charge lenders don’t have “noconsent” plans so it can appear that borrowers are often being denied the lowest rates because of the first charge lenders’ restrictions,” he says.

“However as so many of the no-consent cases relate to buyto-lets, and many of the prime lenders don’t have buy-to-let second charge products, the impact is limited.”

He would like to see more second charge lenders offering FEBRUARY 2019

no-consent products as it would raise awareness of the issue.

Wheeldon says the use of equitable charges is growing but is by no means universal.

“It is possible that more second charge lenders will consider using an equitable charge in the future, but that is an internal matter for them,” he says.

An equitable future?

The equitable charge option certainly looks appealing but it is not without its drawbacks.

Its one major downside is the increased risk it bears for the second-charge lender. As equitable charges become more commonplace in the second charge market, we may start to see how in practice this might work for lenders in the unfortunate event of a borrower defaulting.

An equitable charge also puts a second charge lender in the same position as a first-charge lender if the borrower then takes out a further advance or any kind of additional borrowing, as the equitable charge would sit behind that in terms of priority and effectively become a third charge.

A better option and perhaps a far easier one might be for second charge lenders and brokers to be given a clear understanding of what criteria a second charge application needs to meet in order for it to be accepted. Such a concept surely should not be out of the question given that both sectors now operate from the same rulebook and would certainly be in the spirit of treating customers fairly. It is however unlikely to be something that would be initiated by first-charge lenders, which leaves the responsibility at the door of those in the second charge industry.

Until that time, while many rejections will continue to be given by lenders for a justified reason, without a proper explanation from lenders it is really impossible to tell what percentage of second charge applications, if any will continue to be declined avoidably.

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SFI: Bridging

Turmoil in the market, or just another day at the office?

Understandably, lenders ask what the circumstances are when they receive a valuation, recently dated but addressed to another lender and an influx of re-circulated valuations has caused us to question if something significant is happening.

Newcomers will often use high LTV’s or offer terms too good to maintain to attract attention. When terms are too good to be true, that is just what they are, a come on and too good to be true. Either the lender will be swamped with new proposals and be unable to manage or fund them or the terms never existed in the first instance.

The recent announcement from Octopus that they were closed for buy-to-let loans must have been a

Brian Rubins executive chairman, Alternative Bridging Corporation

surprise to their brokers. However, news that Amicus are in administration and closed for all business, was a bigger shock. Where will the many brokers go to who relied on them and what will happen to the proposals which were being processed?

In recent weeks Secured Trust has withdrawn from writing new business due to market conditions. Similarly, Elysium Bridging appears to have a funding problem to resolve.

None of this is permanent but while these conditions continue, what do their brokers do?

Of course, this is only a handful of lenders in a large market but for those borrowers who had applications in process and commitments to meet, and to brokers who had

The 6MLD and business In September, the European Parliament approved a proposal for the EU’s latest piece of Anti Money Laundering (AML) legislation, known as the sixth anti-money laundering directive (6MLD).

One of the major changes is that criminal liability will be extended to corporates where a money laundering offence is committed for their benefit by an individual in a leading position within that corporate, or where a lack of supervision or control by such individual has made possible the commission of a money laundering offence.

This is a significant change, as currently, criminal liability is only applied to companies in AML regulated sectors.

Another significant change proposed under the sixth money laundering directive is “the harmonisation of 22 predicate offences which may generate criminal property for the purposes of committing a ML offence”

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Martin Cheek managing director, SmartSearch

FEBRUARY 2019

The term ‘predicate offence’ means a criminal activity that gives rise to, or underpins, a money laundering offence and the 22 offences set out in the directive are widereaching and include environmental crimes, tax crimes and cybercrime, as well as more traditional examples such as the trafficking of drugs and humans, fraud and corruption.

This change could put an additional burden on firms to detect and identify signs of predicate offences, implement monitoring systems to help identify proceeds potentially linked to such offences and supervise individuals with authority to make the firm criminally liable.

The sixth money laundering directive also looks to increase the minimum prison sentence for money laundering from one year to four years.

Following formal approval of the sixth money laundering directives, EU member states have two years to implement these new rules.

supported them, it is embarrassing and possibly costly even if some of the proposals are retained and funded elsewhere.

What lessons can brokers learn?

First to question the liquidity and lending policies of lenders and to be cautious. Secondly, all our surveys have confirmed that certainty of delivery and consistent underwriting are brokers’ number one issues.

So, do not believe in miracles, they rarely happen. Focus your attention on the lenders who tell a realistic, believable story. Check how long they have been in the market and if they are consistent or do they come and go; after the Brexit shock, were they able to continue business as usual?

Beware of those new to development finance where risk is greater, and the skill set more demanding: new lenders quickly learn that development finance is not as simple as it looks.

There is no reason to doubt all new entrants but do remember, old friends are usually your best friends.

But what about the UK? Unless you have been living under a rock for the past two and half years, you will know that the UK is set to leave the EU on March 29 this year. This leaves the UK’s position on the sixth money laundering directive unclear.

The latest overhaul of AML legislation in the UK was the Money Laundering, Terrorist Financing and Transfer of Funds Regulations which came into force in June 2017 and implemented the EU’s fourth money laundering directive.

In UK law, the principle money laundering offences already carry a maximum term of 14 years’ imprisonment in England and Wales so it may be that the UK government feels that, once the fith money laundering directive is imposed – our existing AML legislation is sufficiently robust.

If the UK does adopt the sixth money laundering directive more individuals and corporate entities will be in scope for money laundering and predicate offences. So businesses need to make sure they have appropriate AML controls in place to protect themselves. www.mortgageintroducer.com

SFI: Specialist Mortgages

Specialist could be becoming the new normal As the owner of a network working predominantly in the specialist market, it is easy to perceive that almost everyone needs a specialist mortgage, in fact, it is often a surprise when we get a ‘vanilla’ mortgage enquiry.

However, there are many advisers and networks for whom advising on specialist is not the norm.

Specialist mortgages for these types of advisers are often no more than 25% of their business and that includes buy-to-let. But are these advisers missing out on a much bigger opportunity?

IMLA’s Mortgage Tracker Q4 2016 revealed that a massive 61% of all mortgage applications made in the UK, do not result in funding. Together commissioned their own results to understand why. Together’s research showed that 64% of those were rejected due to ‘non-standard reasons’. These reasons included:  29% - Too much debt or income not sufficient  18% - Low credit score  12% - Employment type  10% - Property type  9% - Insufficient deposit  6% - Too near to retirement Millennials aged 18-34 were particularly hard hit due to the way they currently live and work. While for older people, rejection due to nearing retirement age could be an increasing problem according to Age UK, which predicts the number of people aged 65 and over is expected to increase by 65% by 2033.

Interestingly, Together confirmed that of the respondents they surveyed, they would have actually lent to 66% of them. However, the research also found that a significant percentage of the rejected respondents were actually put off of trying again elsewhere.

IMLA’S latest report Q3 2018, shows a drop to 52% of mortgage www.mortgageintroducer.com

Liz Syms chief executive, Connect for Intermediaries

applications that have not resulted in funding. I suspect this is due to the increased number of ‘specialist’ lenders that have entered the mortgage market over the last couple of years, however there is clearly more work to be done to increase awareness of these products.

If some applicants could have got funding elsewhere but have been put off applying again, there is certainly a need to educate the consumer market further with the wider options available from the specialist lending market.

Equally however, as over 70% of the mortgage market is intermediated, there is an even greater need to ensure that all advisers in the market are aware of the specialist options available for their clients.

More mainstream lenders are looking at automation and ‘roboadvice’ as a way to considerably improve the journey for consumers.

Initiatives such as open banking and providers such as Castlight are helping lenders to digitalise and streamline the process, meaning that in the not too distant future, clients will not have to provide the level of documents they do today. This is definitely a good thing for all the clients who tick the boxes as ‘mainstream’, but what about the rest?

We are already aware of issues with AVMs, for example, being unable to correctly predict the value

of a non-standard property, such as multiple flats on a single freehold title. The income for the self employed could also be difficult to review accurately without manual intervention. Even reviewing documents such as the tax calculations and overview documents of a client is not straight forward.

What if they have carried forward losses? The self-employed income they have earned that year would not then show on the document. What if they are a director, but have chosen not to draw a dividend, how will the lenders reflect retained profit in the automation process of affordability?

One of the clear benefits of the specialist market is the ability to manually underwrite a complex scenario. It is very common for a client to have more that one complexity to their circumstances that needs to be reviewed by a lender.

For example, you may have a client looking to purchase an ex-local authority flat, at an auction, with a low credit score and who has only been self-employed for one year.

Where will you go with that?

As more specialist lenders enter the market which will consider scenarios such as the above, how will brokers know which of them to turn to for their clients? Sourcing systems traditionally have not been detailed enough in their criteria, but new tools such as Knowledge Bank and Legal & Generals Smartrcriteria make it far easier for brokers entering this market to understand who may be able to help their clients.

This also gives brokers the ability to future proof their own businesses against the digital threats.

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SFI: FIBA Bridging

Making a better business through regulation As we approach the middle of February 2019, there is much on the compliance calendar and I would like to expand on some of it now.

There are a number of ‘big ticket’ items heading our way in 2019 which are likely to have a substantial impact on the way regulated brokers carry out their business. This will include areas such as the Senior Managers and Certification Regime (SM&CR) that comes into effect at the end of the year. In addition, the FCA will be publishing its final report on the Mortgage Market Study in the spring and from that may come further recommendations.

Other items on their agenda include:  A market study on credit information  Commission paid by brokers to other firms  Review of retained Consumer Credit Act provisions  Creditworthiness  Ensuring that debt management works well for consumers  A review of the motor finance market

Adam Tyler executive chairman, FIBA

Assessment and vulnerability

Are you confident that your processes fully assess the ability of those involved in managing the repayment? Has vulnerability been fully assessed prior to any funding being secured, and are processes in place that would highlight this as a factor?

AML and financial crime

With criminals and fraudsters employing increasingly sophisticated techniques, today’s world requires the need for a constant focus on financial crime and anti-money laundering. In response, the government and the FCA have laid out defined expectations for all of those that provide access to finance at any level. They are working towards ensuring that the UK becomes a hostile place for criminals and expect you to play your part and reduce risk to your own firm. There are some very simple electronic checks you can make that will offer confidence either against money laundering or becoming involved, however innocently, with politically exposed people, for example.

Some of the areas above will be less relevant to you than others but there are some key elements that I feel any firm in the financial sector should be considering.

Although rooted in regulatory requirements the points below generally make for good business practice whether you’re regulated or not – as well as having the ability to help with profitability and security in unusual political atmospheres!

Many of the points below will have the resulting effect of removing risk from your business, which can only be a good thing.

Introducers

One key area in which brokers need to be in complete control is introduced business. If you are a regulated broker then your introducers should have the same or a lower level of FCA approval.

However, recent findings have highlighted the fact that brokers need to be the managing party in these relationships and the financial arrangements. The introducer’s

Processes and procedures

Ensure these are clearly documented. Having robust processes and a transparent methodology can be invaluable to sole traders in the case of

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an FCA inspection – and even more important to firms where there are individuals operating under a principal. Having a clear ‘firm view’ in respect of the way in which business takes place, the commissions that are paid and the presentation of the final outcome, can only be of benefit to the client.

FEBRUARY 2019

role, other than to maintain the relationship, is a secondary one and they shouldn’t be involved in any processes, or appear to be arranging things themselves.

It is the broker receiving the instructions from the client who should be issuing all the paperwork under their own brand as it is essential that the client is fully aware at every stage of the process, who is arranging their finance.

Culture, accountability and governance

These should be the three key drivers in a firm, developing positive behaviours that result in benefit to end consumers. Having the right people in the right roles is key to the success, something which will be evidenced effectively with the introduction of the Senior Managers and Certification Regime in December 2019.

Nota Bene – encouraging news

A survey from a UK lender found that 27% of businesses expect double digit growth in 2019. The report, which canvassed businesses turning over £1m per annum, found that 90% of businesses expect increased revenue in 2019, and over 70% of

“Many of the points below will have the resulting effect of removing risk from your business” them are looking for funding over the next 12 months. The only cause for concern raised, despite Brexit, was that funding decisions were taking longer, with over 50% of businesses having to wait over one month and 31% over three months or more.

Whether the survey accurately reflects intentions generally, only time will tell. But it is good to see the mood looking more optimistic.

There are going to be challenges for all of us this year but let’s not succumb to negativity when clearly there is business to do. www.mortgageintroducer.com

The Last Word

A record year for Mortgageforce A buoyant market has been a boon for the franchise outfit Amid all the talk of Brexit and a subdued property market, confidence was aplenty in December at the Mortgageforce Annual Conference held at the Ned Private Members Club in London. Leading award winners included NatWest, Clydesdale, Santander, Coventry and Kent Reliance.

Guest speakers included AMI’s Robert Sinclair, Vida’s Louisa Sedgwick while Kent Reliance’s Adrian Maloney assisted greatly in keeping the mood upbeat and humorous. The London and Derbycentric aggregator announced record loan volumes of £1.3bn for 2018 and recent acquisitions and recruitment is set to drive this figure close to £2bn in 2019. Kevin Duffy, Mortgageforce managing director (pictured), was overjoyed.

“The noise surrounding Brexit is

over-played and shouldn’t outlaw the fundamentals which underpin the UK mortgage market which remain erudite,” he said.

“We are fortunate in that we are a UKwide player and not over reliant on any one region or sector.”

Experience has also played a significant part in the company’s growth.

“We are blessed with an arsenal of truly outstanding brokers who we believe like our proposition because they appreciate value-added services,” he said. “Occasionally, prospective recruits want to talk purely about commissions and commercial terms but in our experience if folk join you for the money then they’ll soon leave you for it too.

“We are happy to cap our broker headcount at 100,” he added. “And in doing so we can focus all our energy

on developing those 100 brokers and collaboratively improving them and our proposition.”

Duffy also outlined some ambitious plans for 2019 which included two imminent acquisitions, the launch of a B2C channel and the opening of a new London office.

“The new site will be close enough to the NED (a five star hotel and members’ club in the City of London with nine restaurants, indoor & rooftop pools, a gym, spa and hammam) to support what are a charismatic and fun-loving bunch of staff and brokers,” he says.

“Because despite all the metrics and laborious KPI’s, this business is just as much about having fun and enjoying life as it is about smashing targets. That balance will always be preserved within our approach and progression.”

Kevin Duffy presents to one of the winners

Much fun was had during the conference

Another happy winner receives her award

AM’s Robert Sinclair at the conference

Not just any old piece of plastic...

More award winners enjoy celebrating

Luke Christodoulides from NatWest (right)

A band on the night: Duffy was on Drums!

A good night was had by all

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The Hall of Fame

West Ham’s Olympic dream MI news editor Ryan Bembridge witnessed something extraordinary last month – he finally saw West Ham win a match at the London Stadium after four trips.

On the day the Hammers were the better side, defeating Arsenal 1-0 through a goal from rising star Declan Rice just after

half time.

‘On the day’ is perhaps the pertinent phrase. Since beating the Gunners West Ham haven’t won again at the time of writing, losing to Bournemouth, Wolves and League 1’s bottom club AFC Wimbledon.

Watching on was Dean Mason (right), director at Masons Financial Planning in Hertfordshire, along with his two sons William (left, centre) and Oliver (left). They were rooting for their beloved Arsenal but, with Pierre-Emerick Aubameyang having an off day, a goal never came.

Bembridge was present last season when Spurs came away from the London Stadium with three points after a 3-2 victory, while he saw a 0-0 bore draw against Arsenal in Wenger’s final season and a 1-1 draw with the mighty Middlesbrough under Aitor Karanka.

Goals and red cards They say business is ruthless, but one football match involving a PRIMIS appointed representative was just that.

On weekdays Johnny Hastings is owner of Hastings Financial Services in Lanre, Northern Ireland. But over weekends he’s manager of Northern Ireland Amateur League club, Larne Tech Old Boys.

In February saw his side beat Strabane Athletic 3-1 to reach the Irish Cup thanks to two goals by Craig Todd and one from Paul Maguire.

The game wasn’t just full of goals, but red cards too, with one of Hastings’s men, Scott Todd, seeing red and Strabane suffering from three sending offs.

“I am absolutely delighted to take my team to the quarter finals and watch them play amongst the final eight of the most senior competition in the country,” Hastings told The HoF. “At the start of the season we never imagined we’d have made it this far but it’s thoroughly well deserved – the team has worked relentlessly hard to get here and it reflects the level of talent within the squad.

“We’re enjoying the entire experience, particularly games like the one against Strabane in the sixth round.

“Although Strabane had three players sent off and we had our own red card, it was far from a nasty game. A well-deserved victory, we’re looking forward to coming head to head with the winner of the rearranged game between Warrenpoint Town and Queen’s University. “Who knows what the next match might hold!”

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FEBRUARY 2019

Red Carpet Treatment…

Climbing Everest to give something back Leek United customer assistant Jeanette Mountford climbs onto the red carpet this month as she prepares ascend the world’s highest mountain to thank the hospital unit that saved her life.

Mountford has spent the last three years fighting to regain her health, strength and fitness, following a sudden collapse at home in April 2016. And now she’s joining an expedition, climbing up to seven hours a day for almost two weeks in March, to reach Everest Base Camp, at an altitude of 5,364 metres. All proceeds from Jeanette’s sponsored trek will be donated to the Acute Stroke Unit at the Royal Stoke University Hospital in Stoke-on-Trent, where she was treated.

“When I collapsed, my partner Warren recognised I was having a stroke and called 999,” she told The HoF. “Without his quick-thinking and the expertise and dedication of the stroke unit, I wouldn’t be here today – so now I want to give something back to the unit and the hospital for saving my life on that awful night.

“It really has taken me all this time to get my fitness back to normal, but the expedition is going to test my mental and physical strength beyond ANYTHING I have ever done before! What doesn’t kill you makes you stronger.”

In preparation for the trip, she’s been working with a personal trainer, hiking and using a treadmill donated to her by Stoke-on-Trent-based company Staffs Fitness for power walking and running training.Once in Nepal, she and a team, including lifelong family friend Michael Evans, will trek for 12 days, with little chance of showering, staying in tea houses and living the Sherpa life en route to the base camp. Donate at: bit.ly/2I5RQ8y Jeanette, the HoF salutes you!

Simply the best The HoF was very sad to hear of the death of Gordon Banks OBE. It caused much debate in the office about who has been our greatest ever goalkeeper.

We decided that it came down to two – former fantastic Foxes Gordon Banks and Peter Shilton. Ultimately though we decided it has to be Banks with Shilton learning from the best. As the German national team said in tribute, he was “a fierce opponent and a good man”. RIP. www.mortgageintroducer.com

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Just call us on 0344 770 8032 Š2019 Foundation Home Loans is a trading style of Paratus AMC Limited. Registered Office: No.5 Arlington Square, Downshire Way, Bracknell, Berkshire RG12 1WA. Registered in England with Company No. 03489004. Paratus AMC Limited is authorised and regulated by the Financial Conduct Authority. Our registration number is 301128. Buy to let mortgages are not regulated by the Financial Conduct Authority. No limit on portfolio size, subject to maximum borrowing of £3 million with Foundation Home Loans. Calls may be monitored and recorded.

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