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COLLABORATIVE AUTOMATION eKeeper, MCI Club and Burrow talk tech Robert Sinclair Feature: A year to forget? Loan Introducer
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EDITORIAL
COMMENT Publishing Director Robyn Hall Robyn@mortgageintroducer.com Publishing Editor Ryan Fowler Ryan@mortgageintroducer.com Associate Editor Jessica Bird Jessicab@sfintroducer.com
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A brighter future
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s the year comes to an end, I usually go back and read my editorial from the beginning of the year to see how the past 12 months have measured up. This year there doesn’t seem much point in that. Not in anybody’s wildest dreams did they expect 2020 to pan out the way it has. COVID-19 has dominated the agenda and meant that everyone individuals and businesses alike - has had to adapt to the new normal. As I write this, articulated lorries are speeding through Dover carrying the first batch of a vaccine which will hopefully spell the beginning of the end for these strangest of times. It will take time for the vaccine to have its fullest impact, but the hope has to be that there will be some normality by the summer of 2021. The task now will be to repair the economic damage of the pandemic as quickly as possible and kick on. The property market has been shielded from the worst of the impact
so far, and hopefully that will continue. The sooner the entire economy is back on its feet, the better for everyone. As we move into the Christmas period it’s a chance for us all to reflect on the past year and hope for better in 2021. It has been a bittersweet year for many, as families were able to spend more time together, but unfortunately some were left incomplete, and will be feeling it even more this winter. 2020 has taken away two good friends of Mortgage Introducer in Dean Mason and Benson Hersch. Both were regular commentators in the magazine, and our thoughts are with their families at what must be an extremely difficult time. For now, we all must look forward to 2021 with optimism that brighter times are around the corner. Hopefully the pandemic, much like financial crashes before it, will be the catalyst for boom years in the market. In closing, I’d like to wish you a Merry Christmas from all the MI team. See you in 2021! M I
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MAGAZINE
WHAT’S INSIDE
Contents 7 9 14 13 16 18 19 20 26 31 33 34 37 39
AMI Review Market Review London Review Economy Review Networks Review Recruitment Review Service Review Buy-to-let Review Protection Review General Insurance Review AML Review Equity Release Review Conveyancing Review Education Review
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RECRUITMENT
40 The Outlaw The latest from our resident outlaw 44 Cover: Collaborative thinking Jake Carter sits down with eKeeper, MCI Club and Burrow to discuss their technological interactions within a changing environment
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SERVICE
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FEATURE
52 Feature: A year to forget? Mortgage Introducer asks seven industry stalwarts for their reflections on 2020 and their thoughts for the year ahead 54 Loan Introducer The latest from the second charge market 56 Specialist Finance Introducer Development, bridging and FIBA 66 Spotlight: Matt Brown Matt Brown of ULS talks business
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REVIEW
AMI
Paying for poor advice Robert Sinclair chief executive officer, AMI
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s a trade body head representing mortgage intermediaries, the last few months have been tough. The isolation of COVID has not suited me well. I am not looking for sympathy, but it has changed our approach to lobbying and how we work to influence regulators, lenders and firms. New tricks. At the start of COVID-19, we saw the Financial Conduct Authority (FCA) invoicing its fees with increases in costs, married to a step back by the Financial Ombudsman Service (FOS) from larger increases and the Financial Services Compensation Scheme (FSCS) applying huge charges to investment and pension advice firms, whilst mortgage brokers got off relatively lightly. Last month, however, the FSCS advised that it was going to trawl the ‘retail pool’ and ask for another £51m to add to the £41m it was taking from providers and the life distribution and investment intermediation (LDII) class, to be paid in January 2021. This brought the total compensation bill for 2020/21 to £712m.
It is anticipated that firms in the home finance intermediation class will be required to pay an additional £2.3m, which is around 150% of the original payment for FSCS Home Finance Intermediation as per its 2020 FCA invoice, and firms within the general insurance distribution class will pay an extra £29.4m, circa 160% of the original payment as per firms’ 2020 FCA invoice. What is more frightening is that the over £300m compensation required in the LDII class shows no sign of abating. The investment and pensions advice sector is up in arms, blaming the FCA for nor supervising the market properly, the FSCS for not being robust in defending cases, and the poor way that the costs are allocated. Many want a product levy, but some want the expensive cake sliced differently. I am very unhappy that the level of compensation in this LDII sector is again being visited on brokers. Anyone thinking of adding any undeserved liability to the mortgage and protection world will find myself and AMI standing in the way. Let’s be clear, the FSCS pays out on firms that have been declared in default, which no longer trade and have been wound up. Not all such firms create a liability. It is only where a bad product or poor advice is demonstrated that the scheme pays out. These are firms that have
done manifestly bad things. Some end up in the scheme having lost cases at the ombudsman and do not have enough capital to pay the compensation due, but most close in an orderly manner and the liability only becomes obvious much later. Over the past 15 years, lenders have taken significant responsibility around monitoring the quality of broker distribution. We have seen many brokers asked to leave the market as they have not been sharp enough in dealing with fraudsters, or their network has had concerns over the quality of advice given or type of business they wanted to focus on. Our lender partners have helped train, monitor and feed back, and it has not been painless. I recently heard of one insurer which has been removing brokers from its panel as they cannot demonstrate sufficient competence on their products and processes. I see that as good news. The investment and pensions sector needs to step up to the plate as well. The manufacturing sector, be it life companies, investment providers, pension schemes or administrators, needs to take more responsibility. The industry must root our poor practice and not just point the finger at the FCA. They are not blameless, but if the industry is going to wait for them to sort themselves out, there may not be much industry left. M I
New routes to market
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efore the ink has even dried on the £17.9m fine imposed by the Competition and Markets Authority (CMA) on Compare the Market for breaching competition law by imposing wide ‘most favoured nation’ clauses on providers of home insurance, it has announced a tie-up to deliver execution-only remortgages to consumers embracing a range of household mortgage brands. I have always struggled to work out how you can look across the market and complete
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an execution-only mortgage or remortgage. I can see how a product transfer is possible, although perhaps not always desirable, but the information you need from a customer to choose between types of mortgages, and then between lenders, makes true execution-only impossible, particularly with the information needed by the new lender. Koodoo said of Compare: “Its scale and deep understanding of customer needs will help enhance the service”. This hardly sounds like an execution-only approach.
I am sure that the lawyers have worked hard to deliver watertight contracts between Compare The Market, Koodoo and the lenders that have signed up. My concern is around what will happen in the event of any complaints, ombudsman findings, and the potential for liability on the FSCS. Brokers have tales aplenty of consumers making the wrong self-selections. I hope this works well, but it defies my understanding of what is permissible under current FCA rules and guidance.
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Keep an eye on the bigger picture Craig Calder director of mortgages, Barclays
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s I write this, Christmas adverts are out in force to tug on the heartstrings and raise a few smiles – and let’s be fair, during lockdown these really do have a larger captive audience than normal. The nights are closing in, and at a time when we usually see business start to taper off, activity remains strong across many sectors. A robust housing market has proven to be a shining light over these past six months, and has highlighted that aspirations and attitudes towards homeownership have not dampened. However, even though we have all had to adapt and evolve at an unprecedented pace, it’s vital that we don’t get drawn too much into shortterm solutions – however necessary over these challenging times – and keep our eye on the bigger housing picture. AFFORDABLE HOUSING SUPPLY
With this in mind, it was interesting to read a new independent report by research unit LSE London for the Building Societies Association (BSA) and the UK Collaborative Centre for Housing Evidence (CaCHE), which suggest that initiatives have reinforced regional differences and sometimes overlapped with one another. It also outlines that – because many of these initiatives have been shortlived – they have had limited impact and have been confusing for both consumers and lenders. The government is now looking at two new products: First Homes – a shared equity scheme – and a potential mortgage guarantee scheme linked to long-term fixed interest rates. The report suggests that the UK could learn from foreign markets concerning mortgage guarantees – a costefficient way of expanding affordable www.mortgageintroducer.com
homeownership opportunities. It also recommends that those market-based initiatives that help supplement the higher loan-to-value (LTV) market should be encouraged. This really is a timely reminder of how challenging it has been for the government to grow homeownership, and for mortgage providers to innovate in such a way that the market can expand for first-time buyers. This will remain a major challenge in 2021; the more we can highlight factors which help combat affordable housing issues, the better it will be for all concerned in the mortgage chain. NEW-BUILD
When it comes to the raw ingredients of the new-build marketplace, it was encouraging that the Office for National Statistics (ONS) found construction output in the Q3 of 2020 rose by 41.7% compared to Q2. This was the result of a 40.8% increase in new work and a 43.4% uplift in repair and maintenance. Focusing on this new work, the rise was attributed to private new housing, which grew by 84.4% in Q3. Furthermore, new orders grew by a record 89.2% in Q3. This growth was attributed to an 88.7% rise in new housing and an 89.4% uptick in all other work. Public new housing was the only sector in Q3 to decline, dropping by 1.8%. On a monthly basis, construction output rose by 2.9% between August and September 2020. This represents the fifth consecutive month of growth, but the lowest rise in that time. The annual rate of construction output growth was 0.4% in September 2020. A rise was always expected from the low base of Q2 due to lockdown restrictions; nevertheless, these represent impressive figures and help demonstrate the pent-up demand for new-build property. Targets around the supply of new housing remain high, and it’s vital that this upward trajectory continues in order to satisfy a variety of homeownership needs and aspirations.
INTERMEDIARY CONFIDENCE
This pent-up demand is also resulting in sustained intermediary confidence during Q3 2020, but brokers are – quite rightly – still treading with caution. The Intermediary Mortgage Lenders Association (IMLA) found that 82% of intermediaries were either ‘fairly’ or ‘very’ confident about the sector’s prospects – the same percentage as in the first two quarters of 2020, despite the global pandemic. The data also showed that brokers were growing in confidence about the future of the intermediary market. The survey found that 94% were upbeat, compared to 88% in Q2. Mortgage intermediaries were also increasingly positive about the future of their own businesses, with 95% either ‘fairly’ or ‘very’ confident. The IMLA figures correspond with unprecedented demand in the housing market, as buyers continue to press ahead with plans. The research found that the average number of cases intermediaries were handling each month rose from 86 in Q2 to 90 in Q3. Of these, 65% were residential and 28% were buy-to-let, whilst one in 10 residential applications were for product transfers REMORTGAGE
Strong levels of intermediary confidence also extend beyond the purchase market. According to the latest Monthly Remortgage Snapshot from LMS, 43% of borrowers increased their loan size in October. The average monthly payment for those who remortgaged in October showed a substantial fall of £200.73. In addition, 49% of those who remortgaged took out a 5-year fixed rate product. The snapshot also revealed that 27% of remortgagers’ primary aim was to release equity from their property. The purchase market may well continue to dominate intermediary business for the rest of 2020 and into the early months of 2021, but the remortgage market should also remain high on the intermediary agenda. M I
DECEMBER 2020
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Because cases are rarely straightforward, our BDM team spend the time required to make the complex, simple. Where home matters
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What’s to come in 2021
I
this represents for the lender, we will continue to do all we can to support customers who have selected this help. Despite the burden this puts on the lender community, we continue to be there for our customers in the good times and the bad, and follow the Financial Conduct Authority’s (FCA) guidance to the letter. Customer care at this level will only enhance the reputation of the mortgage industry and benefit us all.
FURLOUGH SCHEME
At the time of writing, lenders are seeing a bottleneck of applications as brokers and their customer’s race towards the 31 March deadline to get their mortgage applications over the line. Will the government extend the period of stamp duty relief? It’s difficult to call, so mortgage brokers and lenders should prepare for both eventualities. In the short-term, I believe mortgage applications will remain at the present high levels, and possibly increase, creating even more logistical challenges for operational teams.
Craig Middleton head of mortgage sales and distribution, Harpenden Building Society
t’s hard to believe that here in the UK we were still COVID-free this time last year. It wasn’t until 2020 was well underway that the enormity of this disease really hit. Little did we know what was to come on a personal or an economic level. Despite the huge hardship endured by many, some positive outcomes have been created. In the mortgage world I’ve seen numerous examples of human resilience, operational excellence and the application of technology keeping the property market buoyant, however bleak the outlook has appeared. For mortgage advisers and lenders, I think there are a number of key areas to be particularly aware of as we enter 2021 and a post-pandemic era. Furlough was a word unfamiliar to many before this year, but it is now part of everyday language. As the scheme gets extended, so does the need for lenders to scrutinise mortgage applications in increasing detail, as we assess affordability for those affected. The full impact of the scheme is yet to be seen, with more redundancies likely to come in Q1 and Q2 next year. New applications coming to Harpenden from consumers who have been furloughed will continue to be manually assessed, avoiding the black and white algorithmic decisionmaking adopted by many high street lenders. We will personally look into an applicant’s full financial profile, however complex their income stream. With this increased scrutiny, we can at times say ‘yes’ when digital financial profiling used alone may say ‘no’. MORTGAGE DEFERRALS
With further months of ‘mortgage holidays’ to come and the complexities www.mortgageintroducer.com
STAMP DUTY RELIEF
BUSINESS VOLUMES
As volumes of business continue to grow over and above normal trading conditions, lenders are working hard to maintain normal service level agreements (SLAs). Remote working has meant work has to be repurposed for the staff based at home, and whilst systems have been amended, productivity is difficult for some to monitor and control. My advice is to get your mortgage applications submitted as quickly and as complete as possible. Meanwhile, the pandemic has shown all of us the importance of realising a digital ambition to aid remote working, adaptability and flexibility. NEW TRENDS
We’ve seen some significant trends with regard to product popularity and the increasing use of specialist lenders. Mortgage applications relating to self-build projects, holiday lets – with
the rise of the UK staycations – and major residential extensions facilitating home working have all seen significant growth. These trends look likely to continue in 2021. Customer income continues to become more complex as employment during the pandemic has become more diverse. As a specialist lender manually assessing every mortgage application, we are set up to service this type of customer – we want to create a positive outcome for any strong application, however diverse. New types of property have burst onto the scene during 2020. Empty shop units are one such example, and have become an everyday sight as the public has had to rely on online shopping. Some of these sites are destined to become residential dwellings, and a new mortgage opportunity for us all. VACCINE
Of course, a proper return to ‘normal’ life hinges on the development of a viable vaccine, and then production and distribution to the masses. Whilst there has been positive news of great work in this field, how quickly will a full immunisation roll-out happen? We should all have operational contingencies in place to ensure we can serve our customers well, whether an approved vaccine is distributed within weeks or months. THE FUTURE
As a specialist mortgage lender we want to be seen as a supportive, helpful financing partner for mortgage intermediaries and your customers – now and long into the future. Even during the most challenging trading environments we continue to remain flexible and responsive. Like many in the industry, we have played our part in keeping the property market buoyant. 2021 will be a year of opportunity for the mortgage industry. The future may be uncertain, but for those showing business resilience in these tough times will not only survive, but thrive. M I
DECEMBER 2020
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CONNECTING THE DOTS
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Plans for ‘Generation Buy’ Xxxxxxxxxx Tim Hague managing partner, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Sagis
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recurring theme of the UK mortgage industry is the prospect of long-term, fixed-rate mortgages, recently given renewed impetus by Boris Johnson as part of his attempts to turn ‘Generation Rent’ into ‘Generation Buy’. There is an obvious longer-term policy reason for this focus, beyond votes. Homeownership – or the lack of it – has a very real impact on pension provision in the longer term. If any given generation of borrowers cannot afford to own their own home – and pay off their mortgage ahead of retirement – it creates a massive longer-term structural issue around pension provision and, more generally, aspiration as consumer studies repeatedly show. People can afford to live on a smaller income in retirement if they’ve paid off their mortgage, but they can’t if they are still paying increasing rents. Property prices are still in excess of earnings, regardless of the forecasted wealth transfers, but ownership has to be extended. The two principal challenges facing first-time buyers (FTBs) are: finding a deposit and meeting affordability criteria. Wealth transfers may help with deposits – if they don’t conspire to support higher prices – but the affordability issue is largely driven out of the regulator’s requirements around capital for higher loan-to-values (LTVs), especially at 95%, and the accompanying stress tests. First-time buyers need higher LTVs because they can’t save for a bigger deposit. My own view is that Boris’ proposed scheme will need to include support for lenders participating in it to reduce the risk of higher LTV lending. After all, a 25-year fixed rate without high
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LTVs will have a very limited appeal. However, if there is no will to help from the lending community, he may consider inviting in or setting up a lender to deliver it. We live in an age of increasing government intervention and we need to work with it not against it. Longer-term fixed rates do genuinely help FTBs with affordability. The regulator’s rules around stress tests for products of five years or longer enables borrowers to afford more, or to more easily pass the affordability test.
“If any given generation of borrowers cannot afford to own their own home and pay off their mortgage ahead of retirement, it creates a massive longerterm structural issue around pension provision and, more generally, aspiration” Longer-term fixed rates also bring additional sources of investor into play, especially when interest rates are so low, such as pension annuity funds and local authorities which are more willing to fund longer-term investments. However, the current funding and distribution models are not built for this kind of product. The sale of 5-year fixed rates has risen significantly in recent years, but the appetite for longer terms is more limited. The longer the fixed term, the longer the lock is likely to have to be if lenders are not to pay for the fixedrate hedge long after the borrower has redeemed. From an intermediary perspective, the longer the lock, the less churn there is in the marketplace. There will be fewer remortgages and product switches, resulting in fewer procurement fees. Brokers will need to be creative with business models. Arguably the biggest issue is in the mind of the borrower. The longer fix
suggests an inability to flex with life changes such as job moves, buying with a partner, having kids, or retirement. So in practical terms, how can we address this cocktail of lender, broker and consumer concerns to deliver 25year fixed-rate mortgages? One obvious starting point is mortgage portability. Most mortgages are portable, but few borrowers know this. Brokers should demonstrate the difference between porting – and paying any outstanding Early Repayment Charge (ERC) – with taking a new product with a new lender, in the same way they would demonstrate the difference between a product switch and a remortgage. However, the current process of porting is almost entirely manual, and in order to prepare a European Standardised Information Sheet (ESIS), brokers and lenders have to understand the outstanding balance to be ported, the remaining term of the loan and then the product details for any additional top-up borrowing. Sourcing systems are nowhere near being able to do this, and lenders’ servicing platforms rarely talk to their new mortgage origination systems. An ESIS is typically produced manually. That may be fine while porting volumes are low, but as more longerterm fixed rates are taken and an increasing number of borrowers need to move house, demand for precious operational capacity will outgrow supply. The industry needs to consider technology solutions to address the distinct and separate parts at both the back and front end of this process. Long-term fixes may get some borrowers into homeownership with the government adding its considerable weight behind them, and in a low interest rate environment they have a better chance than at perhaps any other time. However, there are many ducks to line up if we are to achieve Boris’ ambitions for ‘Generation Buy’. M I
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LONDON
Safe as houses Robin Johnson managing director, Xxxxxxxxxx
Kinleigh, Folkard and xxxxxxxxxxxxxxxx, Hayward Professional xxxxxxxxxxxxxxxx Services
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n my time dealing with London’s residential property market, its resilience has been a constant source of amazement and reassurance. Having withstood the blows of the credit crisis and emerged stronger than ever, once again we are seeing a rebound from the impact of the pandemic and lockdown quicker than many would have expected. Partly fuelled by the cut in stamp duty, quarterly prices rose by 0.9% in prime outer London in October, the highest rise in five years, according to recent research by Knight Frank. The largest quarterly rises were seen in Belsize Park (3.2%), Dulwich (2.3%), Wandsworth (2.1%) and Wimbledon (1.8%). The second national lockdown in England is unlikely to have impacted the Prime London market as the first one did – not least because deals are still going through, loans are being made and valuations are available. The fact that the property market remained open during the monthlong lockdown, together with the momentum generated since the market reopened in May, will support activity well into the first quarter of next year. The stamp duty holiday is still in play, and the government confirmed that buyers and renters were still able to move houses throughout November. Clearly, it understands the importance of the property market in supporting the economy. The appeal of London is universal. According to Chestertons’ London Residential Property Market Report in Autumn of this year, lower property prices and the weak pound are also motivating Middle East investors to purchase property in the capital. Sales have increased as a direct result of these overseas investors, as well as those from
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Hong Kong, China, and France, the report said. The recent news around vaccinations, and consequently the economic outlook for 2021, is buoying overseas sales, and enquiries are being supported by forecasts of recovery within the UK economy, with economic growth in 2021 of 6.4% compared to a projected fall of 10.1% for 2020 as a whole.
“People are sacrificing commuting convenience for space, which will support activity in some previously less popular locations” A recent report by PwC and the Urban Land Institute supports London’s appeal as the second most favourable city for real estate investment in Europe after Berlin. It describes the likes of London, Berlin and Paris as “stalwarts” for longerterm investment. These cities, says the report, offer the best of both liquidity and stability. But while the location continues to be universally popular both here and abroad, some property types – perhaps unsurprisingly – are faring less well. The pandemic has diminished buyers’ appetites, for now at least, for flats. In London, the average price of a flat went up by more than any other property type between 2011 and 2019. Over the past 12 months this has been reversed, and flats have been weaker performers, though it should be noted this is not a rapid decline in value so much as a slowing of price increases. Hamptons International said that this year is set to be the first time in more than a decade when flats make up fewer than half of all property sales in the capital, adding that London flats are taking 70 days to sell on average, whereas houses are taking just 29. We should remember that the reduced availability of higher loanto-value (LTV) mortgages will be
DECEMBER 2020
impacting first-time buyers’ ability to get on the housing ladder, too. Flats may be less appealing for now – and they are losing their appeal at the market’s top end, too – but the inability to afford them is a double whammy. As news improves regarding a vaccine and lending becomes more confident at higher LTVs, I would not be surprised to see the popularity of flats return as people attempt to buy at good value. For the bigger picture, the rise of suburbanisation and a worsening housing supply crisis mean the capital will lead the UK housing market in the post-pandemic recovery, with Londoners expected to see their house prices rise by a fifth (21%) over the next five years. JLL predicts prices will rise in the previously “less fancied” pockets, too, as buyers prioritise space to work from home over location. People are sacrificing commuting convenience for space, which will support activity in some previously less popular locations. It’s arguably good news for properties in tier two and tier three locations, but I am not at all convinced we are seeing an exodus to the suburbs. There simply isn’t enough property anywhere to accommodate a seismic shift. This means the current stock has to be used, but also that prices are supported as demand continues to outstrip supply. Some commentators have already picked up on the fact that housebuilders in London have fallen behind during the coronavirus crisis, and that targets have been missed because of the pandemic. The industry shut-down, the impact on supply chains and labour, and the ongoing need to socially distance on-site are all factors that have caused numbers fall below half of where they arguably need to be in the capital. The ingredients that make London property attractive – both internationally and to UK residents – have been exacerbated by the crisis. Perhaps I shouldn’t be surprised it continues to perform well. M I www.mortgageintroducer.com
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The second charge revival starts now Xxxxxxxxxx Tony Marshall managing director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Equifinance
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o say that this has been a testing period for the second charge sector, as well as the whole lending market, would be an understatement. The initial lockdown resulted in valuers being unable to attend properties, the virtual shut down of the Scottish Land Registry, customers being allowed to defer payments on all secured lending for three to six months, uncertainty regarding the return to work for employees on the furlough scheme, and additional concerns regarding those industries that appear to be vulnerable. All these issues created an uncertain environment, which resulted in a curtailment of lending for many. For us, it meant the complete removal of our products from the market, given that we were unable to make credit decisions with any degree of certainty. Having met that challenge, and with the payment deferral scheme drawing to a close, valuers able to go about their work again, and an overlay to our underwriting criteria to
Finding the best choice for the client is imperative
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mitigate the perceived risks in the new environment, we are back. The main difference between the first and second charge sectors is that the former has recovered – a feat which the second charge sector has not yet matched. With property purchase a dominant force since the end of the first lockdown, helped by the stamp duty holiday, second charge loans have taken a back seat in the everyday considerations of mortgage brokers. However, it is time to reset and remind the intermediary sector just why a second charge mortgage provides such a strong option for capital raising customers. As new purchases continue to grow, and overburdened first charge lenders and conveyancers try to cope with the flood, there are likely to be many disappointed buyers who don’t complete in time for the end of March stamp duty deadline. Disappointed buyers are likely to look instead at refurbishing their existing properties, and those whose hopes of a remortgage seem unlikely to happen for a while because of the delays will start to look for alternative funding. Advisers should therefore be aware that a second charge solution is within their grasp. The key determinant in any situation involving client advice is not to
prejudge the solution until there is a complete understanding of the client’s personal circumstances. While both remortgage and second charge options do provide the funding required, the question that should be asked is whether the choice is actually the best one for the client, given their individual circumstances. Each method has its merits, and it is vital that, as second and first charge have become effectively the same thing as far as regulation is concerned, advisers can discern where one method is more appropriate than the other. It is now more vital than ever that customers have all the facts regarding methods of funding procurement. The acid test is not about what the adviser is comfortable recommending, but that the final advice, whether for a remortgage or second charge, is led by the evidence collected at the factfind stage. For those of you who might be new to second charge lending, please consider the following typical examples of when a second charge may be a more viable option to a remortgage. When your client: is on a competitive mortgage rate; is tied into their mortgage with heavy redemption penalties; has an interest-only mortgage, and further borrowing is restricted by the first charge lender; has a credit status that has changed since their mortgage application; needs early settlement flexibility; needs to raise capital for a nontraditional purpose; is unable to obtain a remortgage or further advance; requires speed of funding due to automated valuations; has experienced a recent change in employment. Of course these are just pointers, but understanding when a second charge loan is the more appropriate choice is a crucial skill. Second charge mortgages provide a vital alternative for capital raising customers, and as a lender which has developed its business through the intermediary channel, we are keen to remind brokers of its many virtues. M I
DECEMBER 2020
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NETWORKS
Who wants to be a millionaire? Shaun Almond managing director, HL Partnership
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n two weeks, HLP will have reached the milestone of sending out one million client newsletters on behalf of our member appointed representatives (ARs). A cornerstone of HLP’s strategy, in cooperation with our members, is to help them engage existing customers on a regular basis and strengthen the relationship between customer and adviser. Our research shows that consumers who haven’t had any subsequent contact with the adviser who arranged their mortgage are unlikely to go back to that source for assistance when they need to remortgage. With individual circumstances changing all the time, particularly as we face the social and economic challenges brought on by the pandemic and the high percentage of fixed-rate mortgages reaching the end of their terms, the chances that customers will go direct to their lender for a product transfer are high. For the adviser sector this is not just disappointing considering the role that remortgages will play in the medium term, it is potentially devastating. Once the current purchase boom subsides, the market will regain some of its dependence on remortgage activity, and those advisers who have failed to maintain contact with existing customers could find that their clients have forgotten the value of advice. In the longer-term – over two or more years – the mortgage market should return to consistent growth as consumers seek to get plans back on track and are more confident in making major financial decisions. Normal levels of remortgaging are anticipated,
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but if advisers are going to hold on to their customer bases, consistent communication is paramount. Matters will only get worse as preferences for longer fixed-term products increase the lifecycle and ultimately reduce the opportunities for customer engagement. It is often said that the reasons for poor communication are a lack of time, knowhow and resources. One of the advantages of being a member of a proactive network such as ours is that the core technology provides advisers with reminders about customer contact. DATA DRIVEN
The client newsletter is just one example of how to help keep the brand and the adviser firm in front of clients on a regular basis, and data driven campaigns identify opportunities and send targeted communications, which in turn maximise remortgage and insurance reviews for advisers. Customer relationship management (CRM) software might have been considered a luxury not so long ago, particularly in the mortgage sector. However, the threat from the internet and the potential for the erosion of advice by the proposed expansion of execution-only type deals, as well as just good old competition for customers, means that every mortgage adviser needs to make sure that they are properly equipped. Moving customer information from the filing cabinet to a system that can tell you in a very few clicks when customers are due a call and when a renewal is imminent, as well as telling you well in advance when that fixed rate is due to revert to the lender’s variable rate, is now a ‘must have’, not a ‘must be joking’. As we reach the end of 2020, challenges are going to remain. The purchase market will certainly be a
DECEMBER 2020
rocky road for many up to the end of March, unless the Chancellor is minded to extend the stamp duty holiday, and who knows what will happen in Q2? All those advisers who have traditionally relied on a strong purchase market will need to have a plan B to shore up their new business. What price is a good CRM system now, and the will to use it in 2021?
Mortgage brokers deserve specific treatment Leaving aside the massive COVIDshaped elephant in the room, I think for me one of the features of 2020 has been the recognition that general networks – covering every discipline from selling investments to pet insurance – do not necessarily make the best hosts for specialist ARs. Naturally, I am referring to my own area of expertise, namely mortgages and protection. Although all advisers are subject to the same overall regulatory framework – and share the same responsibility and duty of care to their customers – it has been my experience that the needs of pure mortgage advisers are rarely met in full by networks where the predominant proportion of ARs have client portfolios made up of investment, pension and insurance customers. There is no doubting the best intentions to provide the right support. Nevertheless, where investment members are predominant, mortgage brokers can find themselves with a compliance environment and technology solutions that have been designed more with the investment and pension advisers in mind. In the same way, I believe that mortgage advisers deserve to have the equivalent level of support as investment firms receive from their networks. Unless their unique requirements are recognised, they are better off seeking entry to networks dedicated exclusively to them. M I www.mortgageintroducer.com
REVIEW
Shifting sands in prime London Peter Izard business development manager, Investec Private Bank
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hile the entire property market has been subject to enormous change as a result of the pandemic, this has been particularly pronounced within the London prime market. Some parts of the prime market have seen a relative ‘boom’ – particularly with the much-reported ‘rural renaissance’ seeing an uptick of interest in countryside living, and average prime values outside of London climbing beyond their 2007 peak for the first time, according to Savills. Recovery in London’s prime market has been slower, by comparison. However, experts are now seeing promising growth. Recent data from Knight Frank saw October reach the third highest number of prime London property exchanges of any month in the last five years. Although the majority originated in deals done before the first lockdown, Knight Frank expects that a record number of accepted offers since May should start to translate into exchanges. That said, the road for the prime property market has been far from smooth, from a lack of overseas investors to a shift in buying priorities for domestic investors and, of course, a second national lockdown. As buyers and investors begin to plan for 2021, it will be more crucial than ever for intermediaries and advisers to offer expert guidance on how these trends will unfold, and what else might be coming down the line. With overseas buyers making up a large portion of prime property investors, popular locations – such as Mayfair, Knightsbridge and Belgravia –
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residence as well as those looking for future-proof investment properties. WHAT’S NEXT?
have been uncharacteristically quiet in recent months. According to data from Savills, this prompted prime central London registrations to drop on average by nearly 20%. Despite this, we can still expect the presence of overseas buyers to be felt towards the end of the year, particularly as wealthy investors rush to secure deals remotely before a 2% stamp duty surcharge is introduced in April 2021. Knight Frank describes a narrowing window of opportunity for international buyers here in the final quarter of the year. According to calculations by the firm, based on the combined savings from not paying the 2% surcharge and benefitting from the stamp duty holiday, international buyers could miss out on savings of up to £50,000 on properties worth £2m if purchasing after the April deadline, rising to £115,000 for a £5m property. Advisers should bear in mind that domestic buyers will want to monitor these developments closely. While they may currently benefit from a less competitive market, this could soon change if travel restrictions are lifted. SHIFTING DOMESTIC PRIORITIES
Promising price recovery in the prime London market might be attributed, in part, to a shift in buyer priorities. Data from Savills found that the capital’s greener locations such as Richmond, Wimbledon, Wandsworth and Chiswick saw a huge increase in demand in recent months. Prices in these locations escalated much faster than other prime areas in London, by an average of 4.5% year-on-year. Much of this activity is reported to have come as buyers anticipated a second national lockdown. Locations near parks, good high streets and with more space for home working were seeing increased demand both from people searching for a new primary
With the property market remaining open during the second lockdown, experts expect the impact to be minimal in comparison to the first. Commenting on its recent data on the prime London market forecast, Tom Bill, head of UK residential research at Knight Frank, said: “A second national lockdown in England is unlikely to impact the prime London property market as the first one did. “The property market will remain open during the month-long lockdown and momentum generated since the market reopened in May will drive deal activity into Q1 next year.” Soon after the announcement of the second lockdown, we also saw the Chancellor announce an extension to the government furlough scheme to March 2021. While this move was welcomed by many businesses, it’s worth noting that many have previously questioned whether the furlough scheme extensions are simply delaying an inevitable market downturn when it comes to an end. Finally – and to finish on a note of optimism – buyers should also keep a close eye on developments with regards to a potential vaccine. With logistics and administration of the vaccine a key focus at the moment, if successful this could hail a cautious return to ‘normal.’ If transactions and viewings start to return to pre-pandemic levels, investors should be ready to move quickly as the market resurges. TAKING THE RIGHT APPROACH
For the time being, the future remains uncertain. With multiple macroeconomic milestones on the horizon – from continued COVID-19 restrictions, to Brexit developments and the start of Joe Biden’s presidential term – the London prime market could see plenty more change to come. Whether facing opportunities or challenges, Investec’s experts are on hand to support with the right capital solutions to navigate the market. M I
DECEMBER 2020
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RECRUITMENT
Network to get work Pete Gwilliam director, Virtus Search
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hilst accuracy is difficult, it is estimated that approximately twothirds of hires are made without externally advertising the job. This ‘hidden jobs market’ arises for a number of reasons: maybe the employer needs to hire someone confidentially, or – as is a growing trend – maybe an employer sources candidates directly, thus removing recruitment fees or advertising costs. Not many people realise the extent of this hidden market, which means the majority of people are focusing their efforts applying to the third of jobs that are advertised. This makes those ‘visible‘ jobs far more competitive, and leaves each candidate with more to do to get an interview, let alone the job. Ensuring you are connected to such ‘blind’ opportunities is only really possible if you invest in developing your network. Moreover, regular interactions make it much easier to get the support and sponsorship from those who are well placed to be an advocate for your qualities and skills. The wider your network, and the more often you use it, the better it works. Maintaining contact with ex-colleagues is one example of where
you can be given an insight into firms that may have hiring plans that would interest you. Networks need to be maintained regularly – even when you’re already in employment – for them to really work effectively. Importantly, in considering any job search strategy, you also need to engage with those people who are genuinely good advocates. It is often much easier to get a door opened by someone who believes in your ability than it is for you to do so on our own. For some, the concept of networking feels awkward, but there is no doubt that by giving time and considering the needs of others, this does get reciprocated, which can generate exploratory discussions about how you might fit in the business they’re working in. The key is not expecting to gain an immediate progression from each encounter, and to look at it in the context of how we have all been challenged to work and think differently owing to the ongoing COVID-19 restrictions. Of course, the pandemic has meant the usual opportunities to develop relationships and build your network at industry events and forums have been constrained; however, this should not prevent us from finding other avenues through which to stay prominent and influence our networks. Of course, keeping yourself informed around which companies
Networks need to be maintained regularly, even when you’re in employment
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DECEMBER 2020
are expanding, relocating or developing a new product or service is also an important tactic in knowing where there might be job opportunities that are not yet being advertised. One trend that has a direct link to recruitment patterns for lenders in 2021 is that there will inevitably be more headcount growth in underwriting and telephone-based relationship and business development backgrounds than there will be in field-based business development roles. The working relationships between brokers and the field-based sales activities of lenders has been reset, and the essential tools for remote communications that have been forced into our working models in 2020 are here to stay. Recruitment consultants who specialise in particular sectors will inevitably be close to the plans of firms they partner with, whilst also being able to advise where you may need to develop greater experience and refine skills to be able to make yourself a candidate that might be desirable in the prevailing climate. However, rightsizing headcount to fit lending volume forecasts remains the key focus, so recruiters will certainly have many more actively job-seeking candidates than there are vacancies to fill. In such a competitive jobs market it is imperative you develop, seek out and create your own opportunities, rather than just relying on the roles being advertised to meet your needs. Whether applying for a role or presenting your credentials directly to someone, it is essential that you can sell yourself, your qualities and your career achievements and illustrate the value this has created for previous employers. Whether talking to a recruitment consultant, employer or ex-colleague, make sure you really know and can describe what you want to do and what you have to offer. With competition for every sales channel vacancy only likely to increase, you have to make the first impression count. www.mortgageintroducer.com
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REVIEW
SERVICE
A clear purpose will guide us through Xxxxxxxxxx Stuart Miller customer director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Newcastle Building Society
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hile there has been much tragedy and hardship in the wake of an ongoing health crisis, such disasters do often have the effect of tightening communities and engendering charity, generosity and hope. From the millions standing on their doorsteps to express their gratitude to those working in the NHS, as well as the other key workers within varied sectors who enabled the country to continue to operate through lockdown, to the hundreds of thousands of people who volunteered to deliver food and other necessities to the vulnerable, the pandemic has been a great leveller, and in many ways it does not discriminate between the rich and the poor. However, the lockdown has further widened some of the divisions we already see in society. Some, able to work from decent sized homes with access to outside space, saved money and enjoyed time with their families. Many others, though, have suffered in homes too small, especially with one or more of the household now working full-time from home, and in many cases with no outside space at all. As if the pre-pandemic challenges around financial and social disadvantage weren’t enough, in the UK the virus sadly has, and will continue to, hit harder for those less well off in our society. Poverty is a complex business. There are many, many reasons for this disparity; none of them are fair or easy to address. More than ever, we must all do what we can to focus on supporting our
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communities. As a building society, every decision we make is centred on our purpose: creating a better financial future for our members and the communities we serve. Having a community-led purpose isn’t coincidental to our existence as the Newcastle Building Society, it’s the reason we exist. Having a clear purpose is motivating. It motivates our colleagues, our members and society more generally. It is purpose that drives us to go the extra mile each and every day for our customers and colleagues, and never has this mattered more. The devastating effect the coronavirus pandemic has had on the UK economy – and especially on individuals’ financial situations – has been brutal already, and we are only just at the beginning. How financial services and the mortgage market are responding at this point in time will go on to shape public trust in our industry for decades to come. The events of the past 12 months have entrenched the public demand for financial services that ‘do the right thing’, be that by the environment – ethical funds in the UK have seen sustained record inflows following lockdown – or by society. But there is a challenge here. The mortgage market is quite rightly governed by affordability rules designed to protect the financially
vulnerable and ensure every consumer gets the right outcome. Capital adequacy rules are there to protect the wider financial ecosystem from systemic meltdown. As ever, there can be unintended consequences, and we are already seeing this play out in the types and choice of mortgage finance readily available to borrowers, though this is easing and new products are regularly becoming available. Battening down the hatches is an understandable response in crisis, but we all have a responsibility to ensure that fairness to borrowers does not become yet another coronavirus casualty as a resuly. It’s an incredibly important balancing act to get right. We know that being excluded from mortgage finance can derail a family or individual’s financial situation, and therefore it is important to have a good understanding of the nuances of a borrower’s circumstances. Clearly we must treat all borrowers fairly, but we should also acknowledge that no two borrowers are the same. The more time we can take to assess and understand people’s individual circumstances, the better. The continuing impact of furlough and months of mortgage deferrals have certainly changed the landscape for consumers, brokers and lenders. We, like everyone else, are learning what these events really mean for people, and consequently what we can do to help. By remembering what we are here for, together with our broker partners we are developing new ways of getting the right loans to the right borrowers. Our purpose won’t change, but how we fulfil it will evolve, to support our MI borrowers’ evolving financial needs.
Clarity of vision is needed to negotiate the year ahead
DECEMBER 2020
MORTGAGE INTRODUCER
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BUY-TO-LET
Switching focus in buy-to-let George Gee commercial director, Foundation Home Loans
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here has been a lot of focus on the buy-to-let (BTL) purchase market over the past few months, not least due to the stamp duty holiday being somewhat unexpectedly available to landlords – at least in England, Scotland and Northern Ireland. Clearly, landlords will take a lot more into account than a stamp duty saving when starting or adding to a portfolio, but there’s no doubt that if it means a potential saving of many thousands of pounds – and you were going to purchase at some point in the future anyway – then trying to bring it forward to take advantage of the holiday would have been a major consideration recently. REMORTGAGE FOCUS
That said, as time moves on and there is an understanding of what might – or more pertinently, might not – be achievable in terms of purchase completions before the deadline, I suspect we will begin to see more of a focus on remortgages across the buy-tolet marketplace. There are several good reasons for this. First, we should focus on the average level of mortgage debt held by each landlord – according to the most recent BVA BDRC landlord survey, a typical landlord owes £418,000 in borrowing. If landlords lucky enough to have no mortgage debt are excluded, then this increases to £705,000. There is also a significant difference in the mortgage debt held by those with just a small number of properties, compared to portfolio players. Those with just one property owe, on average,
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£55,000, while this rises to £1.5m for landlords with more than 20 properties. When the cost of being a landlord is discussed, there tends to be a lot of focus on maintenance and upkeep, or the associated costs in securing tenants or of using a letting agent, but we are all completely aware that what tends to be the biggest cost to landlords is that of their mortgage. And this is in an environment where rates and product pricing have been very competitive. ONGOING PROFITABILITY
The ability to cut monthly mortgage costs – particularly for those with multiple properties – is likely to provide considerable rewards in terms of yield and ongoing profitability. If you have over £1m of mortgage debt and you can cut 1% off your mortgage rate by changing product or lender, then it’s unlikely that you are going to be disappointed. Given this level of mortgage debt, it’s perhaps also not surprising to learn that – again according to the BVA BDRC landlord survey – three in 10 leveraged buy-to-let landlords have plans to remortgage in the next year. Again, it tends to be that portfolio landlords are more inclined to review their mortgage options regularly, because they have more properties and are perhaps more tuned into the profitability benefits that can be unearthed by remortgaging to a cheaper rate. With these intentions, it seems obvious that advisers could have a sizeable landlord client database to tap into. The availability of some highly competitive rates means that opportunities are arising for advisers with existing clients whose special deals are coming to an end. Not to mention, a chance to better educate other landlord clients, some of whom might not have previously
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considered the difference a remortgage now could make to them. Again, according to the latest BVA BDRC data, 60% of landlords fund at least half of their portfolio through buy-to-let borrowing, and they hold an average of 5.3 loans in doing so. That latter figure has gone up from 4.8 in the second quarter of this year, again highlighting the increased landlord activity in the buy-to-let sector, and potentially a greater willingness to look at their current finance arrangements and the benefits remortgage advice could deliver. It’s important not to underestimate the potential for marrying up both remortgage and purchase advice for landlords. If we do get the stamp duty holiday extension that so many are currently lobbying for, then we could also see a growing demand to remortgage. This from landlords, who may be seeking to release equity in their existing properties, leveraging up in order to access funding for deposits to make their purchase plays. The remortgage market – both in the buy-to-let and mainstream sectors – has been the bedrock of business for intermediaries for many years. While 2020 has seen a much more even spread in terms of the purchase and remortgage activity mix, there are likely to be growing opportunities for the latter, going forward. GOOD ADVICE
Of course, there is some added complexity across the BTL sector, but this only serves to emphasise how vital good, professional advice can be for landlords looking to maximise their refinancing capabilities across their portfolios – large or small. Which means that the viability of remortgage offerings should be firmly on the radar of every intermediary, regardless of whether you are a BTL specialist or not. Working with specialist lenders, such as Foundation Home Loans, which are focused on delivering the best remortgage products and service, might well help you cut your clients’ costs significantly, both now and in the future. M I www.mortgageintroducer.com
REVIEW
BUY-TO-LET
A strong rental sector fills the housing gap Bob Young chief executive officer, Fleet Mortgages
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ith the year coming to an end, there will undoubtedly be a lot of speculation around lending figures, how individual lenders have done throughout the year, and what this might mean for targets moving into 2021. Of course it’s difficult to talk about other lenders, but the general theme appears to be that the larger, mainstream operators have actually done OK despite the pandemic. The belief being that – for the most part – targets will still be hit. In the specialist market however, particularly for lenders like ourselves who securitise and require physical valuations in order to lend, the picture may be somewhat different. The lockdown effectively took away a third of the year, with physical valuations being halted. Certainly from Fleet’s perspective, our anticipation is that, as a result, we will complete a little over two-thirds of the lending we had planned to. That said, the picture today is very different from Q2 this year. Our runrate of business is well over our monthly targets, and in that regard we expect to complete £750m of lending during the course of 2021 – marking a significant uplift on 2020. The reasons for this are many and varied, but we certainly have excellent funding lines in place with investors who understand the UK buy-to-let sector and are very committed to it. Nonetheless, we also continue to attract attention from new funders keen to access the UK buy-to-let market, which gives us comfort going forward. www.mortgageintroducer.com
That appetite to work with us is based on the quality of loans we produce, but it’s also about the buyto-let sector as a whole, which has shown remarkable resilience not just over the course of the last year, but over many years as it has dealt with various government interventions. The facts of the matter remains that without a strong private rental sector in the UK, the housing gap we currently have would be much, much bigger. And with tenant demand for property growing, house prices inching up, and various other demographic and societal shifts, buy-to-let continues to be a good investment option for landlords and those that might wish to buy these loans.
“This year has undoubtedly been like nothing we have ever seen before. I suspect I am not alone in wanting 2021 to be steady and predictable and, quite frankly, dull in comparison to what we’ve all endured” To say the latter is a key factor in our sector is an understatement. The capital markets are such a defining presence and shape so many lenders’ buy-to-let offerings that you can’t determine what the future might look like without seeing how they are currently running. Again, in that sense, there is much to be encouraged by. I sat in on a European Securitisation Market conference recently, and to say that the ‘room’ was overwhelmingly positive would be an understatement. Normally at these events, there are a number of fence-sitters and those who have at least some reservations.
That was not the case this time, with panelist after panelist all ploughing a particularly positive furrow. There was a great deal of talk about recent residential mortgage-backed securities (RMBS) deals which had been got away, and what could be achievable during 2021, plus a focus on the ‘wall of money’ that was waiting to be used by financial institutions as a result of quantitative easing (QE). The assumption was that the cash generated by QE would not be allowed to sit idly around doing nothing, and that quality buy-to-let RMBS would be much in demand. A more positive securitisation environment is likely to deliver tighter spreads in the capital markets and positive subscriptions, which of course is fed back into greater levels of potentially lower-cost funding available to us to use. This circle, which has not always been easy to square in recent times, is now looking a lot smoother. It allows a lender like ourselves to be incredibly positive about our funding and what we can achieve with it, to have serious conversations with our excellent existing funders and those who might wish to come to market, and it gives us the confidence to continue working with advisers and clients to deliver an excellent service, certainty of mortgage finance, and to help landlords grow their portfolios. On that note, we come to the end of my final article of 2020. Despite everything that has happened, I think there is genuine cause for positivity in what the market, and all stakeholders and practitioners, can deliver in the months ahead. I suspect I am not alone in wanting 2021 to be steady and predictable and, quite frankly, dull in comparison to what we’ve all endured this year. I probably won’t get my wish in that respect, but at Fleet we’ll continue to deliver a speedy service to allow advisers to get on with the job of giving advice and providing the finances their clients need. So, let me wish all readers of Mortgage Introducer a very Merry Christmas and happy new year. We look forward to engaging with and supporting you again in 2021. M I
DECEMBER 2020
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BUY-TO-LET
Stamp duty cliff-edge Jane Simpson Xxxxxxxxxx managing director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx TBMC
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he stamp duty holiday announced in July for properties up to £500,000 in England provided a welcome boost to the housing market, allowing it to make a recovery from the effects of the coronavirus pandemic. The cost saving incentive has certainly had an impact, and resulted in increased activity in the purchase market, including buy-to-let properties. However, the surge in mortgage applications is not without its problems, with some lenders being overwhelmed by new business, and delays occurring with conveyancing work as solicitors try to deal with the increased demand on their services. The deadline of 31 March 2021 means that time is running out for anyone looking to take advantage of the stamp duty holiday. Recent research by Legal & General Mortgage Club found that the average time for a purchase, from finding a property to completion, is taking at least 14 weeks, as processing times have doubled due to the high demand. At TBMC, we only deal with buy-to-let mortgage applications, but we have heard warnings from the home-moving industry that some transactions are taking up to five months to complete, which means that the window of opportunity for getting a mortgage for purchases that avoid paying stamp duty may well be closed. There has been concern throughout the industry that having a hard deadline for property purchases to complete may cause some transactions to fail at the last hurdle, especially as the current Help to Buy scheme is also due to end on 31 March. For example, prospective first-time buyers may not have enough savings to cover the 3% stamp duty charge if
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it was suddenly payable at the point when they were due to exchange contracts on their new home. This could then cause a breakdown in the property chain, creating unintended but drastic knock-on effects in the housing market. There have been calls by the homemoving industry for the stamp duty holiday to be extended by another six months, and to have a tapered ending to avoid creating a cliff-edge scenario for buyers. This would then release the pressure placed on all parties involved in property purchase transactions, and encourage the housing market to continue its recovery beyond the 31 March deadline.
Whatever happens with the stamp duty deadline, it is important for mortgage lenders and brokers to be supportive of each other during this period of increased demand. It may seem sensible to submit cases to lenders as quickly as possible, but it is just as important to make sure that they are fully packaged, with all the required documentation, in order to ensure that the application can be processed without unnecessary delays. Equally, it is vital for lenders to be transparent about their current turnaround times, so that brokers and their clients can have realistic expectations surrounding offer and completion dates. After all, we’re all in this together. M I
Brokers and lenders must work together to help buyers avoid a cliff-edge
DECEMBER 2020
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REVIEW
Rise of the retiree renter Richard Rowntree managing director of mortgages, Paragon
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he private rented sector (PRS) has changed substantially since the turn of the new millennium. Looking at demographic data, we that the customer base shifts, driven by a broad mix of economic and societal changes. After accounting for around 10% of households in the 1980s and ‘90s, a period of rapid growth saw the PRS double in size, before stabilising at around 20% by 2013. In the decade up to this point, the proportion of 25 to 34-year-olds who owned their own home fell from 59% to 36%, while those opting for rented housing peaked at 48% in 2013/14. A fascinating aspect of this changing profile is the number of tenants among the upper-middle and retiree age
Renting can mean flexibility in retirement
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groups. Throughout the last decade, the rate of growth in the number of tenants in these age categories – 118% of 55 to 64-year-olds and 93% of those aged 65-plus – has been almost double that of the 35 to 44-year-olds, the next fastest growing group. This trend can be explained through a number of changes. SINGLE-PERSON HOUSEHOLDS
One of these is the increase in singleperson households, because those who live alone are less likely to own their home when compared to couples without children. Between 1999 and 2019, the number of people living alone has increased from 6.8 million to 8.2 million. A large contributor to this is the growth in the numbers of men living alone. Marriage appears to be central to this, because higher proportions of men never marry, while those couples that do marry have been increasingly likely to divorce – the period between 2005 and 2015 saw an increase of 23% in the number of male divorcees, while the number of women divorcing increased by 38%. It has been suggested that following divorce, there is a higher chance that women will form a household with children from the relationship, compared to men who live alone. Analysing drivers for the shift from an economic perspective, we can see a squeezing of retiree income since the turn of the last decade. Department of Work and Pension (DWP) statistics show that during this time, the average pensioner income increased below the 3.1% rate of inflation, while low interest rates saw pension savings perform poorly. This has compounded a steady downturn in pensioners’ investment returns since the 1990s. Switching to smaller or rented housing offered an opportunity for
cash-poor homeowners to release equity to enjoy later life. A more positive – but perhaps less obvious – driver of declining numbers of over-55 owner-occupiers is the flexible nature of rented housing. Retirement can bring with it more time to spend with family, and more dependence on them. Without the time and money associated with buying and selling a home, renting allows people to adapt to this, moving closer to loved ones quickly and easily. With underoccupation much more prevalent in the owner-occupied tenure, rented housing also provides a route to downsizing into a more manageable property. These changes have been evident throughout the past decade and we will undoubtably see more in the next. It is forecast that over-55s will account for a higher percentage of the population, rising from 30% to 36%, or 26 million people, by 2043, and that older, singleperson households will drive new household formation. LANDLORDS ARE ADAPTING
Based on the relative growth seen over recent years, exacerbated by aging stock and the expected financial fallout of the COVID-19 pandemic, predictions point to a shortfall in the number of beds in the care home sector required to satisfy demand. This means that the role of the PRS in providing a home for older people will become even more important. Encouragingly, landlords seem to be aware of and adapting to the changing profile of renters. Our research highlights that 21% of landlords expect to let more to older singles in future, while 20% foresee letting to retirees, second only to professionals or executives and companies. Landlords who consider longer tenancy agreements, the location of their property and any adjustments required for later life tenants will be rewarded with stability – older tenants tend to live in properties for longer periods – and satisfied customers. With 68% of over-55s saying that renting is enjoyable or suits their needs, this cohort is challenging the perception that all tenants are so-called ‘reluctant renters’. M I
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BUY-TO-LET
A time for big decisions Ying Tan Xxxxxxxxxx founder and chief executive, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Dynamo
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’m writing this article midlockdown and I’m delighted to say that, generally speaking, it has remained business as usual over this period, despite the growing uncertainty over when and if this will end. I certainly don’t envy the decisionmakers when it comes to COVID-19 repercussions and the balancing act between tackling economic issues and health concerns with allowing loved ones to come together over the Christmas period. Big decisions are also taking place across the property market as the stamp duty deadline looms ever closer, with homebuyers, investors and developers having to take greater consideration over their purchases in terms of whether they will be completed in time to benefit from this tax break. Lenders are also having to be careful when generating new business and managing their pipelines in order to get offers out as quickly as possible. BTL SEARCHES
With all this in mind, it was interesting to see the latest data from Twenty7Tec on the state of the mortgage market one week after the second English lockdown began. This outlined that weekly mortgage search volumes reached 87.79% of the year’s highest figure, up 6.8% on the previous week. Search volumes for buy-to-let (BTL) mortgages hit 92.09% of the year’s high, a rise of 8.0% on the previous week. Meanwhile, weekly mortgage ESIS documentation figures were said to sit at 91.42% of the year’s highest figure, an increase of 7.5% on the previous week. Weekly buy-to-let mortgage ESIS documentation figures reached 89.75% of the year’s highest figure, a rise of 7.8% on the previous week.
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As highlighted in the report, the volume of buy-to-let searches has remained relatively steady all year, and those searches are converted into European Standardised Information Sheet (ESIS) documents more often than residential searches. This underlines how robust the BTL marketplace has remained, even throughout the most turbulent of times, and it will be interesting to note how these figures stack up in the weeks leading up to the Christmas period. THE LOCKDOWN EFFECT ON TENANTS
While the lockdown appears to be having little significant impact on activity levels across the BTL sector, the pandemic continues to place increased pressure on tenants. As such, the National Residential Landlords Association (NRLA) is calling upon the government to adopt the recommendations of the Social Security Advisory Committee and suspend the Shared Accommodation Rate rule. The association believes the government should adopt the measures for a period of at least a year. According to the NRLA, those under 35 who are currently relying on benefits in order to pay their rent for the first time will find that the amount they receive will only cover the cost of a room in a shared house. This will force many young renters to choose between building unsustainable debts or moving into cheaper, shared housing. The NRLA outlined that, as a result, the government will be pressuring people into moving home in the middle of restrictions to live with strangers, which poses a health risk. In the four weeks to 8 October, the proportion of Universal Credit claimants aged between 16 and 24, rose by 27%, up from 21%, in the four weeks to 12 March. TENANT SUPPORT
While the vast majority of landlords have acted professionally and
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humanely in their approach to helping those tenants worst affected by the pandemic, it’s clear that additional support is required in terms of rental arrears and tenancies, and in protecting their mental and financial health. Tenant support comes in many forms, and a recent survey from Paymentshield concluded that landlords should be part of the solution, helping to “educate” their tenants when it comes to their insurance requirements. A recent YouGov poll, commissioned by Paymentshield to more than 1,000 adults, found that 67% of those living in a rented property do not have contents insurance. This equates to more than nine million renters in the UK living in properties where their possessions are not protected from being lost, stolen or damaged. TALKING INSURANCE
However, 84% of homeowners have contents insurance in place. Paymentshield believes there to be multiple reasons behind the low numbers among renters, including tenants underestimating the value of their contents and deeming insurance to be unnecessary or expensive. The insurance firm also feels that these figures demonstrate that the industry is not talking adequately enough to tenants about their needs. Of course, it’s not a landlord’s responsibility to ensure that tenants are protected, and the onus must remain on the tenant in question, but research like this does raise the question of how landlords could better support and educate their tenants. Part of this comes back to the advice process that is received by the landlord. Is there an opportunity for landlords and advisers to work together to offer tenants access to the type of insurance cover they need? These are the types of conversations which could benefit all parties in this chain, and certainly provides some food for thought. M I www.mortgageintroducer.com
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BUY-TO-LET
Refurb buy-to-let: The best of both worlds Adrian Moloney group sales director, OneSavings Bank
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hen you’ve been working in the mortgage industry for as long as I have, it’s perhaps only natural that you become just a teeny tiny bit obsessed about property. Whether it’s reading about it or watching TV programmes, I get a real kick learning new things about something which has become a real passion of mine over the years. One of my favourite programmes is BBC One’s Homes Under the Hammer. Now, the premise of the programme probably won’t come as a surprise – a buyer snaps up a property and refurbishes it to either live in themselves or rent out – but what it may surprise you to learn, particularly in these COVID-19 times, is that it has been credited with fuelling a new boom in the number of properties being bought at auction. With the various current restrictions in place due to COVID-19, many people have ended up with more time on their hands to watch programmes such as Homes Under the Hammer, and with property auctions having to move online because of social distancing guidelines, people are finding the whole concept of buying at auction more accessible than ever. According to a recent article in The Guardian, one auctioneer, Savills, has sold more than £240m worth of property at auction so far this year, almost 40% higher than over the same period in 2019. Another auctioneer, John Pye Property, also reported that the total value of properties it sold at auction between May and October was 126% www.mortgageintroducer.com
higher than the same period last year, while the number of bidders at its auctions also rose by 52%. So, what happens if you’re approached by a customer who’s keen to buy and refurbish a property they’ve seen at auction as a rental opportunity, and who needs to arrange a product to finance the project? SPECIALIST SOLUTIONS
Landlords have traditionally faced difficulty in securing the funds to carry out improvement work on a property before letting it out. This is where specialist lenders, such as Precise Mortgages, come into their own, recognising gaps in the market and providing solutions. This includes propositions which bring together the flexibility of bridging finance with the surety of an exit onto a long-term buy-to-let mortgage once the work has been completed, provided the property meets the expected valuation following refurbishment. Offerings such as this could be ideal
for properties purchased quickly at auction, and where finance is needed to carry out improvement work to meet minimum Energy Performance Certificate (EPC) ratings – for example installing a new boiler or fitting doubleglazed windows – or those which require some light refurbishment to make them acceptable for mortgage purposes, such as putting in a new bathroom or kitchen. Here at Precise Mortgages, our Refurbishment Buy to Let product is designed to help your landlord customers maximise their yields, allowing them to purchase an undervalue property without having to be a cash buyer, and to use the equity growth to invest in future projects, should they wish to do so. It also features just one application, which we’ll key for you, one valuer for both the bridge and the buy-to-let, two procuration fees and two offers – which are issued simultaneously. After a difficult start to 2020, the housing market has bounced back in recent months. Refurbishment buy-to-let offers your landlord customers the best of both worlds: access to bridging finance and a buy-to-let mortgage at the same time. It’s innovative products like this which will help keep the momentum going as we head into the New Year. M I
Landlords have traditionally faced difficulty securing funds to carry out improvement work
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PROTECTION
AMI launches new protection report Kevin Carr chief executive, Protection Review, MD, Carr Consulting & Communications, co-chair, Income Protection Task Force
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he Association of Mortgage Intermediaries (AMI) has launched a report, ‘The New Protection Challenge’ based upon the views of 5,000 consumers and 500 mortgage advisers, covering a wide range of topics around mortgages and protection. According to the research, 97% of mortgage advisers say protection was mentioned in the mortgage process, while only 36% of customers remember it being mentioned, suggesting a perception gap between consumers and the industry. One in seven mortgage brokers currently refer protection to a specialist, but fewer than a third of UK adults can identify what income insurance is, and over half of consumers don’t believe protection claim statistics.
Commenting on the research, Alan Knowles, chair of the Protection Distributors Group, said: “The research is very enlightening and could suggest that if protection is being discussed with mortgage customers, that it’s not always being done in a manner that impresses it’s true value and importance.” Vikki Jefferies, proposition director at Primis, added: “With less than a third of UK adults able to correctly identify what income insurance is, it will be up to advisers to help boost consumer awareness on this product.” The publishing of the report coincides with the launch of AMI’s new Protection Specialists Group, which combines heads of protection, proposition directors and practitioners across a range of firms, networks and mortgage clubs. The purpose of the newly formed group is to focus on pure protection and general insurance (GI) matters, providing insight and front-line experience into the issues and opportunities facing the market. M I
NEWS IN BRIEF A woman appeared in court accused of claiming to be her ex-boyfriend so that she could pocket almost £40,000 worth of life insurance via an endowment policy in her ex-partner’s name. According to the latest stats from LifeSearch, income protection (IP) has accounted for a third of all claims this year. Half of the IP claims have been people under the age of 40, and the average age of an IP claimant is 42 years old. Louise Colley, previously at Aviva, has been named as Zurich’s new head of retail protection. Andrew Wibberley, Katie Crook-Davies and Jo Miller have been announced as the new co-chairs of the Income Protection Task Force. Almost a third of Brits say that the coronavirus pandemic has made them more willing to talk about their finances, according to new research by Lowell exploring taboos around money. The SimplyBiz Group is hosting a protection academy event, due to take place on 11 December, which has so far received more than 300 bookings.
How long would you really last with no income?
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n average, we tend to all think we could last around three months if we lost our income and had to rely solely on our savings. But according to the latest ‘Deadline to Breadline’ report from Legal & General, this number is actually just 24 days. The only group to underestimate how long they could survive are those who own their property outright. One in three said they can rely on their savings, but it would take the average working household 14 years to save their gross annual salary. Almost half rank losing their income in their top three worries if they
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became unable to work, while losing the home comes is fourth on the list. Take-up of protection products such as income protection (IP) is understandably higher among those
Protection can mitigate against loss of income
DECEMBER 2020
who have a mortgage (14%) or have children (11%). Those who have a financial adviser are also twice as likely (16%) than those who don’t. Commenting on the report, Richard Kateley from Legal & General said: “In times of hardship people look to protect what they have. “While protection may sometimes be seen as a less glamorous sector of financial services, it can be one of the most important. “This means we all have a responsibility to make sure clients are made aware of their protection needs to help ensure they have a more financially secure future.” M I www.mortgageintroducer.com
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REVIEW
PROTECTION
Vigilance in protection compliance Xxxxxxxxxx Mike Allison head of protection, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Paradigm Mortgage Services
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here is a feeling that, when it comes to compliance, protection can be seen as the poor relation to mortgages. Clearly there are a lot of factors that come into consideration when selecting the correct mortgage for a client, and the justification via the suitability report can take some considerable time to complete as a result. Given the sums involved, getting a mortgage recommendation wrong can potentially cost a broker a considerable amount of money, especially if the mistake is discovered sometime into the mortgage, as the ombudsman will usually look to place a client in the same position as they would have been if the ‘deemed correct advice’ would have been given. It is therefore vital that mortgage advice is not only good advice – clearly not a problem for quality firms – but is also fully documented, with Is dotted and Ts crossed, as it were. But what about protection? Is the same level of detail or consideration needed when, for example, replacing one policy with another? On the face of it the answer to this question would possibly be no if you were to ask the majority of advisers in the protection world. If, however, you were to delve into the recent ombudsman report on cases reviewed, you might take a different view. To give some background, here are some details of a specific case in which a client was remortgaging and reducing their term from 18 to 12 years. A new policy – term and critical illness (CI) – was written with reduced term and a slightly smaller sum assured, which meant a slightly lower premium of £31 compared to £34. The policyholder then made a subsequent claim on the policy, receiving £50,000, which was
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£10,000 less than her original policy. In the original recommendation, the broker had pointed out that the new policy had more conditions covered, and as she was single with no dependants she didn’t need the higher sum assured. The broker also confirmed they were whole of market for insurance purposes. After the review by the ombudsman, it was established that the replacement policy did not have Waiver of Premium or Total Permanent Disability, as the original one had. The policy covered the same number of conditions – contrary to the information in the recommendation – and although the adviser had intimated the lower premium was due to rates coming down generally, no evidence of that had been supplied. In its judgement, the ombudsman’s recommendations were that: There must be clear benefits on replacement cover; The adviser must clearly lay out the advantages and disadvantages when replacing a policy; The adviser was actually not whole of market for insurance as they were for mortgages, and disclosure needs to be clear. LESSONS LEARNED
The binding judgement was that the broker had to place the client back in the position they would have been in, and found against the broker to the tune of £10,250 plus 8% interest. There are lessons to be learned from this judgement. In reality, the client was paid out via the new arrangement and could be said to have had accepted the new policy, given it had been in force some time prior to the claim. Many people reading this would also see this as not being bad advice – and in reality it wasn’t necessarily – the policy had done its ‘new job’ in paying out the sum assured. The devil was in the detail, though. In reality, the story that had been told in the suitability letter didn’t stack up.
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As a compliance business, Paradigm Consulting sees similar files regularly – the advice isn’t bad and the client needs it, it’s just that sometimes the ‘story’ doesn’t add up 100%, which leaves the broker vulnerable if the claim should be referred. DEVIL IN THE DETAIL
Examples of these would lead an adviser to think the suitability was adequate for the advice, but the lack of detail can be dangerous if it leads to a claim and scrutiny. A couple of examples would include: A client that wants certainty of mortgage repaid in the event of death. The recommended plan is for the amount and term of mortgage, but neglects to include any roll-up of fees, in which case the ombudsman could rule the differential be paid at claim. An adviser fact-finding for protection and there are existing plans or death in service that would achieve the client’s objectives – these are ignored and a new plan is written at extra costs and possible over insured. Again, this is not bad advice – especially if the client leaves employment – but this needs to be addressed in the suitability report to give the broker belt and braces cover. It can be highly frustrating to be caught out in this way, especially where a good job has been done. However, it is worth every so often getting a third-party consulting firm like Paradigm to check files to ensure these details are not being missed. It is not that expensive to do so, and can save a lot of angst before the worst happens – not to mention what it does for the professional indemnity (PI) cover, but that’s another story for another time. As this is my final article for 2020, let me end by wishing readers of Mortgage Introducer a very Merry Christmas and a Happy New Year. It might not be like holiday seasons past, but I hope you and yours are able to get together and enjoy the break. M I www.mortgageintroducer.com
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PROTECTION
COVID: A catalyst for communication Xxxxxxxxxx Andy Philo xxxxxxxxxxxxxxxx, director of strategic xxxxxxxxxxxxxxxx partnerships, Vitality
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n light of the coronavirus pandemic, the adviser community, like others, has embraced the move from face-to-face meetings to virtual client communication. Webinars, Zoom meetings, and Teams calls now fill our diaries. Alongside these new channels, we’ve also seen a shift in the way things are communicated, towards simpler language to help explain new and unusual events and topics. Communications tools such as analogies and metaphors that are used
to simplify complex concepts have become commonplace, from explaining the disease itself, to outlining new rules and justifying exactly how a vaccine will be rolled out, it is now not unusual to hear politicians and scientists using simple notions in order to explain complex theories. Perhaps we can take something from this. Protection is also perceived as complicated, and the industry is littered with jargon, acronyms and complex technical terms. This can all act as a barrier to a client receiving advice. We should change the rhetoric and employ various tools of communication to better connect with clients and help them understand the purpose of protection products. Using metaphors and analogies is an easy way to help paint a picture that
supports your client in recognising the value of protection, as well as understanding the products available to them and the extent to which they would be supported if they should find themselves needing to claim. One powerful way of doing this is to use real life examples of people who have had to claim on their protection policy, and demonstrating the ways in which it helped them. This is particularly helpful in bringing to life the various scenarios where having a policy in place could prove advantageous. Collins Dictionary has placed the word ‘furlough’ in the top 10 words of 2020, yet it’s a word most of us likely hadn’t heard of before this year. For many, it is now synonymous with replacing lost income for those who unable to do their usual job during the pandemic. Where income protection is designed to replace income in the event of long-term sickness or disability, the analogy of ‘furlough’ might be helpful in explaining to clients the benefit of replacing income in situations such as illness. M I
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PROTECTION
Are you OK? Jeff Woods campaigns and Xxxxxxxxxx propositions director, xxxxxxxxxxxxxxxx, Sesame Bankhall Group xxxxxxxxxxxxxxxx
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ental health is an important topic of conversation, and rightly so. It has been growing in prominence for some time, to be fair, but the impact of COVID-19 has elevated it even further as an issue for the whole of society. In terms of our industry’s response, I’ve been heartened to see the work undertaken by a voluntary industry group called Action for Suicide Prevention in Insurance (ASPiiN), in partnership with the Protection Distributors Group (PDG). Sesame Bankhall Group is an active member of the PDG, and is keen to support ASPiiN’s initiative. This includes practical guidance developed by ASPiiN and PDG to help financial advisers increase their understanding of the sensitive issues surrounding suicide, which may prove useful in conversations with customers if the subject arises. Of course, it’s not just customers that we need think about when it comes to mental health, but also advisers themselves. That’s why, when Sesame launched its COVID-19 Adviser Support Hub back in March, we wanted advisers first and foremost to focus on their own personal wellbeing. We therefore made this the first section on the hub. We then enhanced this further by funding the cost of employee support services for our members through a specialist provider, giving them access to confidential information and a team of professionally qualified counsellors. I mention this purely to demonstrate how seriously we take this subject. I recently read a study that found the average British person spends 90% of their time indoors, and this study was conducted prior to COVID-19.
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Meanwhile, conditions such as Seasonal Affective Disorder (SAD) are becoming increasingly common. When you consider how many people are now no longer commuting to work or travelling to meetings, the concerns for people’s health over the winter only grow further. This all serves to highlight the importance of increasing awareness and understanding of these issues amongst our friends, family, and colleagues. Doing this means that we’re better placed to look out for each other. Hence the importance of asking the question: are you OK? It’s a simple start to a conversation about someone’s health and wellbeing, which has never been more important than in these uncertain times.
After all, we’re all feeling some level of anxiety to one degree or another. This is one of the things that makes the COVID-19 pandemic truly unprecedented – the fact that on some level we’re all living and working through the same shared experience. These are tough times for many people, but one of the positives for advisers is the opportunity to remind their customers about the added benefits and support they have access to as a result of the protection product you have recommended, such as remote GP and counselling services. It could really help your customers right now, so make sure they know about it. While you do so, check out your own cover, because you might benefit from this support too. M I
Conversations about health and wellbeing could really help your customers right now
DECEMBER 2020
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REVIEW
GENERAL INSURANCE Landlords’ protection during COVID-19
Cyber threat risks for home workers Xxxxxxxxxx Geoff Hall xxxxxxxxxxxxxxxx, chairman, xxxxxxxxxxxxxxxx Berkeley Alexander
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ockdown has seen the rate of cyber attacks rise, but few if any homeworkers have insurance cover, and neither will the majority of employers whose staff are home working. Those that work remotely are a target for cyber criminals and fraudsters, in both their personal and work lives. There are plenty of best practice measures that can be put in place to limit exposure, such as keeping software updated, improving password security, being vigilant with emails, installing antivirus software and training employees on recognising potential threats. However, if the worst should happen, having the right cyber insurance in place is vital. Cover varies between insurance products, but the key elements to look
for include investigating and rectifying damage to the computer, locating and removing a virus, and testing the security of the system post attack. Some policies also cover payments liable as a result of hacking, ransomware, or misuse of personal data, as well as handling the PR around an attack – often the adverse publicity can be more damaging to a firm than the cyber attack itself. Cyber risks affect us all, and whether in an office or working from home, it is likely to be an ongoing issue for businesses for months to come. For larger organisations with dedicated IT departments, cyber protection and IT security is second nature, but for small to medium enterprises (SMEs), often with staff in lockdown, cyber has not always been a key consideration when there are so many other priorities. Make sure personal and commercial clients are aware of the risks, and that they and their staff are adequately protected whilst working from home. M I
ASU – a stark reality
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ccident, sickness and unemployment (ASU) products like mortgage payment protection insurance (MPPI) is another area where some insurers have stopped selling new policies as claims begin to spiral. Whilst it is still possible to secure new cover with some providers, it is important to remember this is also another product that tends to carry an initial exclusion period, as policies are designed to cover future unforeseen events, not what is known to be about to happen. For all those customers who already have an existing ASU policy in place, they will be hugely relieved and grateful to their advisors to know that their mortgageor
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other significant outgoings will be protected if they are made redundant or fall sick as a result of the coronavirus. I would urge all advisers to think carefully about this predicament, and to make customers aware of the benefits of ASU cover. It is only in times like these when the true value of these polices is starkly apparent to everyone. Life will eventually return to normal, and there will come a time when to most people the prospect of sickness or unemployment will seem unlikely. I look forward to those happier times, and I only hope that the memory of today will suffice to encourage your clients to invest in ASU to protect their future income.
s a result of COVID-19, the UK government suspended all repossession hearings by the courts, making eviction impossible. Despite the fantastic good news we’ve just received – at the time of writing – of potential vaccines, the fact is that there has been a 70% increase in the UK jobless total and a rise in Universal Credit applications, with predictions for a significant and severe downturn in the world economy. With the potential for rent arrears to escalate, it is not surprising that many insurers suspended new sales of landlords’ rent guarantee products following enactment of the Coronavirus Act 2020. Whilst the impact of the coronavirus on the UK public is obviously devastating, landlords have also suffered financially from rent arrears. They are quite rightly unable to evict non-paying tenants during this period; however, mediation continues to be an available route, and it is therefore good news that a number of insurers have been able to reintroduce their policies during this period. We at Berkeley Alexander have recently started offering cover again, giving brokers and advisers a valuable point of differentiation in an otherwise restricted market, and providing their landlord clients with some surety. With mediation, the first step is to negotiate a settlement or payment schedule with a tenant in arrears. It’s at the start of this process that a landlord needs a legal expenses policy to kick in and not only provide expert support, but to either top up what the tenant can’t pay, or cover the whole rent sum up to the policy limit. Often the landlord can choose the limit and the length of time it will pay out for. It’s important to remember that a new policy won’t respond if the tenant is already in difficulty, so there is often an initial exclusion period before any claim can be considered. With the economic situation only likely to worsen for landlords, the sooner these valuable policies are in place, the better, before a claim arises. M I
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GENERAL INSURANCE
2020: Lessons for financial services Rob Evans CEO, Paymentshield
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his festive season, people are yearning more than ever for familiarity, whatever guise it may take: personal traditions, celebrating together, even hackneyed cracker jokes seem a welcome comfort in what has been an exceptionally disruptive and gruelling year. But when it comes to the world of financial services and business more generally, I must caveat against striving to recoup the old ‘normal’. Today’s frequent chorus of “everything will change” has been met with some resistance as far as day-to-day life is concerned; the insurance industry, however, must take it as an imperative. It’s the difference between merely surviving 2020 and thriving beyond it. This year’s feast-to-famine property market has led to a step-change in the scale and urgency of activity across the sector; to keep pace, intermediaries cannot simply look to maintain serviceability, but must foster agility and innovation. Reverting to type has an expiry date for advisers: 2021. However, this does not mean a total overhaul of existing practices, but rather maximising what works and discarding what doesn’t if it’s not right for what comes next. Complacency must go. Instead, as the saying goes, be your own best competition. Take, for example, the recent explosion in digital media: at its peak in April, Zoom reported a record 300 million daily participants in virtual meetings. Advisers should be seizing this digital opportunity, and using it to market their services and deliver advice to a broader client base.
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Nevertheless, polls conducted at Paymentshield’s inaugural virtual ‘Changing World’ conference suggest a reluctance to embrace remote advice. When asked what they believe to be their clients’ preferred way of communication, half answered that it was via the phone or email, with a further 33% citing face-to-face methods and less than 10% choosing video calls or social media. This is a missed opportunity. While virtual communication does not have to necessarily replace face-to-face interaction with clients, it should supplement it.
“Adviser businesses must strive to build up a bank of good will among staff in the good times that they can draw on when external circumstances are as relentless as they are now – which at some point they will inevitably be” The former lends itself to establishing an initial connection, but the familiarity and flexibility of video conferencing can make maintaining existing relationships easier and presents an attractive option for an increasingly digitally-minded clientele. Ultimately, a successful customer service model is one that listens to clients and calibrates itself to their present priorities. If advisers fail to anticipate and meaningfully respond to new circumstances impacting their customers – anything from the end of stamp duty in March 2021 to new lockdown restrictions – they won’t be able to focus on how to evolve solutions and propositions to match their clients’ future needs.
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Paymentshield has launched several initiatives this year to support advisers in this effort, not least through our Adviser Hub. With access to data like renewal premiums, quotes not converted and client cancellations, advisers can target customers with tailored advice and deliver real value. At its core, 2020 has been a lesson in resilience. No one can deny how unsettling it was to see the fragility of the mortgage market in the early stages of the pandemic. Such precarity does speak, however, to the importance of advisers building resilience into their income streams moving forward. General insurance (GI) has consistently proven itself to be a dependable means to extra financial stability, which is why Paymentshield has worked with countless organisations over the years to help set up GI specialists, empowering them to maximise the financial and business potential such a position brings. Resilience must extend to organisational culture, too. In my view, more than a company’s strategy, resourcing, systems or anything else, if its culture and people are not right, the business can’t flourish. Commitment to your customers throughout adversity will always pay later when the absolute need is less. We have seen this in spades at Paymentshield. I’m proud that when our community of advisers and customers needed us most, we maintained our market presence and provided further support – from our now permanent three-month payment holiday option to our awareness campaign, National Conversation Week, which aimed to encourage mental as well as financial wellbeing. Adviser businesses must strive to build up a bank of good will among staff in the good times that they can draw on when external circumstances are as relentless as they are now – which at some point they will inevitably be. This kind of culture underpins robustness and agility, and translating it into practical growth will be what moves a firm beyond makedo-and-mend to excelling in 2021. My number one lesson of 2020, then? Culture beats all else. M I www.mortgageintroducer.com
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ANTI-MONEY LAUNDERING
Money laundering and property John Dobson Xxxxxxxxxx CEO, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx SmartSearch
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or most people, the phrase ‘money laundering’ probably brings to mind Hollywood gangster films. But the truth is it is a widespread problem that is much closer to home than many realise. Nowhere is this truer than in the property sector; buying a house is one of the most popular ways for criminals to launder the proceeds of crime. WHAT IS MONEY LAUNDERING?
Money laundering is the process of turning ill-gotten gains into legal ‘clean’ money. There are usually three stages to the process: placement, layering and integration. Placement is moving funds from criminal activity such as drug dealing, human trafficking or terrorism, into the financial system. For instance, breaking up large amounts and depositing the smaller sums in different bank accounts. Layering is used to then hide the trail by moving the funds around, usually by transferring the money from bank account to bank account. Integration is the process of making the funds fully legal, for instance by investing in a business and mixing the funds with legitimate cash.
used to make the purchase, it will be completely legitimised once that property is sold on. Criminals will also buy properties in the name of a family member or friend with no criminal record, either by buying in their name, or by giving them the funds to buy. Property is as attractive to criminals as it is to any investor. Prices rarely depreciate and owning property also provides an air of respectability, legitimacy and normality. SPOTTING AN ATTEMPT TO LAUNDER MONEY
So, how do you spot a potential attempt to launder money? And why should you report it? In order to assess the existence of a money laundering risk, it is best to confirm that a client is who they say they are, and to check if they are on a sanction or politically exposed person (PEP) list. The Financial Conduct Authority (FCA) recently warned it would be “actively monitoring” UK brokers and broker firms to assess their processes to prevent money laundering.
To ensure firms and brokers avoid fines, they should ensure they know their customer. Knowing who your customer is has become more difficult through traditional ID verification. Forgeries have reached such a level of sophistication that means assessing a physical passport or ID is difficult even for an expert. Therefore, the only way to accurately assess whether a person is who they say they are is via an electronic verification. The best and most efficient way to do this is through an automated anti-money laundering solution. This will confirm a person is legitimate in seconds, and also screen them against sanctions lists. The reason this is crucial is that if they are trying to launder money, it could result in huge fines for the broker. Money laundering is not just the stuff of Hollywood, and brokers have a key role to play in preventing it. The key for brokers is to do your due diligence. Using an anti-money laundering solution is the quickest method and will cover brokers from potential fines. M I
LAUNDERING THROUGH A PROPERTY PURCHASE
Property purchases are primarily used in the final stage, integration. To integrate their illicit funds, potential buyers will attempt to hide the origin of the money used for payment. Methods include using cash to pay for a property and using third-parties that act as legal owners. People buy property with cash for a variety of legitimate reasons, but it is also ‘route one’ in terms of money laundering. With nothing to trace the origin of the cash, once it’s www.mortgageintroducer.com
An automated solution can detect fraudulent activity in the homebuying process
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REVIEW
EQUITY RELEASE
Rise to the challenge Alice Watson Xxxxxxxxxx head of marketing and communications, xxxxxxxxxxxxxxxx, Canada Life xxxxxxxxxxxxxxxx
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ome is where the heart is. Never does that saying ring truer than for those who live in their ‘forever’ home. While the concept of a forever home is primarily about an emotional attachment, there are a number of common physical attributes. Our recent research amongst the over-55s shows that key characteristics include having a large garden (38%), access to off-road parking (35%), a large kitchen (35%) and being detached (35%). Having en-suite bathrooms (33%) and a garage (31%) are also listed as the key, as well as being close to shops and restaurants (28%), being in the
countryside (23%), having a study or hobby room (18%) and being close to children (14%). For most, though, a forever home is more than just its construction. Half (49%) said it was because they felt comfortable there, and for 28%, the most important factor was making memories in the home. Unsurprisingly, these clients are keen to do what they can to stay – 53% of advisers who sold an equity release product in the last year said it was because their client wanted to stay in their forever home. However, most advisers (77%) report facing challenges when it comes to tackling preconceptions of equity release products, which are often the result of scaremongering. Over half (59%) also found that a lack of understanding amongst customers was challenging to overturn. Only 11% of advisers actually reported
no barriers when it came to advising on these products. These challenges could be causing some advisers to shy away from equity release. Just 13% of those who supported a client with a lifetime mortgage purchase in the last year presented the idea themselves, whereas nearly two thirds (64%) said their clients had the idea. It’s our collective responsibility as an industry to dispel myths and misconceptions. Equity release can be an effective way to fund retirement, while allowing people to stay in the homes they love. While the findings show some advisers still tiptoeing around equity release, homeowners are increasingly looking for flexibility and certainty when it comes to retirement. Property wealth has a significant role to play, presenting a real opportunity for advisers. M I
The Give Back have been helping the less fortunate every Christmas and New Years Eve for the last 8 years. Volunteers distribute food, drink, clothing and essential necessities around London. This year, The Give Back are raising suppo the elderly, £400 to help, gift and support families, health care workers and the homeless over the festive holidays. Scan the QR code or visit the link below to support those in need this holiday season. Thank you. www.justgiving.com/crowdfunding/thegivebackcovidfund
Scan the QR code to support The Give Back!
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EQUITY RELEASE
Consistency in pricing Stuart Wilson CEO, Air Group
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iven the tumultuous nature of 2020, what about price consistency and certainty? How often have we talked over the last 12 months about the need for consistency and what it could provide both advisers and clients? And yet, in a year of constant change, unforeseen circumstances, and unintended consequences, there has been a consistency and certainty within the equity release market – which may have been generally overlooked – that comes in the form of rates and pricing. Perhaps it’s been overlooked, because – for better or worse – we tend not to focus too much on pricing within our sector. After all, we would all likely be discouraging clients from merely taking out a lifetime mortgage based on a low rate. Balancing the short and long-term needs of the customer when giving advice should always be first and foremost in the advice process, and only once this is satisfied do we then factor in the rate. The facts of the matter, however, are that rates throughout 2020 have been exceptionally low; historically low, you might say. Rates have moved down throughout the year, to a point where you can get a lifetime mortgage with a rate of 2.5% for life. This should certainly be brought into any discussion with a potential equity release customer, or indeed an existing one. The fact that a customer can borrow at such a low rate, fixed for life, is something to be celebrated by the equity release industry. However, a serious question to consider now is around how long those rates can continue at those low levels. Just recently I saw that a couple of providers had edged up their rates, and
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with markets rallying and swap rates rising, we may be at the point where a floor has been reached and there is only one direction to go in. If that is the case, then perhaps we are not just moving into a new year but also a new phase for the equity release sector, one where rates may not be this low again for some time. While decisions should certainly not be made on rate alone, advisers should be speaking to potential, existing and past clients about the implications of these movements. Consider the existing equity release customer who, having had a product for a number of years, might believe moving products to be an expensive option that ultimately only costs them. With rates at ‘old levels’ of 6%, that might well have been the case, but factoring in the potential that they may now have increased equity with a house price inflation uplift, plus the highly competitive rates we have now, and even with the redemption charges they could still be far better off moving to a different product. As a sector we sometimes overlook this, but given the current environment – and the potential for rate increases in the future – advisers might want to review their existing equity release customer base to see if there are options available to cut costs. To help advisers easily do this, our sourcing system, Air Sourcing, has a tool that can show where the monetary ‘break even’ point is for existing customers, based on the redemptions that come with their existing product, and what might be achievable through moving to a new one. This will quickly show the adviser the price point at which rebroking the deal will be worthwhile, and if that means locking the client into a 2.5%ish deal for life, with guaranteed tenure and other early repayment charge (ERC) warranties, then I suspect you might find a client very happy to move ahead with this option. Of course, it won’t be the same for all, but there may be a significant
“Anything that can bring down costs at this time is likely to be welcomed, and it can also allowthe adviser to conduct a full financial review of their client’s current circumstances” number who would benefit from such a review service. Anything that can bring down costs at this time is likely to be welcomed, and it can also allow the adviser to conduct a full financial review of their client’s current circumstances, which might well have changed in the interim period between the last time they were seen and now. This, of course, is my last article of 2020 before the Christmas and New Year break. It has been an incredibly challenging year in so many ways that part of me can’t quite believe it is nearly over. At the time of writing, I’m not quite sure what kind of Christmas will be allowed to have, but I hope you are all able to see family and friends where possible, and that you can take a break, relax and get away from work pressures for a period of time. In terms of what comes next, I am optimistic about 2021 in so many ways. No one is suggesting that it will be plain sailing from here onwards, but the news around COVID-19 vaccines are incredibly encouraging, and it’s my sincere hope that, certainly by this time next year, we will all be in a very different, much more positive place than we are currently. Perhaps that is a wish that will turn into reality a lot sooner than in 12 months. Let’s hope so. Before then, may I wish all readers of Mortgage Introducer a very Merry Christmas, a Happy New Year, and a very prosperous start to 2021. We all deserve it. M I
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In associaaon with
Feature in our next
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REVIEW
CONVEYANCING
A time to be thankful Xxxxxxxxxx Mark Snape managing director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Broker Conveyancing
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s the year draws to a close and we are just weeks away from ushering in 2021, there is bound to be a lot of focus and attention on what the next 12 months will bring for all us housing market stakeholders. To say that 2020 has been an up and down period would be somewhat obvious, but we’re undoubtedly finishing the year ‘on the up’. Understandably, we’d all like to know whether this can continue, if so for how long, and what might happen particularly in the period post-stamp duty holiday deadline. Of course it’s impossible to know, but I appreciate there is a fear that, without an extension to the deadline, the industry and the wider economy at large will face a cliff-edge at exactly the time when we might also be seeing peaks in unemployment and further pressure on incomes. For all the good news around multiple vaccines and the protection they can provide for individuals, I think we must all accept that delivering the largest vaccine programme this country has perhaps ever seen is going to be a challenge. Our return to ‘normality’ in that sense might be many months in the future, and there’s also no guarantee that we won’t have further lockdowns and measures in place that will add to the issues facing many households and their finances. Of course, what we can try to do – in lieu of a stamp duty extension – is get as many cases as possible to completion before the end of March. After that, we will be some way into the unknown in terms of how the market might react. The Royal Institution of Chartered Surveyors (RICS) recently suggested www.mortgageintroducer.com
that its outlook for sales is more subdued in the second quarter of next year, and that seems logical if people decide they might want to wait and see how factors including the market, prices and mortgage availability react after the deadline has passed. However, what I think gives greater cause for optimism is what lenders are currently saying about how they are going to approach 2021. There’s no doubt they too will end the year in a far better position than they would have expected during the first lockdown. To that end, there is a suggestion that targets for lending will be raised as per normal for the year ahead, which may present a more normal picture in terms of lending appetite, and may also mean a return to areas of the market which are currently underserved. That means advisers might well be able to look their high loan-to-value (LTV) and self-employed clients in the face and present a far better range of products for their needs. Certainly, we could do with greater levels of competition in those spaces. UP FOR GRABS
Of course, while the purchase market has tended to garner all the headlines in recent months, there are still vast amounts of remortgage and product transfer business up for grabs over the course of the next 12 months. With advisers taking a majority share of both, there is an opportunity to pick up large levels of business, even if there is a slight tail-off in purchase demand. Also, let us not forget the opportunity that always exists in ancillary sales. It is a well-worn adage, but one certainly borne out by the stats, that when the mortgage market is booming, other sectors can become neglected. That won’t be the case if advisers need to secure greater levels of income, and we would hope this covers off all other areas whether protection, general insurance (GI), conveyancing or legal. Talking of conveyancing, it’s clear from recent numbers that more legal
firms have stepped into the fray in recent months, probably in an attempt to secure some of the large volume of work that is currently making its way through the system. Figures from Search Acumen show the number of active conveyancing firms increased between Q2 and Q3 by a significant 56%; conveyancing volumes also increased, by 105%. Part of this increase is due to the pent-up demand of the lockdown and the stimulation of the stamp duty holiday, but we might also add that an increase in firms doesn’t necessarily mean an increase in quality, or indeed in the numbers of cases getting through to completion. Especially if those firms are not specialist conveyancers, have limited resources or staff working remotely, and are attempting to make something of a quick buck while clients are desperate to find a conveyancer that can get their case completed. We know only too well that advisers are in the best position to provide advice on the right option for a client to take. Leaving them to their own devices means they could choose the wrong option, which may ultimately mean no-one is satisfied. Far better to control this part of the process, provide the right advice, get quality conveyancing for your client and secure the income and outcome you – and they – want. And with that, I’d like to wish all readers of Mortgage Introducer a Merry Christmas and a Happy New Year. This has been one of the most difficult and challenging years I can remember, and yet I’m sure so many of us are very thankful and grateful for what we currently have. This holiday period may well be very different for so many reasons, but I hope you can take some time off, relax and – where possible – spend it safely with family and friends. I look forward to engaging with you all again in 2021, for what I hope will be a ‘game changer’ year for all the right reasons. M I
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REVIEW
CONVEYANCING
Now is the time for brokers to add value Karen Rodrigues sales director, ULS
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e are beginning to see rays of light breaking through the clouds – there are now a handful of COVID-19 vaccines in development which have demonstrated effective protection against the virus. Yes it’s early days in the development cycle for such vaccines, but we should take a moment to appreciate how important these announcements are in our journey back to normality. What we do know, following almost nine months of disruption, is that billions of pounds have been spent shoring up personal and business finances during the period. Make no mistake, this has not just impacted the housing and mortgage markets by stalling them, there has been a much more fundamental change driven by the pandemic. There have been substantial changes to the way we work, with millions of
workers having to transition to home offices, hundreds of thousands of job losses, and changes in how we shop and what we buy – almost every aspect of our lives has been affected. Changes to the way that Britons choose houses, both with regards to the location and their requirements for space, are arguably the clearest to see and understand. Cities no longer have the same commuter draw, at least not in the medium-term, nor is a property’s proximity to a train station or public transport links. Instead, homemovers need stable broadband and outside space, and for many it has now become essential for an extra bedroom which can serve as an office. Then there is the impact of this pandemic on our personal finances. While those able to work easily from home likely spent less in 2020, leaving them with more cash to invest or save, just as many, if not more, have seen their incomes plummet. The young and the self-employed have been especially hard hit – contract workers have seen their hours cut, and those in the service, hospitality, retail and entertainment industries
Conveyancing referral is one way that brokers can add value
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live with the reality of further, imminent redundancies. We all witnessed the spike in purchase and remortgage applications in the summer, following the loosening of lockdown restrictions that had prevented physical viewings and surveyors visiting properties. Despite this we have most certainly had fewer property transactions this year. There has been an increase in product transfers, as these don’t often need clients’ income verification to transfer over, thus giving the consumer the stability of knowing what their expenditure will be and the ability to plan finances. The stamp duty holiday has undoubtedly driven engagement and demand, but it has been tempered somewhat by conservative views within lender credit committees. Extending it has been widely called for, though as I write this there has been no formal announcement. Yes, it will help retain buoyancy in the market, but with house prices being abnormally boosted by this intervention, is it an appropriate medium-term solution? Government intervention aside, there is a need for brokers in this fastchanging climate to find every ounce of added value they can. With personal and business finances tightening, average tenure lengths increasing, and housing transactions seemingly being propped up by the stamp duty holiday, the current number of opportunities to generate revenue is not likely to stay where it is beyond mid-2021. That’s not to say that things won’t change in the meantime – 2020 has shown us how unpredictable our world can be – but it’s worth brokers taking the time to look at the diversification of their revenue. Conveyancing referral is one way that brokers can achieve this. With lenders having a sheepish attitude towards high-LTV products and the options for clients being limited, many will not be able to find a way to their next home move or remortgage. Driving more value out of those who can may just be the antidote that balances broker revenues until we see a more stable housing market once again. M I www.mortgageintroducer.com
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EDUCATION
The great escape John Somerville head of financial services, LIBF
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any of us will look back at 2020 in years to come as one of the most memorable, and possibly most challenging, times in our lives. On a positive note, though, it’s also been a year when we’ve learnt a lot – because we’ve had to. If you cast your mind back to March of this year, you’ll remember how quickly the pandemic and lockdown situation crept up on us. The adjustment was huge: the sudden move to homeworking; meeting clients online and, in many cases, having to help clients with Zoom or Skype; and adapting to support clients who had become vulnerable. All this while activity in the housing market was effectively suspended. Most of us in the mortgage advice sector won’t have had time to pause for breath, let alone stop, take stock and pat ourselves on the back for how well we, as an industry, have risen to the challenges so far. But we should. In fact, we adapted so efficiently that when the second lockdown came – at a time when the housing market was unusually busy for the time of year – we were easily able to adjust once more and serve our clients. You could argue that the second lockdown was almost expected, and we were already set up to work from home by then so the adjustment was easier. You could also say we’d got used to meeting clients online rather than in the office or their homes, and our clients had adapted too. However, reflecting on this year and the experience of lockdown has got me thinking about how adversity can inspire learning. Take, for example, the story of Alan Bryett, one of the oldest and longest serving members of The London Institute of Banking & Finance (LIBF),
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who as a young banker during the Second World War, joined the RAF and flew seven missions before being shot down over Germany in 1943. When he arrived at Stalag Luft 3 as a prisoner of war, someone told him they were building a tunnel. This was the escape plan that inspired the 1963 film The Great Escape, and although Alan never made it out of the camp, he did do his share of digging. He also studied for, and passed, his banking exams while he was a prisoner of war – showing determination in the face of adversity! In 2020, when it comes to learning, we’re relatively lucky. Technology enables us to study in the comfort of our own homes, access materials in different formats – from videos and podcasts, to animation and quizzes as well as written texts – and even to take our exams remotely. At LIBF, we started looking into remote invigilation long before COVID-19, as part of our ongoing development programme. This turned out to be just as well, because it enabled us to launch remote exams in June, at a time when people really needed them.
Education is paramount
The fact that – whether we’re in lockdown or not, and whether there’s a vaccine soon or later – we can keep studying and gaining professional qualifications, is a godsend in more ways than one. The focus needed for study is a great distraction from worrying about the news and the pandemic, for one thing. For another, activity and developments in the housing market are moving at such pace that we all need to keep on top of our CPD. The stamp duty holiday has helped a lot of people, but at the moment it’s scheduled to end on 31 March 2021. Around the same time, new regional price caps will reduce the maximum value of a home that can be purchased through the Equity Loan Scheme. Buyers are rushing to meet these deadlines, even though sufficient deposits are increasingly difficult to raise with very few lenders offering 90% loan-to-value (LTV) mortgages. With the furlough scheme now extended, many of those whose jobs were at risk may have been granted a little reprieve. But none of us know what will be happening in the economy in six months’ time. CPD can help you keep on top of all this, and if you actively pursue personal development to ensure your knowledge of the mortgage industry is current, you could be eligible for CeMAP Professional. You’ll be able to display your CeMAP Professional digital badge on your website, in your email signature, on LinkedIn and all electronic communications. Your credentials will be stored in our online professional services CPD register confirming your status, and you will be given exclusive access to CPD resources and up-to-date study materials, to help you stay ahead of the curve. 2020 has been a year when we’ve all had to adapt and develop new skills that we never imagined we’d master. But perhaps the biggest lesson we’ve learnt this year has been that the value of continual learning is priceless. M I
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THE OUTLAW
THE MONTH THAT WAS
THE Every month, The Outlaw draws some tongue-in-cheek parallels between society at large and a mortgage market in flux
THE THE
AND THE
Chris Pearson and Amanda Fenner were to the intermediary sector what Piers Morgan and Suzannah Reid were to morning TV ratings (Sorry, Chris!). Mortgages were often approved over cornflakes by 7.15am. No surprises, therefore, that HSBC also won Best All-Round Lender for the second successive year at the recent and illustrious Mortgageforce Awards. WORST PERFORMING INDIVIDUAL OR BUSINESS IN A REAL-LIFE PANDEMIC I’ll desist from actually naming and shaming lenders here. To be blunt, in April and May there were simply so many to call out. Many lenders (and surveyors!) half-shuttered their operations too early, or worst still just ran for the hills and moth-balled their operations. Even now – with 90% loan-to-values
O
scar Wilde’s famous quip, “If you want to tell people the truth, make them laugh. Otherwise, they’ll kill you,” has been interpreted in a variety of ways. And The Outlaw’s take on it is possibly as different as anybody else’s. But in adopting Wilde’s sentiments for this Christmas Awards piece, I shall burnish them in the style of my own favourite modern day – and truly world-class – satirist Ricky Gervais. His final Golden Globes hosting (or roasting!?) is a bar which might surely never be leapt over. But here goes, with a parodied version of this year’s societal and mortgage awards, mirroring some customary categories for performing arts... with some apt and comedic references from the world of TV, showbiz, and sports thrown in for sport. First up, the nominations for:
BEST ADAPTATION FROM A PRE-COVID LENDER TO A PANDEMIC LENDER These lenders were all first rate in adapting their businesses promptly once the pandemic struck. They include: The Coventry, Accord, OSB, Halifax, Santander and The West Brom. In what was thankfully a very crowded category, it was HSBC that walked off with the laurels.
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Boris Johnson: Worst Performing Con Artist in a Pandemic
(LTVs) widely back in play – why haven’t more of them at least brought back some staff via PPE wrapped rotas? The Outlaw has it from three leading lenders’ figureheads that their underwriters especially haven’t been able to produce anywhere near the same quality of work, with collaborative feedback on marginal cases simply not happening from disparate living rooms and home offices. They are just declining anything too demanding. A special shout-out here, then, to Alan Cleary and Adrian Moloney at OSB, who at least had the courage to get 100% of their staff back 50% of the time. From what I hear, nobody got sick or died. In the words of EastEnders’ Peggy Mitchell... “ged outta ma pub and getcha arse back to work...” When it comes to Westminster, however, we can thankfully shame those who have been either incompetent or derelict. Step forward, Matt “I’ll keep emoting about the NHS” Hancock. His stuttering style is forgivable; what wasn’t, however, was his negligent under-provisioning of PPE and his general preparedness for the summer months, when he’d had three whole months to war-game it all. Business secretary Alok Sharma also delivered a ghastly performance, with all with the wooden charisma of a pantomime horse woefully out of depth and step. But this award for Worst Performing Con Artist in a Pandemic obviously goes to Boris Johnson. He’d won earlier credits for his avuncular style amidst Brexit and election-winning feats, but in the country’s darkest hour, he was anything but Churchillian. Instead, we can now see this emperor de-robed for what he is: complacent, lazy, U-turning, bombastic, and until recently, clinically obese. In fact, his greatest crime was not ramming home the message on obesity and its clear scientific links to those dying of COVID-19. He was applauded for admitting his own rotundity to begin with, but then – as ever – made no effort to follow through with social policies which might help change the nation’s waistline. Only Turkey and Malta have higher obesity rates than the UK, yet everyone tip-toes around the damned subject. Diddums. Must not upset the wokes and snowflakes, or the actual loyaltycard holders at Greggs and Subway. Anyways, back to our sector and an equally sorry tale of obesity meeting incompetence. 2020 MORTGAGE STORY MOST RESEMBLING EASTENDERS Let’s cue the dramatic drum roll...the resounding winner was of course Countrywide, where some very talented and decent folk whom we all know saw their sharesave schemes wantonly devalued. The whole saga might actually be better paralleled with a series of the 1980s hit Open All Hours. This www.mortgageintroducer.com
HSBC’s Pearson and Fenner: Processing millions before Lorraine Kelly’s even on set
over-complex business was of course never a cornershop, but the headlong rush to become the Harrods of the mortgage sector was built on an iceberg of debt which could sink the Titanic. We can all be angry about this without any commercial conflict of interest, because lest we forget, via all of our pension plans, we are all likely shareholders in these totemic businesses. The existing and recent executive teams at Countrywide will have to fend off their share of rotten tomatoes, but some opprobrium should also be reserved for those who – a few years back – began to swamp the business in debt whilst also making some questionable, and indeed, possibly tokenistic, appointments at a high level. Almost there. But not before the: MOST PITIFUL PERFORMANCE IN A TRAGI-COMEDY This has been won jointly by 16,141,241 people. Yes... you guessed it... the still sulking bed-wetters who voted remain. These folks got a good look last week at what a glacial-paced decisionmaking bureaucracy actually looks like, as the coronavirus vaccine was approved here in the UK whilst Juncker and his pals sat twiddling their fingers. The Outlaw is immensely proud of the fact that in a poll at the time, 70% of you → DECEMBER 2020
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THE OUTLAW
THE MONTH THAT WAS
brokers voted Leave. It was mainly the chai latte drinking London broker-luvvies who didn’t – they know who they are! And lest we forget, these Europhiles in our croissanted capital were also telling us in June 2016 that our housing and mortgage industry was going to hell in a handcart. Which brings us to our final two awards, mutually linked as they are by the matter of size. NOISIEST UNDER-SIZED CELEBRITY IN A COVID MOTION PICTURE Ant and Dec contested this category, as did all the talentless Kardashians, Biebers, Mike Dean (the pompous referee), Nicola “Krankie” Sturgeon, and sycophants of Diego Maradona who – despite being the third best player of all time – was a cheating chav. But the winner, by virtue purely of consistently having the fastest car, is our national pipsqueak Lewis Hamilton. Whether it was for throwing tantrums that not enough of his driver colleagues had bent a knee, or for just trash-talking the residents of his “dull” hometown of Stevenage, here is a non-tax paying cry-baby who should never be knighted. Ronnie O’Sullivan is no font of wisdom or professionalism, but he was incisive for calling out Hamilton over the fact that in other sports – such
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Diego Maradona: The loon checks out
as snooker, tennis, or golf – every participant starts with the same handicap and tools. Which leaves us to now start looking forward to 2021, a year which – contrary to October’s recent forecasting – may not necessarily be one of two halves, but one which is in fact shaped like an upturned pyramid. The Chancellor will surely extend or taper the stamp duty holiday, and the early summer feel-good which will come from an absolute glut of consumer spending, vacations, sporting and music events will sustain the property market right through to late autumn, by which time this incredible 18 month bull market will need settling anyway. It could be a £230bn mortgage market still, Livpull Furlough Club will win the league and Celtic FC will not get 10-in-a-row. England and the kamikaze Jordan Pickford will not get past the Euros semi-finals and the inquest into our government’s mishandling of COVID-19 might even result in lazy Boris being gone by next Christmas. From Easter, you could even be watching some of this unfold on your Mortgage TV screens each month. For, whisper it, but Outlaw TV could then be upon us. Come on…I mean if that Trump imbecile can have his own TV station, why can’t this one? Have a restful Christmas folks. God, you’ve earnt it. M I www.mortgageintroducer.com
Part of the Mortgage Introducer family. @MortgageChat | Mortgageintroducer.com
(From left to right) David Bennett, Mark Dryden, Pradeep Raman and Melanie Spencer
COLLABORATIVE AUTOMATION IN UNCERTAIN TIMES
INTERVIEW
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Jake Carter sat down with eKeeper, MCI Club and Burrow to discuss their technological interactions within a changing environment
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ustomer relationship management (CRM) solution provider eKeeper has seen a significant restructure since 2017, which includes key personnel changes. eKeeper believes this has enabled it to make an increased impact on the intermediary market as a software supplier to the financial services sector, primarily focused around mortgage and protection. eKeeper is owned by DPR Group, a provider of banking software, including mortgage origination systems for over 45 providers and backed by Norland Capital, a Silicon Valley private equity investor. Within the group’s ‘broker channel’ there are three primary arms, eKeeper, a mortgage CRM system, MCI, eKeeper’s technology-focused mortgage club, and Burrow, originally an online digital broker, similar to Trussle and Habito. FOUNDATIONAL ASPECTS OF EKEEPER CRM Originally, eKeeper, MCI Club and Burrow were kept as very separate businesses. Moving forward, however, the broker channel will intertwine the efforts and direction of the companies in order to improve its foundations and offering to customers. David Bennett, commercial director of eKeeper, believes that by having one channel that provides mutual support, it simplifies the group’s aims and improves its offering to customers. Mark Dryden, technical director of eKeeper, said: “Bennett last year was tasked with taking the Burrow platform and making it accessible to intermediaries, so they can white label it.” Dryden explains that today, the Burrow engine is a mortgage client onboarding engine, which utilises a chat-style interface. He says: “Burrow, however, is not simply about gathering information, it is about providing genuine value into the journey. “The platform gives you a mortgage score, it triangulates product criteria and allows for affordability sourcing. This information is then passed directly into eKeeper, which can be acted upon by the broker.” Looking to what Burrow offers the marketplace, Pradeep Raman, director of digital solutions, outlines that it provides the first step in the journey. He says: “What we originally started to do with Burrow was look at how we could assess affordability in a more personalised way. What we realised was that every lender treats income and expense profiles in a www.mortgageintroducer.com
different way. For example, Halifax or Virgin are very comfortable with contractors and self-employed people, whereas HSBC is not. “As a potential borrower, you want to know where to go to maximum the loan you can receive. “If you use the wrong calculator, you will get the wrong figure, so we came up with the idea of the universal mortgage calculator.” MAINTAINING GROWTH DURING LOCKDOWN Melanie Spencer, head of the MCI club, says that it is what the group does to stand out from the market which has helped it maintain growth during lockdown. Spencer explains: “We are unique in the market as we offer technology solutions to help customers, so intermediaries can grow their businesses. “I think that this is key for the brokers, because if they need to consider how they will grow themselves or become more efficient, then the technology is there to support them to do so.” Dryden adds that as a result of the pandemic, people have been forced to increasingly rely on technology. This has encouraged individuals to seek the use of group’s technology solutions. He says: “One of the things we have been able to push out there is access to Burrow, and through MCI we released a lightweight version of our CRM for free. “From a CRM provider point of view, at the beginning of the pandemic we were getting a lot of inquires. “A transformable change, which may have taken years, in people’s realisation of the uses of technology, took days or weeks due to the pandemic.” Raman concurs with Dryden on the increased interest for online platforms, which has broken the mould of the traditional face-to-face activity. He says: “There are two types of brokers, there is the one that is embracing this move towards increased digitisation of the process, and then there is the one who is in denial, who would rather follow the traditional patterns of the process. “It is difficult to change the mindset of a broker who has always built rapport with lenders and customers through physical interaction; however, the pandemic has killed the face-to-face channel, and therefore these brokers are being forced to utilise technology, which we can provide.” Dryden says: “Advisers and brokers did not want to be seen as order-takers, sitting at a computer going through fact-find systems and automated process, they wanted → DECEMBER 2020
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COVER to demonstrate the significance of their role through personalised face-to-face contact. “However, as a result of the pandemic, they have been forced to digitalise their processes, which has in turn sped up the journey for consumers, as well as allowed them to focus on the more important aspects of their role.” Raman also details that as a result of the pandemic and lockdowns, the group has been encoursged to take a further look at its own offerings and improve upon them. Investment in the channel throughout this period of uncertainty has allowed for further product creation within Burrow, with two notable inclusions: a portal system and increased focus on retention. Bennett says: “There was a fear surrounding what would happen to brokerages during coronavirus; however, the pandemic has heighten the need for technology.” Touching on Raman’s point, Bennett says that many brokers had concerns surrounding technology and its impact on the market; however, the pandemic has forced them to embrace it. He says: “While of course the pandemic is terrible, it has been beneficial for us to convey the uses of technology in the market, and it has forced individuals to listen.” Raman adds: “For the first time, instead of us saying to brokers that they should use technology, the brokers are asking where the technology is.” Dryden believes that, as a result of the pandemic, the cultural perception of technology has changed. He says: “The ability to work remotely has filled in the gaps that a broker would have traditionally filled.” TECHNOLOGY AND THE INTERMEDIARY MARKET The mortgage process is no longer linear, instead, there are now different ways to access affordability, and varied approaches to due diligence. As a result, technology being integrated within the intermediary market is essential, says Dryden. Looking to how the group has achieved this, Dryden notes that MCI deals with the products and connecting lenders with intermediaries. Meanwhile, eKeeper is a foundational CRM platform, which is integrated with different technologies, and Burrow is the client-facing engagement platform. Looking to further integrations within the group’s infrastructure, Dryden says: “Brokers typically have between 40 and 80 different logins, which include provider logins, specialist platform logins, sourcing platform logins and CRM logins – we are looking to find a way to reduce this to one login. “This will stop the need for individuals to have spreadsheets, post-it notes and other methods of keeping track of login details, which will also improve speed and efficiency.”
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Spencer says: “Our customers are both brokers and lenders, so it is important to connect the chain between the two. Our eKeeper CRM platform is used by both brokers, and lenders’ business development managers.” PLANS FOR 2021 There are a number of challenges in store for the market during the coming year. For one, the stamp duty holiday on purchases up to £500,000 is set to conclude on 31 March 2021, and as a result brokers are attempting to rush their customers through the process of buying properties, so as to meet the deadline on time. Raman says that the group is looking to design technological tools which can aid in efficiency. He says: “We are designing a client portal, which will include open banking and ‘selfie’ verification within it, as well as other advanced features. “In addition, the portal will include a fact-find. This will allow the broker to send a digital template for the customer to fill out.” Furthermore, the portal will have a key focus on tasks; the broker will be able to detail what their client must complete in a clear manner through the system, according to Raman. This approach all focuses on speed efficiency, which Raman believes is, and will continue to be, fundamental going forward into 2021, particularly with the stamp duty holiday and the Help to Buy schemes set to conclude. Raman says: “The portal will assist in taking the load off a broker. As the client will be able to go through the platform and complete the documents required, this will free up the broker to spend more time focusing on areas which the customer cannot complete within the process. “Our vision is to have everything under one roof – in other words, to offer an end-to-end service. “However, we are building it in a modular fashion, so if you only wanted to use the client portal and you had something else in place for the onboarding, you would be able to do so.” Dryden adds that these developments are not being made with a view to fully automating the process, or removing the broker from the equation, but rather to facilitate the effective use of time. He says: “The solutions we provide are there to support the brokers, as we recognise the value of advice. “When it comes to technology, you only use it for two reasons: to make money or to save money. “We know that, currently, advisers and brokers are working harder for essentially the same monetary gain. This is where technology can effectively reduce the time spent on cases. “Through the portal that we are working on, this will provide brokers and advisers with new customers, alongside their details, essentially providing a packaged case for them. “This, in turn, enables brokers and advisers to focus on what they are really good at, which is extracting www.mortgageintroducer.com
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COVER soft facts, dealing with questions, understanding the client’s needs and improving their financial outcome through personalised advice.” Burrow is also building a model for retention. Raman says that – within current workings – a broker must send individual emails to customers asking whether they would like a renewal when they are close to the end of their mortgage term. As part of the Burrow’s retention model, all of this would be done automatically. This once again harks back to the increasing need for speed efficiency, and also frees up the broker to dedicate their time to other parts of the process. Burrow is also looking at ways of strengthening that client-broker relationship, Raman says: “A broker, once the mortgage has completed, will usually not contact their client again until three months before the mortgage term ends, we want to change that. “We are creating an automated way that brokers will be able to engage their clients on specific conversation topics. The system will then pass the client onto the broker, who can manually continue the conversation and build relationships.” Raman believes that this could lead to more customers realising the importance of protection. Brokers’ greatest source of new business is through existing clients. Therefore, by improving on the client relationship, brokers will see considerably more business, according to Raman. CREATING NICHE VERSIONS OF PRODUCTS Bennett outlines that eKeeper has been altering and developing its systems as it has gone along, which means that it is now well placed to incorporate emerging trends. He says: “Originally, the product started as mortgage keeper, which served the traditional first charge mortgage sector. This then move into a commercial keeper, which served commercial brokers. “We are in the position to alter the system to incorporate emerging trends – such as equity release – which is evidenced by the fact that we have been amending our system along the way so far. “This would include altering the product to include the correct style of workflow, documentation, automation and integration. Through our flexible system, this is well within our reach.” Bennett adds that the group has undergone a transformation by focusing on key areas in which to add to and improve. For example, Dryden explains that equity release is an area which the club is looking to delve into in particular, through altering its systems to be applicable to later life brokers. He says: “This decision stems from our own users, who have highlighted a need for this niche altered version of our product, alongside our own data points.” www.mortgageintroducer.com
MCI recently launched its own branded version of Air Sourcing. The system is tailored to the club’s own panel, and it provides a streamlined broker experience, while leveraging the full capabilities of the sourcing platform. The system is free to use and exclusively available to existing and new members of the mortgage club. This consistent evolution and development has become a fundamental part of the group’s business culture, Bennett explains. He says: “As a business, it is about celebrating success, every quarter we get the whole company together and sit down in order to go through areas of improvement and what goals to set. “I believe this assists us in identifying holes in the market that we can fill. “A lot of businesses focus too much on looking forward, which is important, but looking back is important too, as it allows you to see where you can improve upon your current offering.” BROKER AND LENDER COMMUNITIES’ RESPONSE TO 2021 TURMOIL With all the changes coming next year, including the conclusion of the stamp duty holiday, Help to Buy scheme and furlough scheme, alongside Brexit, and the advent of people having to pay back Coronavirus Business Interruption Loans Scheme (CBILS) loans, how will the broker and lender communities respond? Bennett says: “What has been evident over the second half of 2020 is how resilient the market is – the financial services industry as a whole, but particularly the mortgage side of the market.” Spencer agrees: “From a broker perspective, they believe that the demand will continue throughout next year, despite all of the changes. “While all of these schemes are coming to an end, there will still be a demand and a need from consumers to move properties and to remortgage, therefore brokers will continue to have demand for their services and lenders will continue to see demand for their products.” Spencer outlines that while application volumes are high, brokers are spending more time working on those applications, due to current service times. She says: “A broker may be putting in one, two or three types of an application per client, as there is a lot more work that needs to be done.” Spencer also points to the possible return of 90% and 95% loan-to-value (LTV) mortgages as something that would stimulate the market. It remains to be seen how the end, or replacement, of government supports will affect the market, and whether LTVs will return to higher levels. As with many aspects of the year ahead, certainty is hard to come by. One thing is certain, however, Bennett concludes: “I believe that we will be equally as busy next year as we have been so far in 2020. There will always be supply and demand within this marketplace.” M I DECEMBER 2020
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FEATURE
2020
A year to forget? L
ooking back at the first two issues of Mortgage Introducer this year, excitement was in the air. Debate about the usual subjects – education, service levels and communication between brokers and lenders – where still in circulation, but many had big plans for 2020. Upcoming PropTech launches promised to transform the transaction process, and lenders were looking at bringing a variety of new offerings to market to help many more get onto the housing ladder. COVID-19 was completely unexpected. As it approached UK shores it became apparent that this would change the way many businesses functioned and managed their day-to-day. Lenders and brokers had to close their doors, estate agents had to adapt to virtual property viewings, and potential homebuyers and homeowners were forced to put their moving plans on hold. For many, this was the first time they had seen the property market completely stop, and it was a challenging time for all. As the first lockdown eased and the market opened its doors once again, the environment was different. Service levels were looked at under a microscope as lenders and brokers alike coped with pent-up demand, and rates were pulled from the market in an effort to ease the pressure. Completion times edged to a new high, and with the deadlines of Help to Buy and the stamp duty holiday both approaching in March 2021, now more than ever homeowners and buyers are keen to ensure the process moves as quickly as possible. Although the UK entered a second governmentenforced lockdown as infection rates increased, unlike during the first, the housing market has remained open and the results are surprising. Despite the doom and gloom, the industry has shown unwavering resilience. Businesses are increasing their use of technology throughout remote working, to maintain service levels and ensure productivity levels remain high. Zoom calls have become the norm, both to discuss matters of business and to check in on colleagues to help each other through this challenging time. Rates are re-entering the market, and although high loan-to-values (LTVs) remain uncommon, there is still evidence of recovery. The future, now more than ever, is difficult to predict, but this industry has gone through many turbulent periods in years gone by, and recovery is the main focus. So, Mortgage Introducer has asked industry experts to give their take on a difficult 2020 and their hopes for the new year. M I
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This year has been like no other, but the industry has shown its resilience in testing times. Mortgage Introducer asks seven industry stalwarts for their reflections and thoughts for the year ahead
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FEATURE
2020
Greg Cunnington head of lender relationships and new homes, Alexander Hall
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his year has been a learning experience like no other, with businesses across the industry learning to adapt quickly to remote working set-ups and the array of operational challenges. As an industry we should all be proud of the high service levels we have maintained, especially bearing in mind the unforeseen surge in mortgage payment holiday enquires. When you throw in the added complexity of the high volume of rate and criteria changes, and combine this with how busy the property market has been, the collaboration between intermediaries and lenders has really shone through. On the whole, lenders have been transparent with intermediaries on the challenges faced, which has made the role of advisers easier than expected.
Many lenders have been proactive in explaining the impact on service, and how we can best collaborate going forward to make the process as stress free as possible for our clients. This transparency has ensured we can manage our clients’ expectations, and also helped us to understand what the new packaging requirements and underwriting processes look like. Looking ahead to 2021, I am keen to build on our strong lender relationships even further. The pandemic has seen clients flock to intermediaries as they seek well qualified, professional advice for their mortgage options, and I expect this pattern to continue. It will also be good to see the return of higher loanto-value lending options; green shoots are emerging already, with Accord returning on a permanent basis. There are a lot of first-time buyers frustrated at the lack of lending options available with a 5% and 10% deposit currently, so it will be great to have some more options to support this area of the market which is so important for a properly functioning economy. →
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NOVEMBER 2020
MORTGAGE INTRODUCER
FEATURE
2020
Kate Davies executive director, IMLA
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very business in this industry has had to adapt to COVID-19, but it has actually been quite amazing to see how fast and positive the response has been. Intermediaries and lenders have largely adapted to home working, embracing technology and quickly equipping their workforces to operate remotely. What was previously a seemingly slower adoption of technology in our sector has turned into a revolution. While adapting to this new normal, our market has also had to respond to the pandemic’s financial and economic impact. The government’s payment deferral scheme acted as a lifeline for many borrowers, some 2.5 million of whom have been supported by their lenders through this tricky period. But despite the dramatic implications of the pandemic, and concerns that the virus had caused a collapse in homebuyer confidence, we have since seen the mortgage market bounce back. In the months following the reopening of the sector, demand has risen to unprecedented levels as consumers, eager to buy, have been driven by the government’s stamp duty holiday on the first £500,000 of a property’s purchase price. According to the Bank of England, mortgage approvals in September reached their highest level – 91,500 – since September 2007, 24% higher than in February 2020. The combination of the significant pipeline built up during the initial lockdown with renewed demand as borrowers seek to take advantage of the stamp duty holiday and the current increase in numbers of properties on the market has taken centre stage as a driving force behind the UK’s economic recovery. And the vast majority of borrowers who took a payment deferral have successfully returned to repayments – as at the end of October, there were just 140,000 payment deferrals remaining. However, there are still significant challenges facing the mortgage market. High levels of demand continue to put a strain on all of us – lenders, brokers, surveyors and conveyancers. THOUGHTS FOR 2021 While there are positive signs that a vaccine could be on the horizon, the economy is still likely to feel the after-effects of the COVID-19 crisis for some time to come. For the mortgage market, there are more immediate challenges on the horizon. 31 March 2021 will see three key deadlines for the sector: the end of the current phase of the Help to Buy (HTB) scheme, the closing of the government’s furlough programme – initially scheduled for 31
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October but extended for a further six months – and the deadline for the stamp duty holiday. Managing buyer expectations will be critical. With around four months to go to the triple deadline, consumers are already being warned that if they cannot complete their purchase transaction, they may not benefit from the stamp duty exemption. It will be very important that buyers continue to be warned about the challenges of completing by 31 March if we are to avoid the implications – namely buyers being forced to pull out of their purchase at a very late stage, possibly causing the rest of a chain to collapse.
“In the months following the reopening of the sector, demand has risen to unprecedented levels as consumers, eager to buy, have been driven by the government’s stamp duty holiday on the first £500,000 of a property’s purchase price” IMLA understands that a number of stakeholders have made representations to government about finding a pragmatic and fair way of enabling those who have come very close to the deadline but missed it – possibly only by hours, and very likely through no fault of their own – to be allowed to benefit from the tax incentive. We also understand that Ministers understand the issues and are sympathetic, but as yet there are no signs that a solution will be found. Post-March, therefore, we need to find a number of solutions: how to replace the HTB scheme for nonfirst-time buyers, and how to rejuvenate the market for those who cannot find a high deposit and therefore need access to higher LTV loans. This will all be against a backdrop of having to underwrite increasingly complex mortgage applications, as borrowers present myriad circumstances and patterns of earning. Those in secure jobs will be well-placed, but others may be experiencing continued loss of income as a result of reduced working hours or temporary unemployment. Furthermore, we haven’t even begun to find out how the UK will be exiting the EU, and the impact of that on the economy. On a more positive note, 2021 could be the year in which we start to see green finance rising up the agenda. The COVID-19 lockdowns have given us all a temporary view of a world with less pollution and time to reassess how we live and work. IMLA’s recent research has shown that 74% of lenders expect green mortgages to become a larger part of the market. The government has recently published a consultation proposing that lenders should play a www.mortgageintroducer.com
FEATURE
2020 significant role in monitoring and improving the energy performance of properties mortgaged to them. It has also announced a further 12-month extension to its Green Homes Grant. No doubt there will be much discussion about how best way this can all be achieved – but the need to tackle the issue is not in doubt. We could well see more lenders launching eco-conscious mortgages in the near future as part of the solution.
Towards the end of Q1 and start of Q2 we will see lending and risk appetites revert to pre-COVID levels. However, self-employed applicants will continue to be viewed as high risk and therefore subject to tighter lending criteria. Will 2021 be a positive year for the mortgage market? Thankfully, due to our specialist contacts across the market we are well placed, and so I am optimistic it will be. Cautiously optimistic!
Adam Kasamun
Adrian Moloney
associate director, LDN Finance
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iscussing 2020 without talking about COVID-19 is impossible. It has had such a big impact on all aspects of society, including mortgage lending. Prior to the pandemic there was a low supply of property coupled with high demand, which typically makes for a robust market. Mortgage providers wanted to lend, rates were low and criteria was flexible to meet a dynamic market. However, the background of Brexit and a government somewhat in a state of flux created an aspect of uncertainty. This ended at the start of 2020 with the so called ‘Boris Bounce’, which resulted in an extremely positive first few months of lending and demand. Needless to say this trend reversed when the pandemic hit. The national lockdown unfortunately meant many people lost their jobs, while many others were impacted by the furlough scheme. Those lucky enough to keep their jobs found that working from home became a necessity rather than a luxury. The economic uncertainty saw the Bank of England Base Rate drop to an historic low of 0.1%, and lenders become very cautious in their approach. However, the desire for property did not diminish and so the need for mortgages remained high. Despite this, lenders have restricted loan-to-incomes (LTIs) and LTVs and underwriting has become very stringent, especially for those who are self-employed. We now find ourselves in a problematic position. 90% LTV mortgages could almost be considered specialist lending and, as a general overview, borrowers are facing a 10% reduction in the amount available to them compared to the start of 2020. Property prices have not reduced by the same levels, if at all in some parts of the country, so the difficulties are clear to see. Although we are all looking forward to end of a difficult year, 2021 comes with its own challenges. We will see the removal of the stamp duty holiday and the current HTB scheme, and of course the end of the Brexit transition period. In my opinion, the ‘Bank of Mum and Dad’ will likely be key to the market’s recovery.
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group sales director, OneSavings Bank
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s we stood seeing in the New Year singing Auld Lang Syne, I don’t think any of us could have imagined what 2020 would have in store for us. You don’t need me to remind you of how difficult things were for a while, and how bad the predictions were for the mortgage industry. However, if anyone had told you back in March that the market would be in as strong a position as it is after the year we’ve just faced, you’d have taken it. A combination of the Self-Employment Income Support Scheme (SEISS), furlough schemes and payment deferrals helped keep things afloat over the spring and summer, whilst the stamp duty holiday has led to the resurgence we’ve experienced in recent months. All of which brings me to the good. None of this would have been possible without the support of our broker and packager partners. Yes, it’s been a tough year and we’ve all been up against it, but seeing the way everyone has pulled together in the face of adversity has been nothing short of magnificent. It’s been a real collective effort and makes me very proud to work in an industry which is so dedicated to ensuring the best outcome for its customers. Despite all the challenges of the past year, you’ve done a great job by ensuring cases have been submitted properly, which makes life so much easier for lenders. We really respect the hard work which has meant that across Precise Mortgages, Kent Reliance for Intermediaries and InterBay Commercial there hasn’t been a day when we haven’t completed on a case. Even though physical valuations weren’t possible for a while, you remained patient and understanding while we introduced desktop valuations and automated valuation models (AVMs) to ensure you could still access the products your customers needed. This collaborative effort means that as we enter the final months of a year that none of us are ever likely to forget, we’ve been able to maintain our reputation for providing first-class service. I’m delighted to say that Precise Mortgages and → DECEMBER 2020
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2020 Kent Reliance for Intermediaries were both awarded a five-star rating for mortgages at the Financial Advisor Service Awards 2020. Without the benefit of a crystal ball, it’s impossible to predict what the future holds, but I know one thing for sure. By continuing to work together as one, we’ll be well placed to carry on helping our customers, whatever 2021 throws at us.
prevent fraud and scams. That sees its role to manage responsible growth, and does not assume that fintech is the answer to every problem. Finally, I would like all mortgage brokers to commit to memorable conversations with their customer on a fully protected mortgage. Speaking with passion and positivity about why income protection, life and critical illness insurance is part of the package, not just to keep the sales director and compliance happy.
Robert Sinclair
Paul Brett
chief executive, AMI
managing director – intermediaries, Landbay
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020 has been a tumultuous year. For me it began in Sydney on the holiday of a lifetime, dodging bushfires in the Blue Mountains and COVID-19 in Singapore. On return, the litany of issues was beyond imagination. The imposition of lockdown supplemented by mortgage payment deferrals gave lenders a storm of activity that destroyed their operational capacity. Most have never really recovered, and many continue to deliver a shoestring service that shames their status as major institutions. Of course, this was not all of their own gift. The Rishi Sunak pill of sweetened stamp duty reduction and the opening of the property market as a priority propelled the industry into the spotlight, and the Brexit pent-up demand exploded. Add to this the Prime Minister not happy just promising all sorts of starter homes, affordable homes and Help to Buy, but adding the need for long term fixed rate mortgages. That is, without solving the problems facing the estimated 250,000 mortgage prisoners, or trapped borrowers, as they should be called. Many sold by HM Treasury for a profit, to be caught with asset managers who will not offer them anything other than a high standard variable rate. At some point I hope Martin Lewis will use the report he commissioned to shame those responsible. In the same way that the government should feel shame that, over three years after Grenfell, we still have people in buildings clad with the same material, unable to sell or remortgage and paying vast sums for fire wardens to monitor the risk. For 2021, all I would like is stability. Lenders with products and interest rates that they actually can and do want to lend at. A return to processing capacity that matches the demand in the market and does not exclude those without a 15% deposit from benefiting from government incentives. A market where lenders genuinely recognise the intermediary as a partner. I dream of a Financial Conduct Authority (FCA) that is better connected to the markets it regulates. That supervises with strength and controls innovation to
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daptability has perhaps been the word of this year. In the one year where 20-20 vision would have been incredibly useful, the world changed around us, altering some working practices perhaps forever. Overnight, intermediaries, lenders and clients all had to adapt to new ways of working. Thanks to its state-of-the-art lending platform, Landbay managed to adapt quickly, with all staff working from home within 24 hours of lockdown being announced. How lenders themselves were funded came into the spotlight, as several with less stable funding streams were forced to pull out of the market or pause lending for a while. This was due to the understandable caution of institutional funders, fearing a dramatic drop in property prices, but confidence returned sooner than most anticipated. Fortunately Landbay, with multiple lending sources, continued lending throughout. Securitisations came back quickly, some taking place just after the first lockdown lifted, including one which Landbay was a part of. As the stock market fluctuates and other returns remain uncertain, the stable returns of the UK buy-to-let market mean it continues to be a good choice for institutional investors as well as private ones, and this outlook is likely to continue through 2021. Demand for quality rental properties remained strong, and looks to stay that way for the mediumterm. The pandemic meant mainstream lenders tightened criteria and lowered LTVs, making it much harder for many people to buy. This, together with rising unemployment, will fuel tenants for the buy-tolet market for some time to come; in addition, there is a growing generation for whom owning a property is just not desirable. In contrasting fortunes, the second half of this year saw a positive flood of enquiries, as pent-up demand from lockdown gave way to a rush to take advantage of the stamp duty holiday, leading to some of the best weeks Landbay has ever experienced. Professional landlords, in particular, are seeing the long-term www.mortgageintroducer.com
FEATURE
2020 potential of expanding their portfolios. Looking to 2021, those still wanting to take advantage of the stamp duty holiday will need to act quickly, which may cause a flurry of activity in January. To stand any chance of completing on time, it will be crucial for brokers to guide their clients to lenders which have online processes and continue to perform within service levels. After January, if there is no extension to the stamp duty holiday, there will inevitably be a dip in activity as it becomes impossible to complete before 31 March. Purchases are likely to reduce for at least a couple of months once stamp duty is reintroduced. Lenders will still have targets to hit, however, so this will be the time for brokers to switch their focus to existing clients and remortgaging. It has been forecast that, due to the roll out of COVID-19 vaccinations, the UK could have herd immunity by the beginning of April, this could be an incredible ‘shot in the arm’ – excuse the pun – for the housing market and the economy more widely. We could be in for a very busy H2. It remains to be seen the impact Brexit will have, but in a year full of unknowns, the private rental market has shown its resilience. So, despite 2021 being another year of uncertainty, expect demand for buy-to-let, particularly from portfolio landlords, to remain strong.
Melanie Spencer head of MCI Mortgage Club
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ow, what a year! Who in 2019 could have predicted how 2020 would have played out? I would have handed them my face mask and my stockpiled toilet rolls there and then. 2020 has been one of the most transformative years for the industry, our economy and the way we live our lives. Change is usually slow unless there are driving factors – like a pandemic – that dictates the necessity to change. For those of us able to work from home, the move into a more remote world took days, not years, because it had to. These changes have pulled the industry together, while being forced to remain apart physically. As a broker community, we have worked hard to service exceptional demand due to the need for payment holidays, or the high demand to buy due to the stamp duty holiday. At the same time, lenders have been changing criteria daily, as well as pulling or introducing products. The changes have transformed how we work. Brokers are engaging clients online, realising the power of virtual events, while video conferencing
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“Given the intense pressures lenders have endured, it is hardly surprising that the broker proposition has, perversely, been strengthened” is no longer a convenience but a necessity. This is leading to larger cultural changes for the mortgage industry and its customers. For lenders, the fallout of payment holidays, changes in underwriting, and tightening of criteria has shifted the landscape. Lenders moved to online webinars to support brokers, making both parties realise the power of virtual events – less time on the road for the broker, and lenders have the capacity to deal with more brokers in a wider demographic. For brokers, moving away from traditional face-toface meetings where they can deliver reassurance, and the personal touch has, for many, been contrary to the ethos they provide. More importantly, as a society we’ve had to adapt, and quickly; tools such as video conferencing and portals are no longer workplace, but now commonplace. Gone are the detractors, because there’s no other way to work. Given the intense pressures lenders have endured, it is hardly surprising that the broker proposition has, perversely, been strengthened, as specialist lenders and smaller building societies fill voids left by those on the high street. The time of nimble specialist lenders arrived in 2020, seizing opportunities that will only continue their growth in 2021. These specialists have been able to adapt to the market using manual or innovative underwriting to continue providing solutions, while keeping service levels realistic. As a result, we’ve seen increased demand from brokers for panel expansion. We are set for a turbulent start to 2020, with payment holidays continuing, and stamp duty and Help to Buy incentives ending on 31 March. We need Help to Buy and higher LTVs to enable people to purchase within their means and reduce the gap between the haves and have-nots. As an industry, we can still thrive in 2021. It is more important than ever that – from brokers to lenders and surveyors to valuers – we all work together to ensure we provide customers with the result they are after. We will see brokers continuing their adoption of technology through better online lead generation, increasing back-office efficiency and enabling them to continue delivering true advised value. Finally, there’s the mortgage club, ensuring members have the broadest range of lenders, materials and support, so both lenders and brokers have at least one less concern in the new year. M I DECEMBER 2020
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COMMENT
SECOND OPINION
Brilliant options Loan Introducer catches up with Matthew Arena, managing director at Brilliant Solutions, to discuss the growing demand for specialist products. How has your business adapted to the COVID-19 crisis?
We have seen a very rapid increase in demand for our specialist mortgage services. Having initially been forced to operate in an incredibly restricted market, as soon as the number of mortgage options started to increase again, we diverted experienced staff from other areas of our business, such as commercial mortgages and secured loans, to support our mortgage experts. What products are you seeing demand for? On the whole demand has not changed; people’s needs are similar. The lenders are more cautious, but I think brokers and their clients are pleasantly surprised by the solutions we are making available for borrowers. We are helping more brokers with more cases than ever before and that is a sign that there are plenty of solutions; it is also a sign that more clients and brokers are needing specialist support. The FCA recently announced that it will be looking into the second charge mortgage market again next year, are you surprised? I have no concern when the regulator looks at the industry. We are seeing the benefits of their post credit crunch changes now and a stable industry is positive for all. The fact that they are going to revisit this means that there are some issues to get to grips with. We focus on our own business and operate very differently to many others; that means low fees and an obligation to consider appropriate alternatives. Fees was a longstanding problem in the industry but so much has improved, with more businesses than ever operating a similar low fee business model to ours. The industry has been improving and, in our experience, more mortgage advisers are seeing the benefits thanks to the low fee solutions that are out there. What I will say is that secured loan advice and secured loan packaging is more in depth than
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DECEMBER 2020
Matthew Arena
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Making it personal When you were young, what job did you aspire to as an adult? I am fortunate enough to have worked in two of the three jobs I wanted to do when I was young. I always wanted to run my own business and I also liked the idea of working in corporate finance in the City of London. Now that I think about it, it’s not a typical career aspiration for any youngster! I was also interested in being a trader in the City, that looked like a lot of fun. Is there something about yourself that people would be surprised to hear? Contrary to what your eyes may initially tell you, I am actually an incredibly tall man. What is the best bit of advice you have ever been given? I can think of plenty of fantastic advice I have had over the years but if I had to pick one thing it would be, “Never stop learning”. The world is moving ahead at pace and we all need to keep developing. It keeps you sharp, raises your competence and keeps things both interesting and challenging. The responsibility there is very much your own; you can control that element of your life now more than ever. What is on your Christmas list this year? Proper time with my family who have been neglected since the crisis began and I would like to spend as much time with the wider family as the rules will allow. Gift wise, it’s all about life after the crisis and planning trips away once this is over. My teenage self may make a brief comeback if Santa brings my children an Xbox…
it is given credit for. The level of work involved in offering and demonstrating compliant advice is incredibly high so the sector can justify higher fees than standard first charge mortgages, even where the procuration fees are higher. How do you think the second charge market will perform in 2021? I have high hopes for the second charge market post crisis. Whether that is 2021 or not we shall have to wait and see. At the moment, aspirational borrowing is all but non-existent in that sector, whilst needs-based borrowing is typically riskier, so harder to come by. When the crisis abates, aspirational demand will increase as will lender risk appetites, so the core benefits of the second charge market will come to the fore. M I www.mortgageintroducer.com
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ADVERTISEMENT FEATURE
INTERVIEW
Resilience and growth in adversity Louis Alexander, CEO of SoMo, discusses relationship-building, rebranding, and providing support through a difficult time What are the details of the rebrand, and what has driven the change? In terms of practicalities, we’re now officially SoMo, which stands for ‘Social Money Limited’, having been The BridgeCrowd since the business’ inception in 2012. Rebranding to SoMo is a pivotal step in the evolution of the business, allowing us to expand and continue to support customers. SoMo represents who we are at our essence – we connect people to help them improve their finances by borrowing and lending. The new brand comes with a new website, which is both educational and relationship-centric – a real reflection of the current specialist lending market and the way we operate. With the website, you are one click away from a genuine and valuable conversation and personal relationship with our team about your needs. Far beyond a name and logo, though, the rebrand represents an evolution of culture and mindset, and an evolving product range. Under SoMo, we hope our continued delivery of this personal approach stands us far above the marketplace. Our ethos is to lend in a smart, safe and secure manner, and that’s what we will continue to do.
Extensive due diligence processes and fraud prevention procedures have minimised risk and given us the confidence to continue to lend. We are a second generation family of property lenders, and one that came out unscathed from the Credit Crunch. We are fortunate to have over 100 years of specialist lending experience within the group, and this experience is readily available to all our partners as we support clients in resilience and growth. Markets will evolve, but we also focus on security, responsibility and trust. The challenge now will of course be to navigate the economic environment that comes as a result of COVID-19, but I’m confident that under the new SoMo proposition we are in a strong position to remain resilient and support our customers as we always have.
What changes has the business had to make during 2020? How have you ensured you continue to provide support during this time?
How do you approach developing and maintaining relationships with brokers and clients, and why is it important to do so?
We’re proud that we have continued to lend throughout the pandemic, remaining resilient and fully operational, when many other lenders paused. This allowed us to continue to deliver for borrowers and brokers. A significant reason for this is that we ensure our loans are safe, solid and processed by experienced underwriters.
We focus on treating both borrowers and brokers fairly and working with them to understand their needs and provide the best solution possible for everyone involved. It’s at the core of what we do, and it’s important because we build a trusted and genuine relationship from the very beginning.
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We advise and deliver a range of financial solutions, from commercial or residential property purchases to business investment. Having that relationship as a solid foundation from the start means we can provide a personal service to our clients while offering expert advice tailored to their specific needs. Through our team’s experience we have supported customers with 650 loans with a combined value of over £132m since launch in 2012. We’ve focused on steady growth, not rushing to increase the loan book at the expense of the quality of our loans. This has served us well in the face of a difficult year, allowing us to continue to support borrowers and brokers. What key developments can we expect to see from the business in 2021? The future of SoMo is exciting. While focusing on the rebrand, we’ve had time to reflect on what we’ve achieved so far and celebrate the dedication and hard work of our team. 2021 will be an important year. We have increased our staff by 25% to 50 employees this year, and we’ve moved to new premises to support our future growth – both of which are exciting and important milestones for SoMo. There will also be new, unique products under the SoMo brand, and some of these products are not currently offered within the marketplace. So keep a watchful eye on what’s to come. We’re also preparing for our busiest 12 months, as we predict more brokers and lenders will need to explore specialist loan options to aid their resilience and recovery in light of COVID-19. We have successfully navigated one of the most unexpected challenges faced since the Credit Crunch, and we’re positive we can continue to be resilient and grow even further, while helping our customers to as well.
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SPECIALIST FINANCE INTRODUCER
DEVELOPMENT
An exciting year? Simon Chapman lending director, Pluto Finance
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ur January view towards 2020 was entitled ‘An exciting year ahead’, and who could have predicted what an exceptional year it would be! At the beginning of the year, everyone’s focus was firmly on Brexit and what changes that would bring. Well, we still do not have the answers for these questions, but the B-word has very much been pushed to the back of our minds and instead replaced with the C-word (COVID-19). In January, we noted the flurry of properties being brought to the market, with average house prices surging 2.3% since the General Election, and the prediction of a well-timed recovery, heading into the traditionally busy spring period. Then it hit us. COVID-19, a deadly virus that started far away and quickly moved across the globe, spreading into the UK in March this year and resulting in the complete lockdown of the UK, along with much of the rest of the world. While businesses and families were fighting for their financial lives, everyone, including our team at Pluto Finance, stopped for a moment and took stock with a feeling of impending doom and definite uncertainty, this time not related to Brexit. However, while banks’ appetites for lending diminished and some lenders stopped altogether, we remained very much open for business, albeit increasingly from the comforts of our own homes. We completed a number of notable transactions earlier in the year, following the lockdown period, which included: a £13m Wembley development exit facility with Signia; a £3.4m exit loan for Storey Homes in Hertfordshire; and a £9.7m acquisition funding in Milton Keynes.
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Halfway through the year we posted an update that showed strong levels of new enquiries throughout, which we were eager to support. In September and October, we closed a total of £97m of new loans, including: our largest loan this year, of £35m to fund the acquisition and development of a residential-led mixed-use scheme in Chiswick, West London; two site acquisition loans totalling £16m in Ashford, Kent and Cockfoster, North London; and the £34m funding of 700 purpose-built student accommodation (PBSA) units in Swansea, South Wales for Bricks Group’s ‘true’ brand. So, despite the massive changes to our daily lives and the short-term disruption of construction site activity earlier in the year, it has not all been doom and gloom. The raising of the stamp duty threshold in July has certainly been a boost for the housing market, increasing sales across the UK, but particularly in the South East. This has enabled some of our developer clients to exit schemes with our support and move onto to new projects to continue the pipeline of development for much needed housing and mixed-use stock. In addition to the development exit loans completed earlier this year and
mentioned above, in Essex we provided a borrower with a £10m development exit bridge and equity release. Towards the end of 2020 we have seen an increase in these types of queries from developers looking at gearing up completed schemes through development exit bridge loans to release equity to acquire new sites. We are continuing to focus on lending sensibly within our core appetite. Our core appetite has traditionally been to lend in London and the South East, to capable and experienced borrowers on well-priced units in areas of high demand. However, we will go further afield for the right project and sponsor. On the bridging front, we are currently placing an emphasis on income producing commercial assets with strong covenants, and residential units with strong pre-COVID comparable sales evidence. For development, we are looking to support seasoned developers building mid-market stock within London and the South East. We will also consider further student development opportunities for experienced operators. As ever, we are able to offer flexible and market-leading facilities to support our borrowers. We encourage borrowers to keep their spirits up, and to continue talking to us in order to keep the market moving. M I
Bridging supports the development pipeline
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SPECIALIST FINANCE INTRODUCER INTERVIEW
MARKET
Where are the opportunities? Brian Rubins executive chairman, Alternative Bridging
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otwithstanding COVID-19, opportunities are everywhere! Yes, even as we go into the Christmas holidays and the malaise normally caused by the festive season. With just weeks left, why not push hard and get those loans that are in progress over the line? Often there is very little outstanding, so ask your lenders what will expedite completion. Just before drawdown, it is often trivia – some insurance details, a statement to show the balance outstanding, evidence of identity to complete the MLA. Resolve these mini-issues and the Three Cs come your way: completion,
commission and Christmas. Yours for the taking. Going forward, what are the opportunities to plan for? With most eyes on residential bridging, now is time to address the wider picture. First, expand your offer to include commercial property – retail, office and residential properties, and warehouse and industrial premises. This is a less competitive market, but one with strong demand that is well served by a number of forward-thinking lenders. Second charge bridging is much more cost-effective than repaying the inexpensive first charge and replacing it with a more costly bridging loan. Not every lender has a second charge product, but if the extra funds are to consolidate credit, finance a business or improve the property, a second charge bridging loan is a swift, simple solution. The buy-to-let (BTL) market is in flux because of changing patterns
of occupation – demand for larger properties to facilitate home working, the need for outside space, especially for families, and then the reverse: innercity demand to avoid commuting. With downward pressure on rents in some places and shortage of stock in others, it is a time for your clients to improve and extend their BTL stock, either already owned or being purchased, funded by a first or second charge bridge with an inbuilt refurbishment facility. Then there is the question of true flexibility, loans which can be drawn down, repaid and then drawn again on multiple occasions. With the benefit of interest only being charged when used and the ability to return the funds until needed again, it is cost-effective and flexible, providing liquidity on tap. For introducers and borrowers alike, this is the time to think outside the box and benefit from the opportunities. M I
The green industrial revolution Douglas Grant director, Conister
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he government’s announced 10-point green plan shows it is serious about making concrete commitments to accelerate the move towards a net zero carbon economy by 2050. There are significant opportunities for the small to medium enterprise (SME) sector to capitalise on this transition. Access to credit will be critical for entrepreneurs and businesses to take advantage of these opportunities, as well as to help them adapt and change their business models. The transition to a new, low-carbon economy cannot entirely rely upon on government funding, which is likely www.mortgageintroducer.com
to focus on larger scale projects. A key part of the transition, however, is smaller projects. SMEs are, in their nature, all about people – small enterprises run by individuals, families or groups of friends, whose activities may fall outside the government’s grand plans for “a green industrial revolution.” We know that many businesses want to become more energy efficient. Retrofitting with infrastructure to make them more energy efficient is a prime area where SMEs can make marked improvements. However, it is unlikely that they will be available to receive grant funding to do so, leaving many without the required initial capital to make the crucial transition. The specialist lender segment will be critical to providing that support alongside government funding. Green finance has become more prevalent, and is an option being
offered by the majority of mainstream banks. This requires businesses to agree to a debt facility at a certain rate, as long as certain environmental criteria are met. The rate of payments could be altered retrospectively if the environmental performance does not meet expectations, leaving businesses exposed to greater levels of debt they had not planned for. Instead, Conister’s approach, through the retrofit market, is to finance projects that directly improve energy efficiency, allowing businesses to become more environmentally friendly and be a part of the transition to the new economy. We are already seeing signs of the SME segment pivoting towards the green economy, with COVID-19 serving as an accelerator, and we have recently completed two loans to fund green SMEs, to give their customers access to affordable finance to purchase renewable energy products. M I
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FIBA
More benefits than ever from our partners Adam Tyler executive chairman, FIBA
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hilst the national news reports a more optimistic outlook for the UK, we at FIBA have already planned on beginning the new year with a positive stance. When we announced the date of our annual conference earlier this month, it might have seemed a little early, because there was, at the time of the release, still over two months to go before the event. In more normal times, putting on a physical event with a real venue and all the logistics involved would have necessitated that as much notice was given to likely attendees as possible. It is quite a commitment for advisers to effectively give up a day of their time to a full day’s conference, particularly if they have to travel. Being able to put a date in the diary well in advance and plan to make that investment of time requires organisers to ensure that they give as much notice as possible. I know from many years of experience that as brokers, we can get a deal come in that needs our immediate attention, and no matter what intentions we had to get in the car and travel that day, getting something over the line becomes paramount. However, now that we have all become avid users of technology such as Zoom and Teams, which have done so much to maintain our ability to hold meetings, the rise of virtual events like our Conference and Expo is also demonstrating that – although there is no physical venue – the logistics of event organisation, while different, are still there.
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In fact, although attendees can join the day’s events from the comfort of their office chairs – or sofas, as they are now known – the same amount of thought and attention has to be given to the makeup of the event itself, and the attractiveness of the separate elements from which attendees can derive a positive and valuable experience. Our event, which will also celebrate FIBA’s third anniversary, will showcase our strategy for the future, as well as launching a further range of benefits for our members and partners. The cutting edge technology which powers the event comes courtesy of our parent, SimplyBiz Group. It allows the conference to be significantly different, with a variety of sessions that include plenary presentations and debates, alongside exhibition rooms where delegates can meet with lenders and other partners, and breakout areas in which to discuss matters on a one-toone basis. I would stress that while the event is open to our members, it is also there for any adviser or potential partner who either wishes to learn a little more about FIBA itself, or has an interest
in the future of the specialist property finance sector. Having run a successful series of webinars during lockdown, with more than 1,000 brokers engaging with just one series, we are confident that our conference will attract plenty of interest from delegates who either are or want to be involved in the specialist property finance space. M I
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Partner benefits are on the rise
PI – Renewals for 2021
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ecuring professional indemnity insurance (PI) in our industry is not as easy as it once was. In fact, you may have been seeing increased premiums, or finding that cover is not available for an upcoming renewal. Having been through difficult times, the sourcing of a new provider for much needed cover is possibly the last thing you need at the moment. I also fully appreciate that not having access to cover is not only stressful, but also increasingly business limiting. Professional indemnity insurance is there to cover your legal costs and expenses in defence, as well as damages or costs that could be awarded against your firm, should
DECEMBER 2020
the assessment suggest that inadequate advice or service resulted in a detrimental situation for your client. FIBA members have access to an exclusive block policy arrangement, and it has proven very popular for specialist finance members. Many principals have already taken the opportunity to assess their current provision and, as members, have reviewed their requirements with FIBA’s own PI solution, and have reported back many positive benefits. These have included service excellence, highly competitive cover and plain and simple ease of placement.
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IN ASSOCIATION WITH
AND WITH SPECIAL THANKS TO
THE LAST WORD
MATT BROWN
A day in the life of... Matt Brown, national account manager at ULS, talks shop What is your role? I’m a national account manager, where I manage the relationships with four key mortgage networks. I work on strategic plans with our clients’ proposition teams to support conveyancing income growth for mortgage brokers in our industry. In usual times, I can also be found presenting on stage at events, at team meetings or meeting people on one of our event stands. I also provide account management to a group of key firms within those networks, supporting with training, intervention and all things conveyancing! How has your role changed as a result of COVID-19? I’ve never spent so little on fuel in my car, or coffee from motorway service stations, which is a plus! Trekking up and down the motorway network engaging in events or face to face meetings has become unusual in 2020 and many of the things I used to complete physically in person have switched to the virtual world. This has its advantages and disadvantages in that I can still hold the same conversations via video calls, but there’s something not quite the same as meeting people in person and shaking hands vs. sitting behind a camera waving with a headset on! What is your favourite part of your job? I really enjoy talking to people. I like finding out more about them, their families, their hobbies, their business, their client base and being able to show how our platform and relationships can enhance their conveyancing experience. There is nothing more rewarding than getting feedback from a broker, client or a contact where I’ve made a positive difference to their journey in some way. What do you like and dislike about working from home? I like the fact that I get to see more of my wife and kids. I’m able to have my breakfast with the kids, I can help my wife out with getting the kids ready for school and it’s good that when the working day ends, I have nowhere to travel home other than down a flight of stairs! I also like that I can utilise the time I’d normally be travelling (eg 6.30am!) to go for a run and get some steps and exercise under my belt before I turn my laptop on. What I don’t like is the temptation of the fridge door – it’s very easy to ‘pop in the kitchen’ for a snack – healthy eating and healthy
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discipline is harder being at home all of the time. I do also really miss face-to-face interaction with my accounts, peers, colleagues and new business introductions. What’s the most interesting opportunity in your market? We have a huge opportunity to develop our digital offering, DigitalMove, further. It’s already a fantastic product which has helped to cut out unnecessary wasted time in waiting for the postal system to deliver basic paperwork, but it has the potential to deliver even more. I’m excited for our business, with the appointment of Jesper With-Fogstrup and his digital background – we have the opportunity to go from strength to strength and deliver further game changing results in digitising the conveyancing space. What has been your greatest success to date? Following the loss of her mum to cancer in 2019, my wife set herself nine challenges to represent the nine years her mum received treatment from The Christie Charity in Manchester. I got myself involved on the action and having never taken part in any running activities longer than about 10 minutes, I trained hard and completed two half marathons alongside her – in a decent time. I’ve also signed up to a ridiculous bungee jump to support the charity (unfortunately – or fortunately – it’s been postponed due to COVID-19). Collectively, we have raised over £6000 to date. What do you do to wind down? I’m partial to a pint (or two!) of Heineken or a glass (or two!) of white wine! I look forward to Friday nights, when I can shut the laptop down for the weekend and enjoy some work-free family time. The kids stay up a bit later, we watch a film and eat pizza! I also love to travel the world, we’re always on the countdown to our next holiday and like to see as many new places as possible! What does a great weekend involve? Saturdays are jam packed with kids activities at the moment – I take my son to football whilst my wife takes my daughter to dancing, and then we meet at the swimming baths for their swimming lessons! After that – we’ll try and see family and friends (rules permitting!) and generally have something planned to do in the afternoon/evening. Sunday is relaxation day. M I www.mortgageintroducer.com
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Maa Bond Commercial Director Maa@mortgageintroducer.com 07525 456869