Mortgage Introducer January 2022 by mortgageintroducer

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WANT A CLEARER PICTURE OF EQUITY RELEASE? Our offering brings you straightforward products, accessible information and expert support, helping you provide your clients with clear and positive outcomes. Equity release from Scottish Widows Bank gives you: • A tried and tested customer-centric approach • An opportunity to widen your scope and grow your business • Support from dedicated Business Development Managers, useful tools and resources • Combined expertise of Scottish Widows Bank as part of Lloyds Banking Group

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Ta k i n g o n t h e f u t u r e tog e t h e r For the use of mortgage intermediaries and other professionals only. Scottish Widows Bank is a trading name of Lloyds Bank plc. Registered Office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales, no. 2065. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under number 119278. Information correct as of November 2021.

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Champion of the Mortgage Professional

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GAME

John Ahmed, director of Movin Legal, talks about the conveyancing market and his thoughts for the future

Supporting confident remortgages

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 Robert Sinclair  The Outlaw  Loan Introducer

January 2022

Supporting confident remortgages

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Ryan Fowler RyanFowlerMI Publishing Editor Ryan Fowler Ryan@mortgageintroducer.com Associate Editor Jessica Bird Jessicab@sfintroducer.com Deputy News Editor Jake Carter Jake@mortgageintroducer.com Commercial Director Matt Bond Matt@mortgageintroducer.com Advertising Sales Executive Jordan Ashford Jordan@mortgageintroducer.com Advertising Sales Executive Tolu Akinnugba Tolu@mortgageintroducer.com Campaign Manager Esha Gossain Esha@mortgageintroducer.com Production Editor Felix Blakeston Felix@mortgageintroducer.com Head of Marketing Robyn Ashman RobynA@mortgageintroducer.com CEDAC Media Ltd Signature Tower 42, 25 Old Broad Street London EC2N 1HN Information carried in Mortgage Introducer is checked for accuracy but the views or opinions do not necessarily represent those of CEDAC Media Ltd.

Set for a strong 2022

ere we go again. 2022 looks set to be another strong year for the mortgage market. The past few weeks have been awash with positive news for the market. Recent IMLA data shows that whilst the market will be slower than last year it will still come in at a very healthy £275bn. Brokers are also reporting that the high volumes of business that were being experienced in 2021 have also continued into 2021. This issue we have our annual State of the Nation feature on P44. The overall consensus is that 2021 - despite being annus horribilis for many due to the pandemic - was an exceptionally strong year for the broker market. Brokers, lenders and stakeholders all continued to adapt their propositions to an ever changing market. On the whole these changes have been successful, and the proof can be seen in the record levels of business written over the course of the year. As 2022 gets underway the market

still faces the same age-old challenges. Most notable of these is the lack of supply. The issues facing developers have been well documented however there has been encouraging noises coming out of the ONS that supply problems could be receding. For once the housing brief has been given to a senior statesman. Think what you will of Mr Gove but he holds weight in current government. He’s gone to war with developers on the cladding crisis but he has the power to actually help get the country building the homes it so critically needs. However, questions do remain. With rumours of a cabinet cull following the Partygate allegations Gove could be oﬀ to pastures new before really getting to grips with the task at hand. Equally with the PM hanging on by a string he could play for the top job. All in all time will tell - if he does leave let’s hope housing gets a good Secretary to push things on.

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MAGAZINE

WHAT’S INSIDE

Contents 7 9 11 14 15 18 19 20 24 30 32 34 38

AMI Review Market Review Education Review Networks Review London Review Recruitment Review Service Review Technology Review Buy-to-let Review Protection Review General Insurance Review Equity Release Review Conveyancing Review

40 The Outlaw The latest from our resident outlaw 44 Feature: State of the Nation A brokers take on 2021 52 Roundtable: Remortgages Our panel of experts joined sponsor Barclays to discuss the shape of the remortagage market in 2022 and beyond 58 Cover: Ahead of the game Jessica Bird speaks with John Ahmed, director of Movin Legal, about his thoughts for the future

66 24

SPECIALIST FINANCE INTRODUCER

STATE OF THE NATION

GENERAL INSURANCE

62 Loan Introducer The latest from the second charge market 66 Specialist Finance Introducer Development finance, bridging finance and more from the specialist market

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BUY-TO-LET

RECRUITMENT

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REVIEW

AMI

Ombudsman bites back Robert Sinclair chief executive oﬃcer, AMI

he Financial Ombudsman Service (FOS) have set out their financial plans for 2022/23. They are looking to raise an additional £10m from all firms to help fund their transformation programme. In addition, as PPI complaints are all settled, the work of the service is becoming more complex with the average cost of each case increasing. It is taking them more time, with more qualified and expensive

take more time and expertise than others. But the suggested solution in their recent consultation is to reduce the number of free cases from 25 to 3. As Covid hit there was a plan to reduce the number of free cases to 10, but this was suspended to avoid financial damage to firms. Despite the FCA still seeing the need to still undertake their Covid impact survey for the sixth time, FOS wants to add to firm’s costs. The 3 free cases number was always not enough and creates significant cost jeopardy for firms who might want to defend low value consumer complaints. AMI will be responding vigorously to these proposals and we would encourage all brokers to do the same. M I

case handlers, to reach adjudications. This means that they need to raise more money. Rather than seeing the cost of FOS fall as PPI evaporates, it is growing.

“As PPI complaints are all settled, the work of the service is becoming more complex” To fund this, rather than charging the firms that deliver these more complex cases in volume, they want to spread the cost across more firms. The most complex cases are in the areas of pensions and investments and these

Protection: Moving forward Stacy Reeve senior policy adviser, AMI

n November 2021 AMI released its second protection Viewpoint. ‘Protection: Moving forward’. It obtained the views of 5,000 consumers and over 250 mortgage advisers, with the aim to build on the insight gathered from our 2020 research and to provide new views. For anyone that hasn’t read the research report and would like to, it’s available via the AMI website homepage. One statistic that stood out again this year was the lack of consumer trust around an adviser’s motivations. 42% of consumers believe their adviser only suggested protection to increase their commission (52% shared this view in 2020). Now that we’ve repeated Viewpoint for a second year, the industry has a consistent and clear message from consumers. The challenge is, how do we build trust? It’s important that we take a step back and consider how the average consumer views a firm’s protection process. With the large gap between the number of mortgage advisers that say they mention protection and those

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consumers that recall a conversation, another consistent feature of this year’s report, it’s clear that protection conversations are not memorable nor meaningful enough. This year’s research showed that a third of mortgage advisers do not contact their customers post protection sale. This could be perpetuating the trust issue amongst those who have purchased protection products. If a customer hears from their mortgage adviser when their fixed mortgage rate is due to come to an end but never hears from them on the protection side, they may perceive that their adviser ‘sold’ protection for one reason only: money. REGULAR ENGAGEMENT 60% of consumers told us they want contact once protection cover has been arranged, with annually the most popular option. It seems consumers are content with the amount of ongoing contact from their mortgage broker more generally – 84% said the level of contact is about right. Perhaps consumers see mortgages as ‘once and done’ (until it’s time to review again) but view insurance as something where they want – and expect more regular engagement and interaction. Interestingly nearly a third of consumers said the most valuable protection related

contact from their mortgage broker is not a post-contact call to review cover requirements but a personalised annual statement. This type of contact is most popular with 18-34 year olds (48%), with 34% of 35-55 year olds sharing this view but is less popular with the over 55’s (24%). It seems that communications with a purpose resonates with some consumers but a very small number (8%) of mortgage advisers currently engage with their customers in this way. AMI is keen to support other initiatives that help move the protection agenda forward. During 2022 we will work with the PDG and FTRC to highlight to government and GP surgeries the wider benefits of speeding up the medical report process via electronic GP reports. Protection insurance can help both consumers and the NHS by helping to alleviate pressures on our health service, such as by providing funds to allow private treatment and through additional support services on some policies, such as physio or counselling, reducing the cost, pressure and backlog within the NHS. Whilst it’s great to see the use of electronic GP reports increase during the pandemic, we hope this work will raise the percentage of electronic GP reports even higher.

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First-time buyers need to understand options Craig Calder director of mortgages, Barclays

he financial resilience of a variety of businesses and individuals continued to be tested throughout 2021 amidst some uncertain COVID-related conditions and the subsequent knockon effects from these. Thankfully, a strong economic performance and an extremely active housing market have helped to instil growing levels of confidence across the lending and intermediary communities. This was exemplified in the latest Bank of England stress test which outlined just how resilient major UK banks are to ‘a severe path for the economy in 2021–25 on top of the economic shock associated with the COVID-19 pandemic that occurred in 2020’. The test showed that UK banks’ capital and liquidity positions remain strong, highlighting sufficient resources to support lending. It also passed judgment that the UK banking system remains resilient to outcomes for the economy that are much more severe than the Monetary Policy Committee’s (MPC’s) central forecast. A highly encouraging outcome. When translating this robust stature into mortgage lending, UK Finance has suggested that the level of activity for house purchase is predicted to hit £200bn in 2021, up 53% when compared to 2020. Buy-to-let purchase activity is set to increase to £18bn this year, up 83% on 2020 but homeowner remortgaging activity will be slightly down on last year at £62bn. These predictions outlined that total house purchase transactions, including cash purchases, will reach 1.5 million in 2021, some 47% higher than 2020, and

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the highest number since before the global financial crisis. The trade body also estimated that overall gross lending will peak at £316bn, up 31% on 2020, then moderate to £281bn in 2022, before increasing again to £313bn in 2023. It added that while the 2022 and 2023 gross lending figures will be reductions on the 2021 peak, they will be higher than the 2020 and 2019 figures, representing a return to more stable levels of activity.

“Refinancing activity is expected to accelerate in 2023, as higher volumes of fixed rate deals, including 5-year deals taken out in 2017, are set to end” Despite demand stimulus from the stamp duty holiday no longer being a factor boosting house purchases in 2022, UK Finance says “other COVID-19-triggered behavioural changes”, most significantly the resurgence in homemover numbers following a decade of stagnation, are likely to provide some continued impetus. It’s recent Q3 Household Finance Review showed that homemover activity has been reinvigorated by changing attitudes to working from home, particularly as remote working is now embedded in many businesses’ longer-term policies. Meanwhile, refinancing activity is expected to pick up modestly next year but accelerate in 2023, as higher volumes of fixed rate deals, including 5-year deals taken out in 2017, are set to end and the loans become eligible for refinancing. This overview from two eminent voices offers a very salient summary of

how well banks and lenders have coped in recent times, the solid foundations which remain in place throughout the industry and how we can look forward with renewed optimism. Not that obstacles don’t remain in place for some borrowers. especially when it comes to raising a deposit and expectations around this. Research from the Building Societies Association (BSA) showed that the majority of people (53%) think older family members should offer financial assistance to help their children or grandchildren buy their first home if they can. However, many first-time buyers are still not factoring in financial help available to them from family members. 58% of would-be first-time buyers do not expect any financial assistance from their older relatives, but 71% of parents expect to provide some financial help to the younger generation. 49% of parents said they expect to leave a bequest when they die to the younger family members, but less than one in three first-time buyers (29%) are expecting it. There was also a mis-match in expectations on giving and receiving a monetary gift towards buying a home, with 41% of parents expecting to do this, but only 24% of first-time buyers expecting it. In addition, the findings showed that parents under the age of 60 are less inclined to provide financial support to younger members of their family compared to parents aged over 60. This is likely to be due to the higher value of assets held by older generations. Lenders are fully aware of the issues facing first-time buyers when it comes to raising a sufficient deposit and how we can support them. Whether it’s through intergenerational support, shared ownership, responsible higher LTV lending or a host of other government initiatives. Communication is also a key ingredient within this journey and the more that families can talk about money, housing expectations and mortgages the better, especially when it comes to financial assistance. And the advice process can play a vital role in supporting these important conversations. M I

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2022 wishes in one statement Martin Reynolds CEO, SimplyBiz Mortgages

appy New Year to you all, I hope you had a restful Christmas after a very hectic end to 2021. I am sure that this edition of the magazine will be full of hope and predictions for the year, and I tend to avoid those type of articles for fear of repeating others. However, during the Christmas period there were several issues that niggled at me, as I wrestled with cleansing the house of Christmas food, that I feel need to be heard and actioned by the industry during 2022. 1. General Insurance. We are now all working under the new FCA rules that, among many things, will end price walking. Whilst this aspect has hit the headlines, what has not always been as prominent are the new requirements that brokers will have to attest to with all the providers with which you have agencies. This is not just a one-off exercise but an ongoing and developing process. Please ensure that you are fully aware of your responsibilities and work closely with your provider and distribution partners. 2. Free legals. This challenge has been bubbling along for a number of years, but seems to have hit a social media crescendo during the last two months of 2021. I believe that all parties within this process need to sit down and have

clear and open dialogue on how this should be working, whether that needs to be at Trade Body level or elsewhere. It is the clients that are suffering, as well as all our reputations.

“Let’s all start to be more open and transparent, working together for the benefit of the end clients who rely on all our expertise and guidance to make the right decisions to enjoy their lives” 3. House price data. This is more wishful thinking than actionable. I believe that there are too many indices in the market that, due to how they are calculated, never really give a consistent message to the consumer. I understand that there is a PR angle for the publishers, but it can lead to either confusion or unobtainable optimism for the consumer. 4. The FCA. Last year saw what can only be described as a blizzard of new papers of various shapes and sizes from our regulator. Whilst I am sure that they are all issued with good intentions, at some point there must be a pause to allow the industry to not only concentrate on their implementation but also allow the FCA to review their effectiveness. As it stands, I think that it will not be possible to really see what has worked or not, and which ones may cause unintended consequences. I know Robert Sinclair at AMI has also voiced these concerns.

Openness and transparency should be priorities for the new year

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5. Protection. Whilst it is always the elephant in the room, and it is talked about a lot, we still seem to have the same conversations about it each year. How do we not only increase the levels of protection sales but also issue the right type of protection policies? And how do we get clients to understand the benefits of them, so they want the cover and want to keep the cover? Can 2022 be the year in which we all make the positive choice about how we protect our clients better, whether that is by improving our own knowledge or taking the plunge and creating a referral partnership with the many excellent firms in the market? If we then add in the positive work that is beginning to happen in relation to ESG - and especially in D&I - then this year will continue to be a very busy market for us all. What most of the above points need in order to improve is to work more effectively, and the theme running through them all is transparency; allowing everyone to have sight of the full facts so that they can either make an informed decision or make the right decisions for their clients. What I thought was a positive in the first few months of the pandemic in 2020 was how all parties in the market were more open about what they were doing and the challenges they were facing. This was refreshing and, whilst stressful for us all due to the constant changes, it did allow informed decisions to be made. However, I feel that over the past 12 months this newfound transparency has been slowly edging back to the previous routine of shrouded mystery of half messages that is not beneficial for the market. So, the big wish for 2022 if I sum up all the above into one sentence that has taken 750 words so far, it is – “Let’s all start to be more open and transparent, working together for the benefit of the end clients who rely on all our expertise and guidance to make the right decisions to enjoy their lives”. Simple really. Have a positive and prosperous 2022. M I

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Technology for the value chain Tim Hague director, Sagis

hile the majority of technology focus is often written and spoken about in terms of lender issues and requirements, intermediary technology continues to grow and evolve at a pace.This is a challenge facing all lenders and brokers as we go into 2022 – you know you need to invest in tech, but it’s all too easy to splash the cash and end up in a worse state than you are now. There are so many options and “solutions” and depending on the nature and size of your business, a nuanced approach is likely to be needed for everyone. Whatever your investment decision and capability, I can offer you a framework that should help make things marginally clearer. USER EXPERIENCE

Typically referred to as UX, this is the technology that makes it easy and “frictionless” for you to transact with your clients. The secret to success is to make doing business with you as easy as possible for the customer. That means glitzy features that sound fun but don’t help customers transact more smoothly are probably a nice to have not need to have. Think about the pain points your customers experience today and find tech that will address these. COST SAVING

Return on investment is vital. If the tech isn’t meeting a need you have today or it won’t meet that need more efficiently, with fewer resources at a lower cost, then don’t do it. Innovation that leads to business success is based on cold hard numbers. But ensure

you have allow an appropriate period of time for that and do not be overly optimistic with it. There are systems that have far lower barriers to entry today than some others do. Pay as you go models might be right and offer you the appropriate opportunity to scale . CONSIDER YOUR PEERS

It might sound like a cheat, but reinventing the wheel is in no-one’s interests. Do a peer review to see what works really well and what’s maybe “cool” but totally erroneous to your needs as a customer. If you like what five different businesses are already doing in five different areas, follow their lead. It’s often better to choose something you know works than onboard something claiming to have solved problems you didn’t even know you had. TRY AND TRY AGAIN

Accept that not everything works from day one. Success is the spawn of repeated failures and learning lessons from them. So make sure you review any new strategies, processes or technology you’ve invested in on a regular basis to assess if they’re working. If they aren’t, consistently and over a reasonable period of time to bed in, stop. Start again knowing what you know now. USE YOUR NEW TECH YOURSELF

The chief executive or even the chief technology officer is not the person on the front line using digital systems that transact with customers. If you are making the decision on new software, hardware or online management systems then try before you buy. If you find it difficult to use, everyone will find it difficult to use. Consequently, they won’t use it and a lot of money has been wasted. Run testing groups before you commit with the people who are doing the job themselves.

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DON’T CHANGE EVERYTHING AT ONCE

People hate change. It’s just a fact of life. Routine and habit suit humankind so be mindful of imposing too much change too quickly. It might sound tedious but plan your changes and upgrades over a long-enough period of time to let staff get used to new systems without being overwhelmed. Briefing employees on the fact that new and exciting things are coming is also going to help them transition more smoothly if they know what to expect. ASK EVERYONE IN YOUR BUSINESS WHAT THEY NEED

Collaboration and accepting the perspectives of a diverse set of people who are carrying out different tasks, with different levels of experience and different needs from the business, is fundamental. A customer service assistant on the branch floor will see things quite differently from a chief financial officer. Both perspectives have value when it comes to serving customers well. REVIEW

When you’re buying a new TV, chances are you’ll read other customers’ reviews online. Apply that logic to procurement; ask providers you like the sound of to share client feedback and if possible, don’t be afraid to speak to their other clients directly. You’re checking their references, which is reasonable due diligence. Finally, perhaps the biggest risk when it comes to substituting people’s judgement with an algorithm is “computer says no”. Particularly at this juncture, when more people have complex income patterns, financial hiccups are abundant because of the pandemic, and properties have all kinds of potential to throw up risks you’d never considered (cladding and climate change spring to mind), it’s vital that technology doesn’t over-simplify the market. Processes and systems need to accommodate the business at the margins. Technology should be there to support human decision making, not hinder it or undermine it. M I www.mortgageintroducer.com

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Progress towards true competence Gordon Reid business development manager, learning and development, LIBF

hen mortgage and financial advisers have completed their induction training, their immediate ambition is often to attain ‘competent adviser status’ – or CAS as it is commonly known. This is a recognition of their readiness to undertake professional discussions, unaccompanied by a supervisor. Many advisers see attaining CAS as the culmination of their development, and indeed the completion of it within set timescales is often an expectation. Sometimes, it’s also rewarded by confirmation in role or even a bonus payment. But just how important is competent adviser status? What does it really mean? And how can you achieve true competence? These are three key questions, I will set out to explore in this article, whilst sharing some of my own experiences – both as a mortgage supervisor and a learning and development manager. Whenever I met trainee mortgage advisers, one of my favourite questions to ask was about their immediate aspirations. Their answers often included passing CeMAP within so many months, or passing their induction training programme assessment. It might be that they’d want to complete a competent mortgage interview at the end of their course. Some, looking further ahead, would talk about achieving CAS, within six months. Very few talked about a continuous learning journey. Similarly, not that many talked about understanding the customer journey and how they could make this a better experience. This is in no way a criticism of new mortgage advisers. It’s instead an acknowledgement that those of us www.mortgageintroducer.com

with experience and an understanding of this industry have a significant responsibility, to help them realise what being a competent adviser is all about. There’s nothing wrong with CAS but it should be seen for what it is – a step on the learning journey. It means that you’ve demonstrated you can conduct compliant discussions in a series of different scenarios, without intervention or support. It also probably also indicates that you have completed your paperwork and administration accurately. This is primarily important because of the independence it offers you, because you require less supervision. However, what CAS status does not necessarily evidence is that your discussions are all going to be as effective or engaging as they could be. In sporting terms, you might think of it as making your debut for the first team. This is an achievement to be celebrated. However, unless you keep working and keep learning, your career – and the service you provide – is not going to be anything to be particularly proud of. Unfortunately, for many advisers, reaching competent adviser status also means the end of dedicated supervisor support. This can be for a variety of reasons, including: the supervisor having too big a span  of control the need for the supervisor to focus  their energies on other trainees the lack of a continuous  development culture in the organisation. Regardless of the reasons, however, it’s essential that you have a development plan to take you beyond competent adviser status. If your dedicated supervisor can’t provide the level of support you need, you should look for someone else to coach or mentor you. You may even ask an experienced peer to provide the coaching and a colleague in another team to mentor you. Either way, as a relatively inexperienced adviser, you

can’t be expected to identify all your development needs or the solutions to address them. In addition, as an adviser who has attained CAS, you’re likely to be expected to complete an increased number of discussions. So, it’s essential to continue to look for opportunities to develop – and to dedicate time to them. In an industry as fast paced as ours, it’s not just newly qualified advisers who need to develop. Even if you’ve been an adviser for many years – and are acknowledged as an expert in your field – continued competence is not a given. You still

“It’s essential that you have a development plan to take you beyond competent adviser status” need to keep up to date with changes in the marketplace. Unless you’re familiar with the latest products, processes, regulations, technology, and trends, can you really be described as a competent professional? For example, are you confident you can talk to your customers about ‘green mortgages’? Do you understand what hybrid mortgage advice is, and how it might benefit your customers? Do you know the ‘automated valuation model’ eligibility criteria for different property types and different lenders? Attaining CAS doesn’t mean you can answer ‘yes’ to all the questions above. Yes, you’ll be qualified, have a basic level of skill and a strong foundation of knowledge. That will enable you to do your job to a minimum standard. If you want to stand out from your peers – and demonstrate the skills, knowledge and behaviours which enable you to perform to a consistently high standard – then you should recognise the limitations of CAS and plan to be even better. M I

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Spare some time to help others in 2022 Shaun Almond managing director, HL Partnership

want to make a plea to the mortgage intermediary sector on behalf of an underserved section of society, namely mortgage holders who have never sought to investigate whether the SVR on which their mortgage is based, is the best they can do. These are not mortgage prisoners and unable to move, rather they have either never done a mortgage review with a suitably qualified adviser or, if they have, have chosen not to act. According to a Barclays Mortgages survey, one of the more interesting findings was that one in three homeowners know that remortgaging could save them money and yet 49% of those surveyed have never switched their deal. What is happening? The first thought would be that because base rates have been so low for so long, inertia or indifference would be the likely reasons and people have become used to paying an amount with which they have become comfortable. However, Barclays survey suggests

that it has more to do with a lack of knowledge about remortgaging as well as no real understanding of the way their mortgage works. For example, 28% didn’t know what a standard variable rate (SVR) was and 45% of respondents could not describe what a loan to value (LTV) means. If this represents the level of understanding among mortgage holders across the UK, it is perhaps less surprising that many would baulk at making a change, even if it means that they are missing out on making savings. 2022 then should be a time when mortgage brokers seek to proactively engage customers, who up to this point have not made any move to reduce their mortgage costs. The days of cheap borrowing are numbered – as I write this the BoE has just raised rates by 0.25% - and next year we are likely to see more interest rate increases. Whether this will act as a necessary catalyst to overcome the reluctance to remortgage remains to be seen. Many of these people are not homeowning novices with the survey showing that respondents have been paying a mortgage for over thirteen years. It is surely beholden on us, perhaps in cooperation with lenders, to help more ‘SVRers’ to see that not only can they save money but also point out

Reach out and help those who are sat on SVRs

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JANUARY 2022

that the longer they delay, the more they are going to pay. So, may I urge you to make a special effort to help this particularly unfortunate group? Please give (your time) generously. UNINTENDED CONSEQUENCES

A recent announcement suggested that the Bank of England is minded to rescind the rules on affordability testing when lenders come to assessing a customer’s ability to repay a mortgage. The test is designed to see whether future rate rises would adversely affect that customer’s continued ability to service their mortgage. The affordability rule is one of the measures put in place in the wake of the credit crunch to make sure that lending was more tightly monitored to guard against increasing household debt caused by ‘over enthusiastic’ lending. The argument for abolishing or amending the affordability test is that it disqualifies too many people from getting a mortgage and therefore is unfair. However, the premise for making the change rests on the belief that interest rates will remain low and that the availability of fixed rate mortgages negates the worry about payment shock if rates rise. While many will welcome the BoE’s move and it would undoubtedly mean more mortgages would be granted, we must also recognise the danger of unintended consequences. It is likely that purchase demand will then increase adding further fuel to house price inflation, which, in turn, just takes us back to the same place where increased prices move more property out of reach again. With income multiples already stretched, where does the industry go then? The BoE move could be interpreted as tacit approval for lenders to loosen criteria in other ways. However, I am sure that most lenders at a senior level still have nightmares about the 2008 credit crunch and the painful lessons of what happens when for a while unrestricted lending became somehow acceptable. Further tinkering with credit policy might be tempting, but it is a slippery slope. Let’s be careful what we wish for in 2022. M I www.mortgageintroducer.com

REVIEW

LONDON

Capital market 2022 Robin Johnson managing director, Kinleigh, Folkard and Hayward Professional Services

new year and a fresh start. After a bumper year for the housing market, I’m feeling confident about conditions in the London market – and further afield – in 2022. In a long-anticipated move, the Bank of England hike the base rate back up to 0.25% in December, ending the cheapest ever rate of credit at 0.1%. That will have implications for those on their lender’s standard variable rate and other trackers, but in itself this should support demand for remortgaging. While the coming year is not without challenges, on reflection I think this move marks a sensible first step in the journey to bring a very hot economy back into line. True, consumer price inflation over 5% is largely driven by international socio-economic dynamics – soaring energy prices, supply chain issues, a container shortage pushing distribution costs through the roof and higher import costs post-Brexit – and a rise in domestic rates will have little effect there. But given the Federal Reserve has indicated plans to raise US rates, the implication for the value of the pound – already down significantly – is more positive in a higher interest rate environment and should feed through to stronger purchasing power for British businesses and households. In this context, the outlook for the housing market is brighter than it might be. Even with a rise in rates and the consequent rise in mortgage rates, money is still very cheap, stock levels are still very tight and appetite to get on the housing ladder is still rampant. Figures released in the run up to Christmas revealed the number of properties on the market had fallen to the lowest level on record with the sharp slowdown linked to fears over

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London is and continues to be a global centre

Omicron. Rightmove data showed estate agents had an average of 14 properties on their books in December, half the level of a year ago. Add to this picture separate figures from LonRes which show that rents in London continue to rise and in prime areas were an unbelievable 19.7% higher in November 2021 compared to 2020. They now stand 2.7% above pre-pandemic levels (February 2020) and 4% higher than in November 2019. With the prospect of rental inflation of this degree, would-be first-time buyers are increasingly turning to parents and grandparents for help securing their first home in a bid to avoid further financial pressure on their existing and future wealth. This is particularly true for London, where house prices are highest and affordability is tightest. Another positive for the market was the Bank of England’s December announcement that the Financial Policy Committee plans to consult on reviewing its affordability mortgage market. While it plans to retain the cap on lenders lending to borrowers at a loan-to-income ratio over 4.5 to 15% of their balance sheet, it’s inclined to scrap its affordability stress test which sees borrower affordability stressed at 3% over SVR. This rule, which is in addition to the Financial Conduct Authority’s affordability rules, can mean some borrowers end up being able to borrow less than under the LTI cap and FCA

rules. Given how sticky SVRs have been despite big falls in mortgage rates, the Bank of England looks set to take a much more practical approach. Good news for borrowers and access to mortgage finance. All these factors and more are supporting demand for homes. The so-called race for space is also driving transactions in London. Rightmove data published at the tail end of the year indicated valuation requests from homeowners were 19% up on that time a year ago. With January traditionally a time that people list their homes for sale, it’s also likely that the stock shortage may be alleviated. I’m never one for predicting the market, and with Omicron the latest variant to disrupt our lives, calling anything is a fool’s game. That said, the prospect of high inflation and higher interest rates is going to act as a catalyst for many looking to upsize or buy for the first time. Perhaps not as strong a driver as 2021’s race to take advantage of the stamp duty holiday, but a driver nonetheless. One final word on the UK capital. London is and continues to be a global centre; its property market seen as a safe haven for international money. While the world’s super-rich may be in a different league from the family of four looking for a house with more space near a good school, their presence in the London market has a halo effect for homes of all shapes and sizes. This makes one thing certain: property is as safe as houses, for the foreseeable future at any rate. M I JANUARY 2022 MORTGAGE INTRODUCER

FLEXI FIXE IXEDD FOR TER TERMM THE MORTGAGE BUILT FOR THE FUTURE UTURE Fixed from 11 to 40 years with a monthly payment that never changes Greater borrowing power No ERCs for life events For FTBs, home movers and remortgagers Up to 95% LTV 10% overpay from day 1

LIFE WILL BE DIFFERENT IN 2061 YOUR CLIENT’S MONTHLY MORTGAGE PAYMENT WON’T BE Discover more at www.kensingtonmortgages.co.uk/ intermediaries/flexi-fixed-for-term THIS INFORMATION IS FOR INTERMEDIARIES ONLY Kensington and Kensington Mortgages are trading names of Kensington Mortgage Company Limited. Registered in England & Wales: Company No. 03049877. Registered address: Ascot House, Maidenhead Office Park, Maidenhead SL6 3QQ. Kensington Mortgage Company Limited is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 310336). Some investment mortgage contracts are not regulated by the FCA.

REVIEW

CLADDING

Cladding solution is a complex one Steve Goodall managing director, e.surv

our and a half years after the Grenfell Tower fire which took 72 lives, the complex and complicated issues involving high-rise cladding remain largely unsolved. December saw the row over how to tackle the cladding crisis escalate with the Royal Institution of Chartered Surveyors having reviewed the role of the guidance note supporting EWS1 deciding to retain it for now. It followed Housing Secretary Michael Gove announcing a planned u-turn on official government safety advice, which stated from January 2020 that all flats must have fire-safe cladding, insulation, balconies and wall structures. That advice triggered lenders to ask for EWS1 forms. Government is unlikely to be best pleased that the RICS continues to adhere to the stricter rules, particularly given the fact that those rules have swelled the cladding crisis up from around 200,000 high-rise flats with dangerous cladding to 1.3 million flats suddenly rendered valueless in practice because of lower-rise blocks coming into scope. The End Our Cladding Scandal campaign group estimates that the cost of remediation on all homes affected has reached a whopping £15bn, with

all manner of reasons why the work still hasn’t been carried out. Blocks of leasehold flats require co-operation from all leaseholders and freeholders to agree building works and, where developers have refused to cover the cost of remediation, agree to pay for them. The costs can be crippling and not all leaseholders have the financial clout to pay out. There’s also a deep unfairness amidst all this. Individuals and often young people in their first owned home are being expected to pay up to £100,000 to make their flats safe and therefore saleable or remortgageable. It was for exactly this reason that Mr Gove has hinted at a range of measures designed to hold those responsible for the cladding crisis to financial account. Inside Housing reported last month (December) that the minister is considering stricter financial penalties for developers, builders, cladding and insulation manufacturers among others which played a role in decking flats in dangerous materials. Alongside this move, government could ban responsible developers and contractors from accessing government contracts and funding schemes, such as Help to Buy until they make their properties safe for those who purchased them. But until those plans translate to action, the RICS has said its “riskbased” guidance to surveyors who value flats for mortgage lenders will stay in place. I sympathise with their position given, as RICS itself has said “the problem must not risk simply

The cladding solution will ask some big questions of us all

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being moved from one unsuspecting purchaser to another”. But this state of affairs simply cannot be allowed to persist. The cost is not just financial here. A frightening one in five leaseholders facing financial ruin because of cladding told the End Our Cladding Scandal campaign group they had considered suicide or self-harm because of the situation. There is something deeply broken if the system designed to protect consumers from harm inadvertently increases the likelihood of harm. The whole affair is fraught with complexity and I don’t pretend to have all the answers but elsewhere changes are underway. Perhaps Westminster will feel under pressure to offer a more drastic solution after the Welsh Assembly unveiled a scheme to buy up “unsellable” flats affected by cladding from as early as this year. As reported in the Daily Mail, the Welsh housing minister Julie James told the Senedd the scheme could include those who have failed to sell their flat because the sale would push them into negative equity, those in mortgage arrears and families living in overcrowded flats. Describing the plan as a ‘mortgage rescue’, she added: “[Leaseholders] will either be able to sell the house to us and then, if they want to stay on and rent it, they can, or they can vacate, take the money and start again somewhere else.” The government is often the insurer of last resort when floods or terrorism have emerged as significant risks. Perhaps here it will behave similarly or indeed become the lender of last resort? The Welsh approach demonstrates what is really needed here. Where there is commercial risk, corporates will avoid it. Where they are public companies, they have a legal duty to avoid it. Only the State can afford to sort this out. But the larger question for us all is that if the state does step in, do we relinquish the right to manage our own affairs in other markets? M I

JANUARY 2022

MORTGAGE INTRODUCER

REVIEW

RECRUITMENT

A smooth, transparent recruitment process Pete Gwilliam director, Virtus Search

he intermediary mortgage lending sector is undoubtedly experiencing rising demand for key skill sets and increasingly competitive hiring conditions thus heightening the need to have a seamless recruitment process. The most in-demand professionals typically have choice. Because of this, organisations with poorly thought through and executed recruitment processes invariably miss out on the best talent. Firms spend a lot of time and resource on customer acquisition, but don’t always look at hiring employees with the same emphasis on the “customer journey”. Just as employers set out to evaluate the best person for their role, employees too form their first impressions of a Firm from how they are managed and treated during a recruitment process. Of course, recruiting is about fulfilling your organization’s needs, but the more you understand and design the process from the applicant’s point of view, the more they will “buy into” each step of your process. Candidates favour companies that give a clear indication of the role, the pathway the opportunity offers, the challenges of the role, the management style, and values. Investing time in developing a candidate briefing pack that goes beyond a job description- e.g. a piece about company performance and strategic plans/financial standing and ultimately the culture and values and the reasons why someone should want to work there and how they develop and grow. Why not also include a bio

of the hiring manager’s background and out of work interests? It is important to regard first meetings as the opportunity to sell the Firm. I strongly advocate that the first meeting has to be with the line manager for the role, and is focuses on how both operate. The hiring manager is best placed to outline the expectations of the role and the challenges of delivering the desired outcomes, and by giving the candidate something to aspire to, it should give the individual a reason to be excited about the opportunity and moreover thereby preparing a presentation or a business plan for the second stage of the process is a worthwhile investment of time.

“Candidates favour companies that give a clear indication of the role, the pathway the opportunity offers, the challenges of the role, the management style, and values” My experience drawn from many pieces of candidate feedback tells me that a lengthy selection process has an impact on a candidate’s impression of an employer and whilst not advocating that shortcuts should be taken in the selection process, the more hoops someone must jump through the less well it is received. Therefore, before an interview process begins it is important to be clear that the budget for the hire has been approved, and to be clear on how and when the salary will be negotiated. Additionally, forward planning which stakeholders are needed for the component parts of the process, allows placeholders to be set in diaries in advance to protect time. Similarly, the process you can be mapped out

MORTGAGE INTRODUCER JANUARY 2022

for the candidate. There is no doubt that taking too long to make selection decisions takes some of the goodwill away and leaves candidates open to influences from elsewhere, making the hiring firm look inefficient and/ or giving the impression that person is second or even third choice. Delays in the process can give candidates the impression you are not really interested in them and if they have a choice they may choose the Firm that has created a better impression during the process - an employer that values and respects ‘potential employees’ in a recruitment process suggests that they are likely to be a good employer, which is not to be underestimated, especially in candidate short markets. Running through the process should be the negotiation of any potential package and this certainly should have been approved internally ahead of the successful candidate being identified, so there are no surprises, and importantly momentum after the final meeting can be maintained, such that an offer letter can be presented to the candidate after they have verbally accepted the role ( of course this will be “conditional” upon satisfactory references/credit and criminal record checks/ education verification, etc and eligibility to work in the UK). There’s something wrong if a process takes longer than four weeks to get to offer stage and the offer is not meeting the Candidate’s expectations. Often overlooked is the importance of the unsuccessful candidates who could become your loudest detractors. You need them to be ambassadors and the one thing that they will appreciate most will be feedback on how they performed and where they didn’t quite match requirements. All candidates deserve feedback and this should be timely and worthwhile and this can offer candidates who aren’t being progressed something to ‘take away’ from the process. As with customer reviews never underestimate that employers’ interactions with candidates at all stages of the interview process can ultimately impact their reputation in the marketplace. M I www.mortgageintroducer.com

REVIEW

SERVICE

Regenerating our urban spaces Xxxxxxxxxx Stuart Miller chief customer officer, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Newcastle Building Society

n the wake of the Conservative Party Conference and the Chancellor’s Autumn Budget Statement, the government underlined its commitment to regeneration and levelling up through the allocation of grants to local authorities for brownfield regeneration. Chancellor Rishi Sunak announced £1.8bn of government money to help fund the regeneration of brownfield land across the country as part of a strategy to satisfy the need for new homes. The government is hoping its commitments will deliver as many as 5,600 brownfield homes in the next three years and provide in the region of 17,000 jobs across the housing and construction sector. Michael Gove’s Department for Levelling Up, Housing and Communities (DLUHC), has allocated £57.8m across 53 local councils towards developing brownfield land in England. Local councils are also being encouraged to bid for £20m from the Brownfield Land Release Fund (BLRF) to deliver self and custombuild projects on brownfield land - giving local people the opportunity to build and design their own homes. As I write, the initial tranche of £58m is being boosted with an additional £11m from the BLRF to support 23 redevelopment schemes across 15 councils. This is all very welcome news indeed. New-build housing is a vital component of the UK market. You only need to look at the low supply of housing stock across the country to see why it plays such an essential role in our housing mix. Land supply on an island such as ours is clearly finite and so it makes www.mortgageintroducer.com

perfect sense to reuse land for housing. Regeneration sites also often come with ready-made infrastructure such as transport and utilities in place and this kind of investment can make a huge difference to local communities and economies. The current lack of supply of new property is a key issue and materially affects borrowers’ ability to afford property. The shortage is particularly acute now because of the impact of the pandemic on labour and materials. The Campaign to Protect Rural England (CPRE) released their study ‘Recycling our land – state of brownfield 2021’ in November. Their analysis of 330 local authority brownfield land registers revealed that the current identified capacity for houses on brownfield land throughout

“Land supply on an island such as ours is clearly finite and so it makes perfect sense to reuse land for housing” England stands at 1.2 million homes (1,162,969). This is an increase in housing capacity of 101,624, or 9.5%, since the previous analysis conducted in September 2020. Brownfield land can be found in high supply in all regions of England, with particular hotspots in the North West (167,461), Yorkshire and the Humber (108,790) and the West Midlands (99,600). Our own heartlands are already benefitting from some of this substantial investment. South Tyneside Council has received over £1.8m for its Holborn Riverside Regeneration project, Durham County Council just under half a million for its Greenwood Avenue Burnham Hope development and a further just shy of a quarter of a million for its Chaytor Road Bridgehill development. Developers and buyers need our support. Getting people into their first homes is at the heart of a building

society’s purpose so we spend a lot of time, thought and effort in designing ways that can help with borrowers’ affordability and ability to secure deposits. It’s why we have launched our Deposit Unlock scheme – designed to give low-deposit buyers more borrowing options when it comes to new build homes and fill the gap left by the cap implemented last year on Help to Buy. But regenerating our city centres requires other expertise and understanding. The redevelopment of existing buildings or even their repurposing comes with specific challenges. Access and location may be less than ideal as re-purposed office space can very often mean having to share access with existing commercial premises. The size of the units or the square footage of rooms can be significantly reduced by the characteristics of the existing physical structure and then there are more significant issues that need to be understood. Brownfield sites, even with incentives for developers, can be costly to develop, because of issues such as contaminated land – land which has been polluted by substances which can cause harm to people or protected species. Much of this is specific to redeveloping brownfield sites but it should not deter us from making the most of regeneration opportunities. Redeveloping our urban spaces is a good thing. Derelict sites across the country need to be transformed into new homes to boost local communities and support people onto the property ladder. Disused factories, schools, hospitals, shops, petrol stations and military bases are all classified as brownfield land, offering the possibility of much-needed housing. Brownfield releases the pressure on greenfield sites too and by unlocking its full potential, we might make a real difference to achieving our national ambitions for housing. M I

JANUARY 2022 MORTGAGE INTRODUCER

REVIEW

TECHNOLOGY

Build back better to meet new challenges Steve Carruthers Xxxxxxxxxx principal mortgage consultant, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Iress

n October, the Chancellor heralded an age of optimism for business investment despite the headwinds facing many as the cost-of-living increases. Heralding a stronger economy for the future might appear wishful thinking in the face of slowing GDP growth and supply chain problems but, in one respect, he was right to look beyond these. If 2021 proved one thing it is that anything is possible. Looking beyond the phenomenal effort and success of the vaccine rollout programme, this year is on course to be the strongest for home-buying for many years. According to UK Finance, 2021 is on course to be the strongest for homebuying activity since 2006. Indeed, evidence from the Financial Conduct Authority earlier in the year backed up the view that pre the end of the stamp duty holiday in England and Wales, there was a record surge in activity during the latter half of 2020 and earlier this year. Our own Mortgage Efficiency Survey findings too highlighted this. Nearly every lender we spoke to had enjoyed record lending in Q1 and for many this persisted well into H1. While the first few months of the pandemic, during which the property market shut down for a time, led to predictions that sales would slump, the reality was very different. As a result we have had a market this year which is likely to eclipse anything we have experienced as an industry since the credit crunch. The result is that there is plenty of evidence to suggest that as we emerge, albeit gingerly, from the pandemic,

financial organizations are advancing with plans to accelerate digital transformation and cloud migration to better respond to the pandemic, climate change and the operational processing efficiency challenges they face. The COVID-19 pandemic has been a game changer in how it’s forced organizations to accelerate digital transformation to support major changes in how people work and to help mitigate negative impacts of the economic downturn. It’s not surprising. COVID-19 has exposed operational shortcomings and highlighted the continuing reliance for many organisations on paper-based and manual integrations. Slick front end systems have, in reality, often been glued together behind the scenes by people in offices updating excel spreadsheets and using paper-based systems. Many lenders still do not have adequate digital multi-channel capabilities. The opportunities and risks are operational and reputational. As branches shut and lenders struggled to cope with call centre

Lenders are enhancing digital self-service capabilities

MORTGAGE INTRODUCER JANUARY 2022

volumes, it became obvious how essential digital self-service is in dealing with high volume enquiries. Everything from re-financing to requesting a payment holiday has required a rethink in the pandemic. It’s not just the customer facing technology that has had to respond either. Many lenders have required enhanced reporting solutions to fully understand the risks and funding requirements they were undertaking. Nearly all the lenders we spoke to during the Mortgage Efficiency Survey told us that enhancing digital self-service capabilities was high on their agenda. Indeed, if maintaining a personal touch was not the focus of new processes, it has become an important philosophical point for many whose businesses have previously been built on face-to-face interaction. In terms of innovation, the objective continues to be to deliver where possible a light touch or even frictionless, yet secure customer onboarding experience. The priorities of IT professionals continue to be Digital Transformation, Cybersecurity, and Cloud Migration. Where once customer acquisition, retention, speed to market, lean and agile working commanded the attention of boardrooms, larger transformations are under consideration as the failings of expensive to fix legacy systems have become acutely apparent to lenders. So at the beginning of 2022, we have a window. IT has been very much at the forefront of running the business in the past two years. Working-fromhome securely and the redeployment and call on IT resources has meant the tactical has often trumped the strategic. There is an opportunity now to evaluate which IT investments run the business and which are intended to improve the business. Both are important but if the focus remains solely on IT operations, the market will move, evolve and catching up will be ever harder to do. A successful year of better margin lending means we can face whatever headwinds in better shape than ever before but it also means many lenders have a window to adapt and evolve to meet new challenges. M I www.mortgageintroducer.com

REVIEW

TECHNOLOGY

Time to abandon legacy thinking Jerry Mulle UK managing director, Ohpen

f you want to understand the issues facing financial services firms with legacy IT infrastructure you need look no further than London Underground for another example of old infrastructure grappling with very modern expectations. The first line opened in 1863 and, notwithstanding the impact of the pandemic, the network carried 296 million passengers in the year 2020-2021 according to statista. It’s a lot of bandwidth for a largely Victorian invention. The underground network has been crucial to the capital’s ability to deliver economic prosperity but anyone with experience of it will readily admit some parts are far better than others. Of course, unlike banking technology infrastructure, if you want to move about London, you have only one choice in terms of the underground system you can use. Yet for years financial services companies have felt bound to protect legacy systems and ways of working – compiling the pain for executives further down the road. The temptation and problem with legacy thinking is not to change procedures and systems but to continually modify and upgrade. After all, it might do what you need, when it came custom built in the dot com era and, though it may be ludicrously expensive to upgrade, if ain’t broke why try to fix it? The answer to that challenge resides in a combination of factors that are changing the way we think about the way we live and work. The operating requirements of the pandemic, the advances in the digitalisation of distribution, and the agility and cost savings of cloud computing (to name just three) have fundamentally challenged the premises upon which legacy architecture has evolved. www.mortgageintroducer.com

Cloud computing underpinned the world’s economy, global supply chains and remote workforces during the pandemic and now dominates in any organisation’s plans that require increased scalability, business continuity and IT cost efficiency. The legacy position which might be summed up for some as ‘better the devil you know’ has produced its own inertia in thought and action. Inertia that results in expensive upgrades with lengthy release periods. As technologies become almost obsolete, legacy systems often rely on a dwindling cohort of experienced and aging developers to maintain their operability. Often the risks involved in legacy are not simply those attributed to the system itself but the availability

We recognise that solutions are as much about the business models that accompany these solutions. Aligned interest between provider and purchaser means the barriers to making these moves are removed” and cost of those who can maintain and upgrade them. In very real terms, legacy IT can generate compatibility issues, support issues, create data silos and security issues as well as performance and productivity issues that can make lenders uncompetitive. So many layers of history can stifle innovation and often for eye-watering sums of money. In commercial terms, the risks to businesses have ceased to be about all about worrying about doing the wrong thing. Now the biggest risk is arguably in doing nothing. That may prove very expensive. There is an equally important consideration that goes hand in hand with the technology opportunity itself. Legacy technology is accompanied by legacy business models that over time

have become prohibitively expensive encouraging commercial inertia. Now there is an opportunity that combines both the technological opportunity with a new more accessible business model for smaller organisations. Our answer offers the flexibility and opportunity of an aligned business model and cloud native solution – a pathway that offers low implementation risk with maximum opportunity and it works with your pace of digital transformation. For the adoption of new technology to work, we recognise that solutions are as much about the business models that accompany these solutions. Aligned interest between provider and purchaser means the barriers to making these moves are removed. Robotics solutions have often been identified as a more cost-effective way to deliver smaller scale solutions in comparison to those of say APIs. But this is no longer true. If you are aligning the interests and success of the provider with the purchaser, all solutions become affordable and truly scalable. We recently migrated 1.6million records in one European business using APIs but our business model means this is available to anyone. We firmly believe the opportunities of new technology should be available to all businesses. The alignment of technology innovation with business model innovation is the key to adoption of better technology and business practices. There are many obstacles to making important change. But the cost to businesses of doing nothing is no longer sustainable – particularly when the cost of doing the right thing becomes another compelling reason to act. It’s why I firmly believe legacy thinking is no longer sustainable. The business approach and the delivery has to be configurable to adapt and adopt the very best of what is available at any point in time. The world of technology is always innovating. It is important that the technology world innovates its business practices to keep up with it. M I

JANUARY 2022 MORTGAGE INTRODUCER

REVIEW

TECHNOLOGY

Technology and data are shaping decisions Mark Blackwell chief operating officer, Core Logic UK

verything about the way we live and work today is changing and while the accelerators of that change may vary, at the heart of how we experience change in our daily lives are technology and data. In all walks of life, the application of technology and data are changing the way we work, live and play. While banking and mortgage lending may not be at the cutting edge of technology, they are engaged in a process of changing how and where technology and data can add value to the customer experience. Apps and processes that fulfil twenty-four hour, 365 days per year self-service have flourished over the last decade. The way in which people want and need to interact with financial services companies has changed completely. The way in which financial services companies need to interact with them will evolve further. It begs an important question because as some tasks and jobs are replaced by automated processes, we need to understand the value of the technology data and people in determining the way we live. The pandemic heralded a renewed interest in digital technology. In a world of working from home and pandemic restrictions, the remote valuation model and to a lesser degree the Automated Valuation Model (AVM) found a renewed lease of life in which these models could enable transactions to proceed where otherwise they might have ground to a halt. It has a valuable role to play in facilitating certain types of lending and,

over the coming year, and will support lenders who, fighting thinning margins with continuing low interest rates, are keen to drive more operational efficiency on lower risk lending. But as we know, a valuation model like the AVM, do not take into account elements such as property condition and new build property is particularly difficult to value due to the lack of comparable properties and historic data. Yet, the remote valuation can pull on a larger pool of comparables and data sources which can enhance our understanding.

“The remote valuation model and to a lesser degree the Automated Valuation Model (AVM) found a renewed lease of life in which these models could enable transactions to proceed where otherwise they might have ground to a halt” We live in a digital age and big data offers us big opportunities. Climate change has heralded a renaissance in the desire to understand a property’s energy performance. It is early days but how we assess and what we assess will change as we begin to understand what ‘good’ property really looks like. Data and technology will play a huge part in establishing that. But putting the right information in the right hands is only part of the equation. While machines can make decisions from data, they do not always make perfect sense of it. They can be ruthlessly consistent in the actions or conclusions they draw from it but human experience, wisdom and expertise are all important ingredients we dismiss at our peril. It’s not difficult to see why

MORTGAGE INTRODUCER JANUARY 2022

valuations should be so much more than a binary choice. Our own feeling is that there are many steps open to lenders that go beyond binary decisions – in particular as the industry begins to evolve its understanding and calculation of value. Core Logic has been for some time at the forefront of enabling lenders, panel managers and surveyors to enjoy the benefits of real time data and mobile working to better understand property risk as it occurs at the point of valuation. But these elements are also shaping thinking about the future. Realising the value of big data has been a strategy for property risk managers for some time. What we are seeing now is an evolution in the demands made from the available data. How do we understand the value of a property that goes beyond a snapshot of the market at a certain point in time to an understanding of its performance over the coming years? As computational power becomes smarter, and more innovative, senior executives are now exploring how significant parts of their businesses can run on data-driven decisions that provide immediate guidance on the best actions to take. Core Logic’s data and technology is a key part of derisking those decisions. Working with our panel management and valuation partners, we are beginning to see the technology and data that underpin AVMs, digital and remote valuations evolve from producing outcomes that provide defensible decisions about property to thinking that might allow a different interpretation of value. Climate change and energy efficiency are just two areas prompting new questions about the nature of property value. The confidence in the data driven model to support human thinking is proven. Using technology and data appropriately allows those in property risk to understand and focus upon what risks are really being taken and how appropriate they are for the organization. Technology and data are not only supporting those decisions they are helping to shape them. M I www.mortgageintroducer.com

REVIEW

TECHNOLOGY

Hybrid working now a must-have Neal Jannels managing director, One Mortgage System (OMS)

any Christmas plans were dependent on a negative COVID test as a fresh wave of uncertainty washed across the country as a ‘tidal wave’ of Omicron proportions emerged and the UK workforce was urged to work from home (where possible). Whatever your views on COVID, the vaccines, the boosters and/or the politics behind this, we all have to face the fact that a remote form of working whether permanent, semi-permanent or occasional - is a must for all businesses across financial services. BUSINESS AS USUAL

We still don’t know how long COVID will be amongst us or what might be around the corner. This is something of a chilling thought but we can be thankful that it remains business as usual for many firms when it comes to servicing the needs of their customers/ clients, strategic partners and employees. Back in October, we saw the Financial Conduct Authority (FCA) issue new guidance to companies operating a remote or hybrid working model, warning that firms must be able to prove their working model does not affect the firm’s activities or cause detriment to consumers. And this remains highly relevant. The new directives state that firms will be evaluated by the regulator on a case-by-case basis and should be able to prove that the lack of a centralised location or remote working does not or is unlikely to affect the company’s ability to meet the threshold for the regulated activities it has or will have permission for. The guidance states that companies should be careful to ensure that remote working does not affect the ability of the firm to oversee www.mortgageintroducer.com

its functions, cause detriment to consumers, damage the integrity of the market, increase financial crime or reduce competition Other advice contained in the proposals include the need for companies to have the necessary planning in place. Recommendations include firms having the systems and controls, including the necessary IT functionality, and for these systems to be robust. Additionally, companies should also ensure they have considered any data, cyber and security risks, particularly as staff may transport confidential material and laptops more frequently in a hybrid arrangement. Firms are also advised to manage systems and controls effectively, including digital capabilities such as the ability to access records/ systems, whether the firm in question relies on physical documents and what arrangements have been made for their security and access. Hybrid working models are certainly not going away anytime soon or are its impact on the UK workforce. New research from Microsoft in conjunction with YouGov, highlighted that more than half (51%) of UK workers who currently have the choice to mix remote and office working would consider leaving their company if this hybrid option was removed. For many employees, the COVID-19

Many people have reconsidered work-life balance

pandemic has changed hybrid working from “nice to have” to “must-have”. More than half (59%) of HR decision makers surveyed agree hybrid working has had a positive effect on the mental wellbeing of their workforce. The findings come in the wake of recent data from the Office for National Statistics which revealed that resignations and job-to-job moves in the UK are at their highest level in two decades. The result is what experts are calling “the great resignation”, with many workers changing roles and companies as they re-evaluate their views on life, work and how to balance them. IMPORTANCE OF ADVISERS

Prior to the pandemic, it was evident that lots of firms across the mortgage market did not have appropriate systems in place, or their current system was not sufficiently adaptable. This was hardly surprising to an extent but, with the impact of technology having ramped up immeasurably, this has placed an even greater importance on advisers – whether one-man bands or part of a larger brokerage – to have access to the right systems, solutions and platforms to better engage with clients and run their business more efficiently and effectively. One of the biggest trends we’ve seen as a business in recent times is the huge increase in demand for our CRM system. This really underlines the value attached to intermediary firms being in full control of their tech processes and their data. It also offers greater transparency, the ability to plan and offer a more joined-up approach across all areas of the business. The right tech platform will provide advisers with the tools to speed up and simplify the mortgage journey for clients and help give them extra piece of mind throughout the process. And this is something which every intermediary firm should have added to their Christmas list if they didn’t already have it in place. M I

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Tax policy concern to London lettings Xxxxxxxxxx Richard Rowntree managing director of xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx mortgages, Paragon

s with much of the past two years, we enter 2022 in uncertain and challenging times. With Omicron becoming dominant across the country, London lettings agents and landlords are waiting to see what impact this will have on the capital – the regional market most impacted by the first wave of the virus. The work from home order from the Government is unlikely to lead to the same pictures of empty streets as it did in the first lockdown, but will it put the brakes on the strong recovery of the London rental market? In the short-term it may well have an impact, but over the long-term I would expect demand to return to the levels we have seen in the past few months. Of more concern to the London lettings market, I would argue, are changes to tax policy. London’s lettings market has been resurgent - tenants have returned in large numbers as work and nightlife reopened. There has been a buzz around the capital again and it was nice to see bars and restaurants busy and theatres full. According to Hometrack data, new tenancies agreed in London during the third quarter of the year were 50% above the five-year average. This growth in demand is reflected in increased rents, up 5% in central areas compared with last year and up 1.6% in outer areas. The third and early fourth quarter is traditionally a busy time in the London rental market. University students return and graduates take their first steps on the jobs ladder, whilst those

moving for other purposes generally like to do so before the Christmas rush starts. This year, people returning to the capital after living with parents or returning to their home countries have added to the demand for rented property. The transience and complexity of the London rental market means it is more sensitive to economic or political changes than any other city in the UK. For example, rents in the capital declined in the wake of the Brexit vote, even though tenant demand remained unchanged. Coronavirus has added another dimension to that complexity. One area the market it has been particularly sensitive to is Stamp Duty. The introduction of the 3% Stamp Duty surcharge in April 2016 led to a significant decline in new buy-to-let purchase of London property. The number of new buy-to-let homes purchased in London was 58% lower in 2019 than in 2015, the final year before the surcharge was introduced. This decrease was more pronounced than any other market in the country. Conversely, when the Stamp Duty holiday was introduced, purchases soared again. Comparing the period when landlords received the full 3%

Many people have reconsidered work-life balance

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Stamp Duty discount – July 2020 to June 2021 – with the last comparative period not impacted by Covid – July 2018 to June 2019 – showed the number of buy-to-let purchases increased by 52% in the capital. Despite this growth, transaction levels remain 30% lower than 2015 levels and the availability of property to let amongst London lettings agents is at record lows, having been in general decline since 2016, according to data from Hometrack. Hometrack’s data showed that available lettings surged at the start of coronavirus as the market became flooded with short-term lets moving into the long-term rental sector as tourism died. However, as those properties have returned to the shortterm market and strong tenant demand has led to good quality lettings being snapped up, stock availability has become a major issue. Whilst the latest Government orders may temper tenant demand in the capital in the short-term, the bigger picture is worrying if stock levels remain subdued. A long-term constraint on supply will likely lead to accelerated rental inflation in the coming months and years, as well as poorer choice for tenants. There was a mooted increase in the Stamp Duty surcharge to 4% following the recent Budget. Although HM Treasury was quick to highlight the figure published in an Office for Budget Responsibility report was a mistake, it must have formed part of the Government’s thinking. Additionally, London Mayor Sadiq Khan has raised the prospect of rent controls on a number of occasions and whilst this sabre rattling may play well into the hands of the electorate, in reality rent controls have historically resulted in the opposite happening. Landlords typically respond by exiting the sector, reducing stock, whilst rents levitate towards the upper end of the rent control ceiling, causing unnecessary inflation. Given the uncertainties surrounding the market and the impact of the initial Stamp Duty surcharge, landlords in the capital need some political and fiscal stability. M I www.mortgageintroducer.com

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Welcome to 2022 Xxxxxxxxxx Bob Young chief executive officer, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Fleet Mortgages

hope you were able to have a pleasant Christmas and New Year, an opportunity to recharge the batteries, see (a small number) of friends and family, perhaps take a drink or two, open a present, or just catch-up on some shut-eye. The pandemic continues to present us with a variety of challenges of course, and while you might appreciate this article is written some weeks before publication and I can’t know exactly where we currently are, I’m going to try and put that to one side at least from a mortgage/housing market sense. Just before the end of the year, I saw a montage of clips featuring Andrew Marr who was leaving his Sunday morning politics show. For the past five or so years, Marr pretty much summed every single year that passed as a ‘momentous’ or ‘extraordinary’ one, and there was no sense of hyperbole here. They all genuinely were and looking ahead to 2022, you can’t truly see that trend changing. We might all wish for something a little more boring, and there will be few amongst us who don’t crave some sort of pre-pandemic normality, but the reality is that this can’t be the case, and therefore we have to all do our best with what we’ve got. The other point to make is that when it comes to the mortgage and housing markets it’s fair to say that we have fared considerably better than other sectors. That is something to be thankful for – that we have the environment in which we can all keep on working and achieving – and it’s therefore important to keep on making a positive difference wherever possible. The public’s need for advice has not lessened; if anything, it’s become even more important, and we need to keep www.mortgageintroducer.com

pushing the message of what borrowers get from advice and why it continues to be so important. Again, just prior to Christmas with the Bank of England’s decision to increase Bank Base Rate (BBR), advisers were presented with another opportunity to communicate with their client base and all those who might be considering their mortgage situation, particularly if they’re sitting on a lender’s SVR. Working that existing customer demographic remains as important as it has ever done. Significant demand exists both here and right through the market. Education, highlighting options, suggesting potential pitfalls, and simplifying a process which can often seem complex and difficult to get

“When it comes to the mortgage and housing markets it’s fair to say that we have fared considerably better than other sectors. That is something to be thankful for – that we have the environment in which we can all keep on working” one’s head around, are mainstays of an adviser’s life, but I also think there’s a duty for all of us to be doing this professionally, especially when it’s as important a sector as the mortgage/ housing market. I often talk about the importance of experience – in an industry, within an individual business, when part of a community – and having people around you who have a ‘corporate memory’. That seems especially relevant in our market. I have lost count of the number of times I’ve heard ‘new ideas’ or ‘innovations’ suggested which were carried out a number of years ago with often wildly-fluctuating results. That ‘memory’ is important for us lenders, and it’s certainly important for our trade bodies, and our regulator(s).

Just recently, I was voted onto the UK Finance Mortgage and Product Service Board – a specialist forum along the lines of the old CML Exec, which comes together and discusses a whole host of mortgage-related issues. Essentially, we’re trying to shape positive consumer outcomes and shape our market to ensure we have a sector which all can rely on, and if necessary, one which has the input and gravitas to be able to push back against those who might think they’ve come up with the best thing since sliced bread, but are perhaps not aware of what might go wrong. This type of organisation is comprised of some knowledgeable people, and it is predominantly made up of individuals who can say they’ve been around the block a few times. I felt my own involvement was important particularly from a specialist lending point of view – it can often be the case that you have representatives from, for example, mainstream players, but not those who are cut from specialist cloth. And, given the growing importance of the specialist market – be it buy-tolet or later life lending or mortgages for adverse customers, etc – it’s important to have voices that are in the thick of those sectors, who understand customer needs, who understand what advisers bring, and who can look at proposals or ‘innovations’ presented and outline just how they might impact on those sector spaces and, rather importantly, the customers they are seeking to serve. This year has only just begun, and the sweep and shape of it remains undefined, however we can all impact it positively and benefit from the undeniable demand there is for both mortgages and advice. It is never easy. It is likely to be momentous and extraordinary for all manner of reasons we can’t yet see, but it has all the potential to be a very good year for those that seize the opportunities and are willing to continue educating and informing those who have come to rely on us. M I

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Wait for the Q2 bounce back Xxxxxxxxxx George Gee commercial director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Foundation Home Loans

021 was an extremely busy year for the industry and for Foundation Home Loans. It saw a host of new challenges emerge for borrowers and opportunities present themselves across the intermediary market. As a result, many lenders have broadened their criteria to create something of a new landscape for intermediaries as we enter 2022. With that in mind, here are three focal points for the year ahead. SPECIALIST LENDING

Specialist lending has been at the forefront of the mortgage market throughout 2021 and this will continue in 2022. The knock-on effect of the pandemic on income, employment status and personal finances has resulted in many existing and potential homeowners being pushed beyond the more traditional lending boundaries and automated underwriting requirements. Of course, each lender has their own operational strategies and procedures when it comes to products, criteria and lending policies. Like many specialist lenders, here at Foundation Home Loans, we incorporate a manual underwriting approach which allows us to be more flexible around complex income scenarios and around income/ earnings for the self-employed. Focusing on the self-employed, moving forward, there will be an even greater need to take a more holistic approach when assessing both pre- and post-pandemic levels of profitability/ income in order to reach the right lending decision. Affordability is all about having a deep understanding of the customer’s real circumstances and this is an area where a manual underwriting approach can make a real difference. www.mortgageintroducer.com

Such an approach also highlights the importance of BDM and support teams to ensure that intermediary partners are fully aware of the types of cases which fit within individual lending boundaries and, as importantly, the ones that don’t. The value of these relationships will become even more prominent in 2022 as borrowing needs increase in complexity and the need to talk becomes ever more crucial. THE IMPACT OF THE STAMP DUTY HOLIDAY

If specialist lenders have proved themselves to be the significant driving force within the mortgage market, then the stamp duty holiday of 2021 has certainly proved the dominant factor in a housing market which has experienced amplified activity levels over the past 12 to 18 months. This government-led initiative has provided a hugely positive effect not only on the housing and mortgage markets but also on the economy as a whole. A fact which was evident in a recent report which showed that the Treasury received £1.21bn in stamp duty revenue in November 2021, taking the total for the year so far to £11.44bn, the highest amount for the first 11 months of the year since 2017. According to HM Revenue and Customs (HMRC), Treasury stamp duty receipts for November 2021 were 22% higher than pre-pandemic levels in November 2019 (£0.94bn). When you consider how many transactions were exempt from paying stamp duty altogether and the amount of tax savings experienced by thousands of homebuyers over this period, these revenue figures help demonstrate the unrelenting appetite and demand for homeownership across the UK and its importance to the economy. We have also experienced a sustained level of business and, looking forward, I expect activity across all sectors to remain robust in the early part of 2022 with Q2 seeing the residential market really spring back to life.

Rewarding green endeavours As one of the first specialist lenders to bring green mortgages to the market, this is an area which will continue to play a prominent role within our residential and BTL product ranges. The quest for energy efficiency is a constant one for homeowners, tenants and landlords. The high-profile COP26 conference helped keep important environmental issues at the forefront of people’s minds and momentum gained from this event is resulting in a fresh wave of interest in green mortgages.

“It’s also encouraging to see more lenders entering the green mortgage space and options emerging for homeowners and landlords who deserve to be rewarded for their environmentallyfriendly endeavours” Staying on a positive note, the government is aiming to support as many homes as possible to reach an energy efficiency rating of C or better by 2035, with an earlier target of 2030 set for private rented homes throughout England and Wales. In the wake of this, we are already witnessing many landlords taking action and it’s also encouraging to see more lenders entering the green mortgage space and options emerging for homeowners and landlords who deserve to be rewarded for their environmentally-friendly endeavours. Increased support for all of the professionals in the homebuying process to raise the subject of property energy efficiency as part of their advice would be helpful if it’s to have any real impact. So, let’s hope that 2022 is the year of the green mortgage. M I JANUARY 2022 MORTGAGE INTRODUCER

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Now is the time to talk about remortgaging Xxxxxxxxxx Jane Simpson managing director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx TBMC

he impact of policy changes made five years ago, as well as more recent measures introduced in response to the COVID-19 pandemic present well-timed opportunities for brokers to discuss remortgage options with their clients. Industry data highlights how the incentive offered by the Stamp Duty holiday created surges in buying activity that were followed by dips - mortgages written for buy-tolet purchase totalled £2.8bn in June, a figure that fell to £800m in July and £1.1bn in August. A further £2.1bn was written for buy-to-let purchase in September, with post-Stamp Duty purchases of £900m recorded in October - this suggests that some buyers brought forward their planned sales in order to take advantage of savings. As a result, some brokers may be experiencing a slowdown in purchase activity but remortgaging offers an alternative source of business. And it is not just the absence of Stamp Duty savings that may be stopping landlords from responding to the strong tenant demand seen over the

past year, recent research from ARLA Propertymark highlights how there is an average of 29 buyers for every property available on the market. Perhaps a symptom of this shortage of stock, at TBMC we’ve recently seen an increase in enquiries from landlords who are looking for finance to either improve their existing portfolios, maybe making them more energy efficient ahead of the proposed changes to EPC requirements I wrote about recently, or to purchase properties in need of renovation before being let to tenants. Although the number of loans available to borrowers has increased after many lenders withdrew their offerings to mitigate the increased risk brought about by the pandemic, it seems as though the refurbishment subsection of the market is one that is currently underserved. Remortgaging against one or more properties that a landlord currently owns can be a cost-effective way of raising funds in the absence of suitable products. This is especially true considering that many re-mortgage deals are offered with free valuations and legal fees, meaning there are limited upfront costs. The competitiveness of today’s market means that rates are still low despite the Bank of England’s recent decision to raise the base rate of interest by 0.15% to 0.25%. With inflation

Many landlords are looking for finance to improve their existing portfolios

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forecasted to continue its ascent, further base rate increases are expected so borrowers would be wise to beat the central bank to the punch and lock into a new fixed-rate mortgage. And it’s not just the current low rate environment that should have remortgaging on brokers’ radars; next year will see a swell of 5-year fixed rate mortgage mature. This is because in 2017 the Prudential Regulation Authority (PRA) introduced new rules to reduce the risk of investors becoming too highly geared, as was the case in the lead up to the global financial crisis. The PRA’s new underwriting standards required lenders to take a more comprehensive view of a landlords’ property and business activity, something that was not routine as some lenders relaxed criteria in response to the demand for buy-to-let mortgages that had been rising since the turn of the new millennium. A key aspect of the standards was the introduction of a minimum affordability calculation. Signalling a shift away from the previously tenure neutral policy, Government changes that were effective from April 2016 increased landlords’ tax burden. These updated overheads were required to be considered, alongside a minimum stressed interest rate, when assessing whether a borrower could afford mortgage repayments. To take into account the benefits to the customer of rates being locked in for longer terms, mortgages fixed for five or more years were generally subject to a lower stressed rate. When combined with a shift towards fixing for longer in anticipation of increasing rates, this boosted borrowing over fiveyear terms – according to industry data, 3,008 five-year fixed rate mortgages were written in December 2016. This number increased to 4,167 the following month, on its way to hitting 10,717 in January 2018. While the Omicron variant has reminded us that the sector still needs to be ready to respond to changes that impact the market and wider economy, the year ahead of us does appear to bring with plenty of positives and opportunities to support customers in providing much needed homes. M I www.mortgageintroducer.com

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The year in numbers Cat Armstrong mortgage club director, Dynamo for Intermediaries

et’s take a look at some official figures and what to expect from 2022 and even beyond. UK Finance has predicted that buy-to-let purchase activity has increased to £18bn this year, up 83% on 2020. The level of activity for house purchase is predicted to hit £200bn, up 53% on 2020; however, homeowner remortgaging activity is said to be slightly down on last year at £62bn. These predictions outlined that total house purchase transactions, including cash purchases, will reach 1.5 million in 2021, some 47% higher than 2020, and the highest number since before the global financial crisis. The trade body also estimated that overall gross lending will peak at £316bn, up 31% on 2020, then moderate to £281bn in 2022, before increasing again to £313bn in 2023. It added that while the 2022 and 2023 gross lending figures will be reductions on the 2021 peak, they will be higher than the 2020 and 2019 figures, representing a return to more stable levels of activity. This data demonstrates just how busy the last 12 months have been and there is every reason to believe that whilst gross lending may slow in 2022, activity within the BTL and specialist markets will remain strong. Meaning that the reliance on the intermediary market will also continue to grow. When it comes to shifts in homeownership and rental demographics, it was interesting to see the English Housing Survey 2020–2021 outline that, of the estimated 24 million households in England, 15.5 million (65%) were owner occupied in 2020–21, a figure which was unchanged from 2019–20, but represented an increase from 63% www.mortgageintroducer.com

in 2015–16. Breaking this down, 35% of households were reported to be outright owners, while 30% bought with a mortgage. The private rented sector accounted for 4.4 million (19%) of households in England, unchanged from 2019–20, but lower than in 2015–16 (20%). Renting was found to be more prevalent in London, where 27% of households lived in the PRS in 2020–21, compared to 17% of households in the rest of England. The social rented sector, at four million households (17%), was still the smallest, following a longer-term downward trend which stabilised over the past decade or so. In 2010–11, the social rented sector accounted for 17% of households with 9% (2 million) renting from housing associations and 8% (1.8 million) renting from local authorities. Meanwhile, in 2020–21, 10% (2.4 million) rented from housing associations, and 7% (1.6 million) from local authorities. There is little question that homeownership aspirations remain strong but this fact should not undermine the huge significance of the

The numbers point to the value of the advice process

private rented sector, the role this plays for millions of people across the UK and how vital landlords are in the grand scheme of the overall housing market. A factor which has often been undervalued in recent times despite rising standards across the board. Some good news has emerged for landlords as the annual trend of low voids continued last month, decreasing from 19 days on average in October to just 18 days in November. According to Goodlord, this brought voids below the year-to-date average of 19.5 days with the average void period for 2021-to-date now 28% lower across the country compared to 2020 figures. Let’s hope that this positive trend continues in the same direction throughout 2022. Staying with the BTL sector, a poll conducted by CHL Mortgages highlighted rising awareness around limited company lending across the intermediary market with an estimated 96% of brokers expecting to write more limited company business in 2022. When asked how much limited company buy-to-let business brokers are currently writing, 69% said they are writing one to five cases a month, 25% are writing none, and only 6% are writing more than five cases a month. Looking to the challenges facing brokers when placing limited company business, 59% cited a lack of knowledge around limited companies, 46% said structure and shareholding, 28% highlighted conveyancers and 20% pointed to independent legal advice for shareholders. Whilst the popularity of limited company lending continues to grow and many lenders have evolved their product offering to – pardon the pun – incorporate such an offering, this remains a complex area for landlords from a short, medium and longer-term tax and refinancing perspective. Which, yet again, points to the value of the advice process, another area which will continue to become increasingly prominent in 2022. M I

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PROTECTION

Taking all of the opportunities you get Kevin Carr chief executive, Xxxxxxxxxx Protection Review, and xxxxxxxxxxxxxxxx, MD, Carr Consulting & xxxxxxxxxxxxxxxx Communications

rotection for a mortgage should be a no brainer, shouldn’t it? Well, it seems not according to Association of Mortgage Intermediaries (AMI) chief executive Rob Sinclair. Speaking at the recent Protection Review conference in London, he described the reality as follows. He put it bluntly that, “Mortgage advisers are shit at having good conversations about protection.” He went onto explain that research AMI conducted showed while 86% of mortgage advisers had talked about protection with customers, just 30% of clients could recall the conversation. His exasperation on stage was clearly felt by the audience. “It doesn’t lodge in their memory at all. That’s not a great place for us to be as an industry,” he said. “Only when we get the customer nailed into thinking ‘this is the product I need to have a conversation about’ and we give them to a specialist who does it, will we have the right conversations.” Why does this disconnect exist? Have we forgotten how to talk about

Roger Edwards marketing director, Protection Review

the importance of mortgage protection? As someone who has worked in the industry for more than a few decades, I feel those mortgage protection messages are hard baked into the very fabric of the industry. But perhaps the reality is we’ve let those messages fade into the background. We can all recall them if required to, like the lyrics of a 1980s pop song, but we rarely put the record back on the turn table and make everyone listen to it. Product providers and financial advisers have been sharing, through training and marketing, the same messages for decades. Mortgage protection is the easiest of protection sales because the mortgage is the biggest debt that most people will ever take on. And the consequences of not been able to service that debt could be catastrophic for a family. Even the financial warning that comes with a mortgage is a convincing argument for a protection policy. “Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.” Most people probably do not take much notice of this warning statement

Getting the protection message out clearly is imperative

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even though the justification for protection is woven into it. Do we flit over its importance rather than linger over the words and emphasise the implications? Just take a moment to consider the words in more detail. “Your home”. The place where you live. Where you feel safe. Where you raise your family. Where you entertain your friends. The focal point for your entire life. “Is at risk”. What is the risk? Well, if you default on the loan and cannot make the repayments the bank may repossess the house. It will no longer be the focal point of your entire life. No longer the place where you live. What would happen to your family if the lender took the roof from above their heads? Can you imagine being homeless. “…if you do not keep up repayments”. What could stop you from making those repayments? Redundancy resulting in loss of income. Illness resulting in loss of income. The death of the breadwinner (there’s another cliched old phrase)? Most of us don’t have enough savings to continue to service a mortgage for long, and with interest rates on the way up after being at rock bottom for many years, payments may become harder to manage in future. These are powerful messages and it’s hard to argue against their meaning. So how can we make those messages land again and ensure mortgage broker clients do remember the conversations, and accept a referral to a protection specialist? Maybe it’s a simple as dusting off those tried and trusted messages again and using them in a new round of mortgage protection focussed marketing and training. Sinclair also delivered some good news from the AMI research. Consumers too are more aware of the need for protection, with younger people especially conscious of income protection. The opportunity to have good protection conversations does exist. As an industry we need to rediscover the power of the messages and relearn how to deliver them in a way that makes mortgage applicants take the necessary action to protect MI their mortgage. www.mortgageintroducer.com

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PROTECTION

The aggregator/adviser balance Xxxxxxxxxx Mike Allison head of protection, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Paradigm Mortgage Services

es, it’s that time of year again when in the heat of the moment, or during conversations with friends (less likely recently of course), new year resolutions start to emanate from our mouths sometimes prior to the brain having been engaged. If we are really unlucky, someone will have tagged or recorded them on Facebook or some sort of social media and we will be held to ransom for the remainder of the year or until they are broken. CURVE BALL

In our personal environments we can, in the main, control what and when we decide our resolutions to be – we have pretty much total control of them. In our professional lives we are not always afforded such luxury. For example, we have a regulator who continues to mould the way in which we go about our daily tasks. So entrenched are we in that path of working under a set of rules that we do not always notice the ‘curve ball’ or, as I like to call it, the recent Consumer Duty paper meteorite heading our way. Let me make clear that I believe the intentions of the regulator are nothing but highly honourable in their pursuit of customer fairness but this particular change has almost crept up on us. And for smaller businesses (especially those who do not take external compliance advice) the reliance on the firm to get it right will be the biggest challenge many have faced since the advent of regulation whether that be for investments or, most importantly, from our perspectives mortgage and general insurance (including protection). Working within the new framework will definitely be something the Senior Managers will have to ‘control’ but the www.mortgageintroducer.com

principles have already been set in the December consultation paper and are now pretty immovable. Many will not yet have finished the 200-plus page paper on the future of UK regulation during the Christmas and New Year break but all advisers must be in little doubt that the impact on financial services in our world will be - as I said - the biggest overhaul of financial services regulation since the implementation of regulation in the mortgage and protection space. It will not only apply to us all as distributors but will also impact all product manufacturers and distributers – including advisers and providers – to review what they currently do and how they do it. If the costs of implementation are anything to go by, and demonstrate the seriousness of the change you will see, then this is not an exercise in ‘tinkering around the edges’. It is definitely a paradigm shift. To give you an idea in pounds, shillings and pence as we used to say, the FCA estimates the one-off costs alone could be approaching £2.4bn, with ongoing costs of up to £176m a year. You will be hearing much more about the effects of the new regime as 2022 unfolds but in brief it incorporates a central consumer principle that a firm ‘must act to deliver good outcomes for the retail consumers of its products’. Make no mistake this is a clear step up from ‘treating customers fairly’. The FCA in the more recent past have started to inform us what ‘good’ looks like and conversely what ‘bad’ looks like too and in its role of implementing the changes I guess we will have a lot of examples coming our way. At the moment, we are given to understand the ‘how’ part on delivery of good outcomes. Stakeholders will need to: 1. Act in good faith toward retail customers. 2. Avoid foreseeable harm to retail customers.

3. Enable and support retail customers to pursue their financial objectives. Whilst many of you will no doubt say this is what you do presently, the acid test will be in the detail of proof at every step of the way. Another area in which the regulator has had an impact already in 2022 is the Fair Pricing review within the general insurance space. Most GI providers will have told you what their own views on this are and how they have changed their processes to reflect the new regulation. ATTRACTIVE OPPORTUNITIES

Basically, we should see a ‘levelling’ of prices for advisers versus the aggregator market which may mean the opportunities look more attractive to get involved in distributing GI, especially for those operating in the mortgage sector. Estimates have been made that previously advisers, while advising on mortgages have lost the GI opportunity to the tune of 75% of the mortgages written – with the customers going elsewhere to purchase. Where there was a clear differential in the ‘opening’ prices of some of the GI providers in the past, this should be a lot narrower now and advisers should be able to compete on price or clearly show the cheaper versions of the products are lacking in quality from a cover perspective. This is an area where you can ‘control’ what you do to grab the opportunity and the numbers are not to be underestimated. I hope this hasn’t provided too bleak a picture for 2022. We are a resilient bunch and used to rules, but I would urge those who have not yet thought about implementation of the changes to contact a specialist organisation like Paradigm Consulting for advice on how it will affect mortgage, protection and GI distribution. Finally, may I take this opportunity to wish all readers of Mortgage Introducer a happy, healthy and moreover prosperous 2022. M I

JANUARY 2022 MORTGAGE INTRODUCER

REVIEW

GENERAL INSURANCE

A not so dry January: bad weather ahead Louise Pengelly proposition director, Paymentshield

e all know January is by no means the best-loved month of the calendar year – and that’s got a lot to do with the weather. This time last year, Storm Christoph brought as much rainfall as typically falls in a month in just three days to Northern England and Wales, flooding nearly 700 properties. Here at Paymentshield’s Southport HQ, we’re used to a drizzly New Year, with January averaging at least 20 days of rain and a temperature of 5°C. 2021 brought some of the most intense and exceptionally wet weather since records began nearly 200 years ago in 1833 – and it’s a trend we can expect to continue. As the World Meteorological Organisation has warned us, the effects of climate change have seen extreme weather events – from powerful heat waves to devastating floods – become the “new normal”. With this in mind, it’s no surprise that claims continue to spike throughout the winter months. It’s therefore crucial for customers to ensure their properties are as winter-

ready as possible if they are to insulate themselves against the disruption and potential hefty costs resulting from weather damage. As trusted experts, advisers are perfectly placed to help their clients with these preparations – both by helping them to understand exactly what their Home Insurance policy covers as well as where their own responsibilities lie in terms of home upkeep. It would be reasonable to assume that after 18 months of lockdowns turning us into a nation of homebodies, domestic disasters would be on the decline given, for example, how much more quickly people spending time at home could intercept a burst pipe. And while it’s true that we’ve seen certain claims such as theft and fire damage reduce in frequency throughout these periods, our research in partnership with YouGov last year nonetheless showed that people are still putting their homes and their finances at risk. This is because nearly a third of us (31%) haven’t run any home maintenance tasks that could help prevent problems with their homes since March 2020 – from cleaning the gutters to servicing their boiler. This is alarming, especially as our original data has revealed that in the past two years, 32% of claims made in winter months related to escape of

Customers should do what they can to winter-proof their homes in anticipation of bad weather

MORTGAGE INTRODUCER

JANUARY 2022

water, with a further 30% for storm damage at an average cost of £672. Simple steps like those above can help fend off a hefty claim later down the line. Both cleaning gutters and servicing boilers reduce the likelihood of a leak for instance, with the former preventing a build-up of water and the latter keeping the boiler in good working order, making it less likely to cause water damage in the future. With these findings in mind, it’s fair to presume that many customers will have questions about how best to protect their homes. This provides advisers with a perfect opportunity to contact their clients and demonstrate their expertise; it also enables them to explore if their clients have any other financial products they need assistance with. This conversation should also include educating clients on an important, often misunderstood point – that most insurance policies aren’t designed to cover for wear and tear, but to protect against unforeseen losses. Advisers can help point out the practical steps that homeowners can take to avoid having a claim rejected because the home was in bad condition to start with. Paymentshield’s resources “A Guide to Keeping Afloat in a Flood” and “A Guide to Beating the Storm” outline the sensible precautions that customers can take to help winter-proof their property as well as practical advice on what to do during and after periods of bad weather, such as checking over the roof and gutters following a storm. Advisers can use these easy-tounderstand guides, available in our online marketing toolkit, as conversation starters with their clients, therefore demonstrating their value by offering additional support. The last thing people need after an already stressful festive period is avoidable damage to their home. Advisers rain-checking on client conversations about the importance of preventative home maintenance measures should therefore not be an option this January and February. After all, despite the uncertain times we continue to find ourselves in, there’s one thing we know we can rely on: classically dismal British weather. M I www.mortgageintroducer.com

REVIEW

GENERAL INSURANCE

Income from the mortgage spike Geoff Hall chairman, Berkeley Alexander

anuary is always a boon month for mortgages and remortgages, and 2022 is no exception. The property market is still looking pretty buoyant as we head into this new year, with strong buyer demand and a predicted rebound in the number of homeowners getting ready to sell. In more good news for brokers and advisors, £6.7bn worth of mortgages will mature in January, and there are plenty of deals to be had, including ten-year, seven year and five-year fixed term mortgages, with competitive LTV

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rates.The chances are that general insurance renewals will coincide with your clients’ mortgage/remortgage requirements, and this year your clients will need and value your help with GI more than ever. PREMIUM RISE

As well as being an important income for your business and a good retention tool, this year clients are facing a rise in premiums across the board as a result of the “hard” insurance market conditions and fair pricing kicking in. The hard insurance market has pushed up prices with eye watering premium increases in some lines of insurance. There are fewer insurers offering terms and wordings have tightened up. In addition to this the FCA has introduced the fair pricing rules in a bid

to bring an end to the practice of ‘price walking’ where insurers offer cheaper premiums to new customers. This is likely to mean less competitive quotes when seeking alternatives. Clients will need your support to navigate these changes and make sure they stay adequately protected in the areas they need cover. When times are good it can be easy to let general insurance sales fall off your priority list. Don’t take your eye off GI, especially this year. Use it as a chance to get the New Year off to a flying start in terms of both your income and your relationship with customers. GI is, after all, another opportunity to keep in touch with clients throughout the mortgage lifecycle, retain relationships, differentiate service, and demonstrate the extra value you can deliver. M I

JANUARY 2022 MORTGAGE INTRODUCER

REVIEW

EQUITY RELEASE

Downsizing decline is an opportunity Xxxxxxxxxx Andrea Rozario xxxxxxxxxxxxxxxx, chief corporate officer, xxxxxxxxxxxxxxxx Bower

ow long must this false dawn go on? For a few months there it felt like COVID was finally slowing down and we were going to get back to some semblance of normality. And then: Omicron. This new variant will, I imagine, be the first of many more variants to come and we will all be well versed in Greek before the year is out. After all, Omicron is only the 15th of 24 Greek letters (thank you, Google) so it feels like there is still some road left to travel before coronavirus is over. At least I can cancel Dualingo. Not exactly the most upbeat way to start, I admit. But, with a new variant raging and a long winter ahead it feels like there is little to be positive about - if you excuse the pun. However, looking back across this now nearly two year pandemic experience, there are crumbs of comfort to be found. For example, for millions of people up and down the country the

significance of being a homeowner has been utterly solidified. With so many of us forced indoors – whether through self-isolation or just working from home – the importance of having a comfortable four walls surrounding us has never been more critical. According to recent research from financial services provider OneFamily, more than three in four over 50s (76%, to be exact) claim that they are now more likely to stay in their current home for the rest of their life. The pandemic, it seems, has made most people realise that their home is the best defence against everything else going on in the world. With working from home seemingly a permanent fixture for many of us, 50 - 65 year olds may be getting a feeling for their retirement already. Many of us have had more time to spend in the garden, more time to consider home improvements and more time to really appreciate the homes we have built. It has made most of us realise that home is where the heart is, but also given so many people approaching their retirement a fresh perspective on their property. It is hardly surprising that, after being forced to spend more time indoors than Boo Radley on a bad day, we have

More than 3 in 4 over 50s claim that they are now more likely to stay in their current home for the rest of their life

MORTGAGE INTRODUCER JANUARY 2022

become more attached to our homes. Restaurants were shut, pubs closed, and anything fun bordered up for what seemed like years. We had to make our own entertainment and our homes became the venue. But what does this have to do with equity release? First off, the fact that so many of us have become reconnected to our homes during lockdown means that, as we have seen from the data above, downsizing will become a less desirable option. More than half (53%) of people say they would miss their garden, nearly a quarter (23%) want to keep their bigger space for those now extra precious family visits, and 17% of people said they would rather reinvest money back into their homes than relocate. And, after everything that has been going on, who can blame people for not wanting to move right now? For equity release, this could be an opportunity to help. Thousands, if not millions, more people are seeing their homes as a vital safety net and could well be considering it to use as a way to fund their retirement. OneFamily’s research bears this out as, nearly a quarter (24%) of those surveyed would consider taking equity release to free up the cash they need to stay put and fund their later life. Now, although equity release has been robust during the pandemic, we are nowhere near a quarter of older homeowners accessing their equity via a lifetime mortgage. But this shouldn’t be the target. Equity release needs to be approached carefully with expert advice, so aiming anywhere near one in four seems foolhardy. However, what this does show is that homeowners up and down the country - after 18 months of being stuck inside - are well aware that their property will play a huge part in their retirement finance plans. For those of us on this side of the divide, the ones creating the products and delivering the advice, we need to redouble our efforts and be prepared for a swell of interest. Not all this interest will turn into business - and nor should it - but being on top of our game will be critical as we finally (hopefully) draw nearer to the end of the pandemic. M I www.mortgageintroducer.com

REVIEW

EQUITY RELEASE

Don’t ignore equity release in 2022 Xxxxxxxxxx Stuart xxxxxxxxxxxxxxxx, Wilson CEO, xxxxxxxxxxxxxxxx Air Group

irstly, a Happy New Year to all readers of Mortgage Introducer. What will 2022 bring us? It’s incredibly difficult to say, isn’t it? Especially given where we currently are with the pandemic and the fact that, even with all the progress that has been made, COVID is still very much with us in various guises and is still going to play a major part in all our lives for some time to come. Closer to our business home however, I am incredibly positive about our marketplace and the ongoing and growing need for advice from later life lending customers. I’ve said this many times before, but anyone who looks at the foundations, the demographics, the need, the attitude change in terms of one’s property, and concludes anything else than a growing market, is probably looking in the wrong direction. That said, while that demand continues to grow, it’s not going to suddenly combust into business activity without every single one of us making it happen. The ‘home is my castle’ mentality has shifted, and there are more ways to access equity, but there is still a big job to be done in terms of education around later life lending and ensuring the facts are known. 2022 will be no different in that regard to other years that have passed. We still have to make the case for later life lending, for advice, for confidence in products etc, and that goes as much for educating other finance or industry professionals, as it does for the end consumer. It’s why a focus on being able to access all later life lending products and solutions for consumers is so important, especially if you are relying on a strategy which puts introducers at the forefront of securing business. We know

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that many equity release advisers have done this very well over the years – working with introducers such as IFAs, wealth managers, accountants, estate agents, and the like, who form a strong connection allowing them to introduce business. It now has to be an approach which isn’t merely built on equity release but all other later life lending products that might be available and suitable to those introducers’ clients. Because how comfortable might those introducers be introducing clients to an adviser who is effectively only able to advise on one part of the sector, and not all of it? The answer is not comfortable at all. Now, the simple fact of the matter will be that some advisers still won’t want to go down this route and will

“It would be fair to say that there has been a healthy dose of scepticism about equity release/later life lending, particularly from IFAs and wealth managers. However, over the last couple of years, you can sense that hardened edge softening and it would be a dyed in the wool naysayer who did not now recognise the importance of these products” still feel they can ‘do a job’ only advising on, for example, equity release, but they may well find that their introducers begin to walk if they feel their clients are not going to get a 360-degree service. Why is this important? Well, as mentioned, it’s important to those who already rely on introducers, but it’s also important within the context of finance industry professionals and how they view later life lending. Traditionally, it would be fair to say that there has been a healthy dose of

scepticism about equity release/later life lending, particularly from IFAs and wealth managers. However, over the last couple of years, you can sense that hardened edge softening and it would be a dyed in the wool, later life lending nay-sayer who did not now recognise the importance of these products for a growing number of customers. In a way you could say that IFAs and wealth managers have ignored our sector for way too long, but again, in this day and age this isn’t really possible. For later life advice specialists this clearly presents an opportunity, because while they are not ignoring the sector any more, they are still very unlikely to be advising in it themselves. Which means they are actively looking for specialists to partner with, and I’ve spoken to a number of advisers who have been forging relationships with these finance professionals and benefiting already from these tie-ups. I spoke recently on a ‘Breakfast with Stu’ meeting and urged all advisers to draw a circle around their own local base and contact all potential professional introducers within it, because I’m confident you will (at the very least) get one interested party, probably many more. While a small number will feel they are still able to ignore the later life lending space, others will realise they truly can’t do this, and because they are not able to be active here they will need a specialist who understands the market and is able to access all solutions. Again, we come back to the point of ensuring you can offer a full range of solutions, not only for the client themselves but in order to attract introducers who will want to see their client needs fully met, not just set against one set of products. Overall, this is good news in that we have a wider range of professionals more engaged with our sector and the advisers who excel within it. Work hard at the opportunity this presents and, with the support of a partner such as Air, you should find the next 12 months prove very fruitful indeed. M I

JANUARY 2022 MORTGAGE INTRODUCER

REVIEW

EQUITY RELEASE

A solid platform from which to build Xxxxxxxxxx Claire Barker managing director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx Equilaw

ith the new year now upon us, the need to push forward and to build on the advances of 2021 remains of paramount importance. In last month’s article, I referred to a recent survey of advisers by Air Mortgage Club in which the need for better educational standards was highlighted as key requirement for tackling consumer suspicions of ER. However, while this remains a top priority for the sector in the months ahead, perhaps the most alarming aspect of the AMC research relates to the ability of advisers to provide the expertise and knowledge needed to reassure or inform clients at a frontline level. Indeed, the survey found that while 76% of respondents felt that customers had a limited understanding of the ER market, 43% said that the same was also true of advisers, with 23% suggesting that greater education and training at an advisory level represented the most significant area for innovation in the later life lending sector- a genuinely shocking conclusion that could have serious implications for our ability to meet the expectations of clients or to tackle their misgivings effectively if it is ignored or allowed to fester. For example, recent research by Boon Brokers has found that almost 60% of homeowners aged 55 or over say they would never consider taking an equity release product out on their home, despite more than two-thirds (or 67%) admitting that they aren’t really clear what it is or what it entails.

The survey, which was based on a pool of 1,000 respondents, identified a number of depressingly familiar misconceptions and misunderstandings amongst consumers, with the fear of negative equity and/or losing ownership of a property accounting for 9% and 22% of objections (respectively), while the worry of burdening family members with debts or other obligations accounted for 9%. In addition, the research also found that one in eight (or 12%) of respondents had been deterred from pursuing equity release options as a result of family disapproval, while the impact of media horror stories and other disruptive news items were cited as a restraint by a further 18%- a rollcall of issues which merely serves to re-enforce the need for better awareness and knowledge at all levels of a transaction. However, while the need to tackle myths and to promote a better understanding of ER remains crucial, so too does our ability to protect vulnerable customers by ensuring that all recommendations are compatible with individual needs and circumstances and that a clear weight of evidence is provided to support them. For example, under current ERC regulations qualified advisers are obliged to base each recommendation on both short and long-term requirements, with projected spending costs and the viability of pension plans being considered alongside other factors, such as existing income, investments, tax, care needs, inheritance, the impact of loans on benefit eligibility or the possibility that an alternative financial plan may represent a better option. However, as the number of ER products and service options continue to grow exponentially, so too does the possibility that some recommendations

MORTGAGE INTRODUCER JANUARY 2022

may be limited or compromised by a failure to keep pace with the sheer variety of choices, thereby engendering the kind of unwanted publicity that reenforces negative stereotypes. Moreover, a failure to offer sufficiently personalised advice or to challenge client assumptions could lead to a resumption of multi-firm reviews by the FCA that are unlikely to moderate hostile opinion. So, the way forward is clear, even if the necessary solutions are less apparent. Better training can help of course, with the launch of the ERC’s competency framework aiming to improve understanding of the industry, as well as of markets, clients, soft skills, processes and products amongst advisers. The six educational modules, which were developed and trialled alongside specialists from across the sector, have been designed to reflect each advisers level of experience and to offer mentored advice on every aspect of the application process, thereby supporting individual development and ensuring that those who are new to the industry or whose core business lies elsewhere are conversant with all obligations and requirements. The ERC’s Advisers Guide (which was relaunched in July) offers a valuable resource for advisers which is reflective of feedback from the FCA and wider sector as well as of emerging product innovations and market trends. Yet, while both of these initiatives represent a clear and necessary step in the right direction, there is also little doubt that their effectiveness could be raised yet further by a renewed emphasis on industry sponsored materials and platforms such as webinars, complementary training programs, resource packs from lenders and developers, focus groups or, as in the case of a recent development from Air Club, online support modules. It might be taking longer for some to absorb these developments than others. But despite what some nay-sayers might suggest, we do have a solid platform from which to build and we certainly don’t want to isolate or alienate advisers by apportioning unwarranted blame. M I www.mortgageintroducer.com

BECOMING A GI GENIUS

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REVIEW

CONVEYANCING

Base rate rise chance for increased comms Xxxxxxxxxx Mark Snape xxxxxxxxxxxxxxxx, managing director, xxxxxxxxxxxxxxxx Broker Conveyancing

irstly, a warm welcome to 2022. I hope you were able to see family and friends over the holiday period, although appreciate that the Christmas we might all have been promised was probably not the one you ended up with. You’ll appreciate that this piece has been written well in advance of you reading it, and therefore it’s very difficult to say with any accuracy what the current situation might be. However, it is not in my nature to be downbeat because the year does stretch out ahead of us and I think there are plenty of market fundamentals to suggest it can be a strong one for us all, particularly in the intermediary sector. Just before Christmas we received the news from the Bank of England MPC that it was putting up Bank Base Rate to 0.25%. This was the first time in three years that a BBR move had been upwards, and one undoubtedly fuelled by inflation levels and the Bank’s attempt to bring this more under control. It did come as something of a surprise it has to be said. Given the level of Omicron infections doing the rounds and the clear impact this was having/going to have on business, particularly in the hospitality sector, many economists and commentators had resigned themselves to the Bank not making such a move while the true impact was yet to be seen. If you were looking at this purely from an inflationary pressure point of view, the argument for a rise was compelling, however add in everything else, and it began to seem less likely. Clearly, the vast majority of MPC

members thought it was better to act now than wait any longer. Voting 8-1 in favour of an increase, BBR rose from the incredibly low 0.1% to the merely very low 0.25%, and while it looks likely further rises will take place during 2022, we’re still going to be at historically low levels regardless. And yet, a BBR rise presents an opportunity, particularly for advisers and particularly for those borrowers who (unfathomably) are on rates which will be impacted by such a rise. So, for example, while we might have borrowers on tracker rates who

“It was interesting to read that almost two million mortgage borrowers are either on tracker or standard variable rates. Any adviser looking at those numbers will see the opportunity that exists, and of course, while there will be some who might not be able to remortgage, one would presume that the vast majority are not in that camp” might not be able to switch mortgages without incurring an ERC, we also have hundreds of thousands of borrowers on SVRs who – one would hope – could move if they wanted to. It was interesting to read at the time of the BBR increase, that almost two million mortgage borrowers are either on tracker or standard variable rates. Any adviser looking at those numbers will undoubtedly see the opportunity that exists, and of course, while there will be some among those numbers who might not be able to remortgage,

MORTGAGE INTRODUCER JANUARY 2022

one would presume that the vast majority are not in that camp. In a year in which purchase activity is unlikely to live up to the heights reached last year – although we certainly hope it does – the importance of remortgage business is only going to be heightened. A BBR rise will have been noted by borrowers, especially those who are going to be paying extra each month as a result, and therefore advisers are likely to be pushing at an open door if they are communicating about what it could mean and what borrowers could do to mitigate such increases. Indeed, given the competitive nature of the mortgage market and the fact that many of these borrowers might have picked up their last mortgage when rates were significantly higher than now, the chances of being able to find a more competitive rate for eligible borrowers must still be better than at most other times. Of course, a remortgage client brings with them other wants and needs, not least if they have received no other financial advice since the last time they secured their mortgage. Add in the rollercoaster ride that many people have been through financially since the pandemic began, and advisers should be able to provide solutions across a range of other products and services, namely conveyancing, protection, and the like. Few people have been left unscathed in recent years, but a positive here is that the mortgage market continues to work incredibly well and offers a wide range of options for all types of borrowers, especially those who could be on much better rates if they simply looked at their options and secured the advice that will get them to the right result. So, while we have started the year once again in a somewhat uncertain state, advisers are nothing if not resilient and they recognise the opportunities available to them when they are presented. A BBR rise does just that and it makes sense therefore to communicate effectively, market your services and seek out those borrowers for whom changing their mortgage is a no-brainer. M I www.mortgageintroducer.com

REVIEW

CONVEYANCING

Taking security seriously wonder that normally cautious people end up falling for the scam? Xxxxxxxxxx Karen Rodrigues sales director, xxxxxxxxxxxxxxxx, xxxxxxxxxxxxxxxx eConveyancer

his year looks like it has been a productive one for the nation’s scammers. Figures from UK Finance covering the first half of 2021 found that during this period, criminals managed to steal a total of £753.9m through fraud. That eye-watering sum represents a jump of a whopping 30% on the same period in 2020. One of the biggest growing forms of fraud in the UK has been authorised push payment scams, those where the victim knows full well that they are transferring money out of their account, but where they have been conned into believing it is for legitimate purposes. Losses to this sort of scam jumped by 71% in the first half of the year, reaching £355.3 million. This meant that authorised push payment scam losses surpassed the amount of money stolen through card fraud for the first time, This sort of scam involves the fraudster impersonating a genuine individual or business, appealing to the victim to transfer the money, often declaring that it needs to happen swiftly. Sometimes it will be that the scammer poses as a bank, warning that the victim’s bank account has been ‘compromised’ and they need to move their money to a new one. However, there are occasions when scammers pose as someone from within a housing transaction. Having gained access to an account of someone involved in the deal, they may then pretend to be the conveyancer, and send over an email missive calling for the client to make some form of payment or else risk the whole transaction collapsing. Given those sorts of stakes, is it any www.mortgageintroducer.com

CHANGING HOW WE COMMUNICATE

One of the reasons that this form of property fraud is so concerning is that it is seemingly so easy to commit. Scammers and fraudsters are becoming more sophisticated, and getting much better at not only gaining access to accounts but also at impersonating legitimate businesses. It means that when a client receives an email supposedly from their conveyancer asking for fees to be paid, or a deposit to be transferred, into a new bank account then all too often they have no reason to question whether it’s a true request or an attempt to con them out of money. One way to tackle this issue is to change how we communicate. If email is too open for scammers to attempt to intercept, why not open up a different channel of dialogue? Ensuring that all parties involved in a housing transaction enjoy a more secure way of speaking with each other has been at the heart of our development of DigitalMove, our secure, digital platform which is open to everyone involved in a deal, from the buyers and sellers to the broker and estate agent. The platform is designed to make the actual process of the transaction smoother and faster. Since documents can be uploaded digitally, and everyone can see how a case is progressing, delays are cut down. Crucially for brokers, it also means fewer phone calls from stressed clients wondering what’s holding up their case - they can see clearly on DigitalMove what needs to happen next for the deal to move forward. One of its additional features is aimed at improving the security of a transaction, and reducing the opening for property fraudsters. Through DigitalMove homemovers and their conveyancers are provided with a secure way to communicate. Email can be removed from the

equation entirely, meaning there is no opportunity for scammers to intercept those communications. By utilising DigitalMove, buyers can ensure that dialogue between those stakeholders is entirely secure. REDUCING STRESS WHILE IMPROVING SECURITY

We believe that innovations like DigitalMove can make an enormous difference to the housing industry. Brokers don’t need to tell them that many people find buying or selling a property one of the most stressful experiences of their lives, in no small part due to the fact that most of the time they have no idea what’s happening. That’s what is at the root of those calls to brokers, estate agents and conveyancers for updates - the most important people in any housing deal feel excluded from understanding how it is progressing. The brokers I’ve spoken to about DigitalMove have been effusive about how it has made a tangible difference to the experience of their clients, who have found the process so much less stressful precisely because they have been included in it. It has also provided real benefits to brokers - the cases complete quicker, meaning they get paid faster, while they also spend less time answering questions from stressed out buyers over the phone or by email. Crucially, they can also relax, safe in the knowledge that everything is being handled entirely securely. WORKING WITH PARTNERS WHO TAKE SECURITY SERIOUSLY

The reality is that a housing transaction is one of the biggest - and most stressful - deals anyone will ever face, and that can easily lead to costly mistakes being made. As a result, it’s a good idea for brokers to guide their clients towards working with legal experts who not only take security seriously, but actively provide channels of communication to all parties involved which reduce the chances of a scam taking place. M I

JANUARY 2022 MORTGAGE INTRODUCER

THE OUTLAW

THE MONTH THAT WAS

THE

THE THE

AND THE

Chris Pearson: Omnipotent

Every month, The Outlaw draws some tongue-in-cheek parallels between society at large and a mortgage market in flux

o... Whether it’s gonna be Veganuary or even Gin-anuary for you, 2022 has finally arrived. A year when my hunch is that the pandemic will truly abate, if not ever fully leave us.

And virtue of my annual A to Z styled compilation I have given nods to the worlds of medicine, politics, celebrity and sport as well as our own. It’s also the Queen’s Platinum Year, so I’ve dished out some New Year Honours of our own, and also made some bold observations and predictions at the bottom on three subjects which might animate us... feel free to fill my post bag by return! 😛 is for Agony. Which describes brokers’ continued frustrations with Lenders over the quality of their “fees-free’ in-house conveyancing. It’s simply

A 40

MORTGAGE INTRODUCER JANUARY 2022

shocking in so many cases. It’s also for Accountability, and the chronic lack of it amongst EPL referees and I’m afraid also at the NHS. Most medics and nurses are trojans, but amid the perennial executive derelictions WHY is nobody ever fired??? We the taxpayers are being lobotomised. remains for Brexit (see what I did there!). Some remoaning malcontents have now moved on to swell the ranks of Insulate Britain or the anti-vax brigade. Meanwhile (and contrary to the doommonger predictions of 2016) the UK last year saw near record levels of investment, a staggering 122 companies chose to list on the London stock market, and only a meagre 8000 workers re-located to the EU. Hardly a meltdown, eh? Border controls are another matter however (see P below).

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is for Cleary. MT Finance were a swashbuckling 2020 debutante, thanks in no small way to Rory Cleary. The ole man has good genes! C is also for Coventry, a competent and cogent lender led by a very capable Kevin Purvey. And for Cummings too. For all his peccadillos, his departure from No 10 will come to mark the genesis of Johnson’s ultimate defenestration.

D E F

is for Duffy (proceed to V below).

is for Edgy and Exemplary.... adjectives to accolade three less mainstream success stories from last year. Congrats to Shawbrook, Interbay and The Royal Bank of Canada for such exceptional support. is for Foundation Home Loans who were a real riser last year and whom we have further high hopes for in 2022. It’s also for Farage. Lazy Boris will be bricking it now over the latest opinion polls in the 80 Red Wall seats where it’s clear that a porous UK border policy is testing constituents’ patience. If UKIP has a re-boot, the Tories will be in serious trouble. is for Greed. And specifically, our housebuilders where the “race for space” resulted in the eight top firms posting combined profits in excess of £7bn. And yet millions of new homes go unbuilt as these egregious charlatans sit on land banks laying idle. is for Honours. Our industry should have them too, so we’ve awarded some (see below). It’s also for Hypocrisy. Witness the one- hit -wonder cast of Harry Potter turning up for their anniversary... yet not one of them empathised with the books’ author who made them multimillionaires and who’s now trapped in her own home receiving death threats. (see V below) is for Insouciance and Incautious bravado. That which our indolent PM defaults to under any scrutiny. But I is also for Inflation, and this is what will soon rid of us of the buffoon.

G H

For many it will soon be “Eat or Heat” and once Boris gets a rightful kicking in the May council elections (if not before, hopefully!), then the vote of no Confidence will inexorably follow. is for Jurisdiction and Judicious. Most provincial Societies do a stellar job. But I wish that some of them would lend beyond their own footprints. J is also for Jam... At large, the Building Societies have excelled for brokers in recent times. We salute them. But my, have their leaders coined it in. Did you know that the combined remunerations of the top six CEO ‘s last year exceeded £5m?... Now go to P for procuration fees! is for Karma. Hopefully coming Prince Andrew’s way soon. Doubtless this moron’s claims that he doesn’t sweat are actually put to the test... every time the doorbell goes. Karma may also be coming for Newcastle United’s obsequious Amanda Stavely. She’s backed by an arrogant nation with an appalling human rights record, so nobody will shed a tear if 2022 sees excursions → for the Toon to Rotherham and Wigan.

Adrian Moloney: OSB’s rising star

THE OUTLAW

THE MONTH THAT WAS

is for Landbay where Paul Brett and Ian May did great things in 2021. It is also nauseatingly for Levelling Up. A now grossly over-used slogan and doomed to fail for two reasons. For one, its capable implementer Michael Gove will at some be moved on to sort some other sh*t show out. And second, it simply can’t succeed in this electoral term given everything in the I section above. There simply isn’t time before the next election to get spades in the ground. is for Moloney, OSB ‘s rising star. Forever magnanimous and measured. It’s also for Maxwell. Following the Ghislaine verdict, attorney Damien Williams said it proves that nobody is above the law. Except that is, wives of US diplomates who kill British motorcyclists then scurry home to avoid facing justice. Let’s get this stalled trade deal with the Yanks off the ground… you give us the cowardly Anne Sacoolas and we’ll gladly give you the perfidious and contemptible Duke of York? is for Newcastle. The football team is doomed. But thankfully the Toon’s Building Society is made of sterner stuff and if a 2021 league table existed for product innovation and helpful underwriting then it would be Champions League material. N is also for Noise. Yet more of which we’ll doubtless hear from Trussle and Habito in 2022. Clickbait galore, as witnessed in the recent “Seven Times Income” soundbite. Totally disingenuous given how many loans the BOE rules on LTI actually permit at that level. A handful I reckon. is for Obesity. Now a world class metric for the UK, led by our fat-again PM. The NHS spent a gargantuan £10bn just treating Diabetes last year. O is also for Obscene and outrageous. Words to describe the supposedly skint European Super League plotters and especially the morally bankrupt Real Madrid... who suddenly now appear to have the money to spend €200m on both Haaland and Mbappe. is for Pritti. Patel really is out of her depth and she is a totem for possibly the most dysfunctional and subjugated cabinet in government history. The polar opposite of these buffoons is HSBC’s prolific Chris Pearson. HSBC were omnipotent in 2021 and Pearson was polished,

Rory Cleary: Good genes!

M N O

P 42

MORTGAGE INTRODUCER JANUARY 2022

professional, personable and perceptive. And of course, it’s for procurations rumoured last year by some to be due a revision. I agree that they surely do... UPWARDS, given all that brokers now do on case packaging that they didn’t do 10 years ago. Consider also just how much lenders will save from now on in reduced premises costs and their staff continuing to work from home? is for Qatar. Who recently awarded the clueless Day-vid Beckham £10m quid to “sport wash” their tawdry World Cup. It’s also of course for Queen Madge who in her platinum year gets a balanced critique from The Outlaw below... is for risible and ramshackle. Step forward Messrs Raab, Root, Ronaldo and Rangnick. The first is a rancorous robot, the second can’t captain a cricket team for toffee, the third is a narcissist non-presser and the fourth is a total dud (congratulations to the gobby Jurgen Klopp btw whose lionising of Rangnick helped lumber Surreychester with this one trick pony fake).

Q R

www.mortgageintroducer.com

is for selfishness and self entitlement. How girding and sweet it was to recently see Arteta, Tuchel and Scott Morrison (the aussie PM) telling Messrs Aubameyang, Lukaku and Djokovich to each “go do one”. Social media has a lot to answer for in terms of turning modern day celebrities into versions of Icaris. S is also for Sinclair. Arise Sir Bob. What a job he does for intermediaries. Equally, S is for science and scientists. These boffins became the rock stars of 2021 but their 15 minutes’ worth is NOW long up. They occupy gold plated jobs and few ever lose them, yet they have no compunction in trashing our wider economy and jobs market. is for Typical. The typical UK house is now worth £254,000, up a stonking 24% via the pandemic and Rishi Sunak’s thankful interventions. T is also for Trump. Don’t be surprised if he ends 2022 as the bookies’ favourite to regain the White House. The man is pathetic and a self-parody. But his actual policies trumped anything that Sleepy Joe has since achieved. is for Ubiquitous, a word referencing that good and bad brokers (and supervisors!) are found everywhere, both in networks and DA firms. It’s time for the infantile “we’re better than you” narrative to stop. is for Virgin. Since the £1.7bn merger in 2018 the share price has halved! Yet the CEO (David Duffy) has seen his pay double to £2.7m a year. You’re paid too much, Duff. The mortgage proposition remains decent in areas such as retained earnings calculations, but too many talented folk have now moved on? V is sadly also for virtue signalling, and the entire culture cancelling virus that now afflicts us. It’s surely time for some common sense to speak again and for the hard working and tolerant MAJORITY in this impressively diverse nation of ours to stand up and scream “ENOUGH”. can only be for Wokism, alive and well in our society at large. Over Xmas the TV snowflakepolice were out in force, for seemingly Love Actually is a sexist and homophobic film and Mrs Doubtfire is offensive to the LGBTQ1 community! Where will it all end?

U V

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X Y

is for Xi. The despicable Chinese leader. According to the Greek sequencing the next variant was meant to be the Xi one. Alas, 2 years after the Wuhan leakage, no world leaders (except Trump) have had the courage to call China to task. is for da Youff, innit..! On our search engines, First Time Buyer enquiries continue to rise. It’s also for Yorkshire. For sure, a questionably run cricket club, but the intermediary lender Accord is now the county’s finest stroke player. Well done to Jeremy Duncombe and his team. is for Zealous. The FCA ‘s new gaffer (Nikhil Rathi) is seemingly ruffling feathers via the long overdue streamlining of the regulator’s multi-layered and bloated salary bands. Get in there my son, and disturb things. Our respect will then follow.

And so to some Mortgage World Honours Joining Sir Bob in ermine and silk are Martin and Raymond.... ie, Lord Reynolds of Leamington, and Lord Boulger of Sussex. Two titans of our sector. In the more famed world of Honours however we continue to see some totally incongruous awards. Lest we forget, the Chilcot Enquiry found that the war in Iraq was prosecuted with “unwarranted certainty”. 20,000 civilian lives were lost and 600 of our soldiers perished. Yet the despicable Tony Blair is now knighted. Alongside another man who divides opinion, F1’s Lewis “Mirror - Virtue signal - Indicate” Hamilton. Which brings us back to Queen Madje. With three dysfunctional sons, her parenting skills do I’m afraid fail scrutiny. But as a Monarch, she really does have no equal, especially given her sons’ collective sh*t shows which she has had to absorb. We all get a four day Beano in June and amid a potentially humongous market this year we will possibly need a break by then...! Send her Victorious, Have a good one, all.

JANUARY 2022 MORTGAGE INTRODUCER

FEATURE

STATE COVEROF THE NATION

STATE of the NATION MI

MORTGAGE INTRODUCER

JANUARY 2020

www.mortgageintroducer.com

FEATURE

STATE OF THE NATION COVER

John Phillips national operations director, Just Mortgages

Just Mortgages team members from across both the business and the country discuss their 2021 stories, and their hopes for the year ahead www.mortgageintroducer.com

want to start by saying how immensely proud I am of everyone at Just Mortgages, for adapting in what has been the most unusual year I have ever known. I think that it’s fair to say that 2021 has not been the year that many people expected. The amount of lending this year has been nothing short of bizarre. There was almost no one who, this time last year, would have forecast that the mortgage industry would have written, what is expected to be £316bn of mortgage business by the end of 2021. That will be a 29% rise on the £244bn in 2020, also outstripping 2019’s £268bn. This boom in mortgage lending has been driven by the three stamp duty cliff edges and partly by the fact that it wasn’t possible for many people to go on holiday or to spend the money that they would normally do. This has led to many people spending it on housing – either investing in a new home or extending or renovating their existing property. At Just Mortgages our lending has outstripped the market and increased by one third in the past year. I think this proves that the Just Mortgage strategy is working. We have focused on a more holistic approach to financial advice. We expanded beyond only mortgages and protection this year by also establishing our wealth advisory service, Just Wealth. We are also increasing our focus on equity release. It remains an uncertain market however. With the surges in energy prices, the Omicron variant and rises in the Bank of England base rate I expect the house purchase market to ease back a little in the first quarter of 2022. Purchases will also be hampered by the lack of housing supply. This year we have seen many people who have lost up to four or five houses to higher bids from other people. For mortgage brokers, instead of purchase business however, this will be replaced by remortgages. The remortgage market is already booming and this will continue - especially as a large tranche of five-year fixed rates reach maturity over the next few months. Come Easter, when the economic situation may well have settled down, and I expect the number of house purchases to start increasing again. The big question is what will happen with house prices? The lack of supply is continuing to drive house price escalation, but as interest rates and fuel prices rise, there may well become a point where people are just not prepared to pay the prices they need to, especially at the lower end of the market. This is likely to be good news for landlords, who, while having to absorb higher house purchase costs, are able to charge higher and higher rents from people who just cannot afford to get onto the housing ladder. With such a changing and uncertain market. The key for brokers will be to take a more rounded approach, servicing existing clients as well as new ones and looking beyond mortgages and protection to all of a client’s financial needs. M I JANUARY 2022 MORTGAGE INTRODUCER

FEATURE

STATE OF THE NATION

Ben Woodbridge-Stocks Title: Wealth adviser Division: Just Wealth Location: Derby

Richard Rejniak Title: Director Division: Just Mortgage self-employed Location: Hornchurch, Essex Although 2021 was our best year on record and business went up by about 25%, we could probably have done double that if there had been more stock available. Lack of housing stock is a national issue. We’re seeing things like 30 people after one investment property in Manchester. We’ve got hundreds of Agreements in Principle ready to go but there are hardly any properties. The stamp duty holiday and the various government grants to support self-employed people have definitely helped to push the market. I mainly handle complex buy-to-let mortgages, and also commercial propositions and bridging loans. I’ve been in the business for 17 years, and have been heading Merchant Private Finance since it was started in 2011 as a subsidiary of Just Mortgages. We now have a very strong team of six, and have established such a reputation that all our business is word of mouth. We’re based in Essex but cover the whole country. At present we’re seeing a lot of buy-to-let investors focusing on Manchester and Leeds. A lot of the customers we deal with are from abroad, mainly Polish, Russian, Albanian, Italian and Moldovian. We also have a lot of Construction Industry Scheme (CIS) workers. Our plan for 2022 is to go back to basics, and pick up the phones and make the calls, and be as responsive as possible to get the deals done. We’re hoping that in January more stock will come in.

MORTGAGE INTRODUCER

JANUARY 2022

I made the decision to go self-employed in 2019, and joined Just Wealth at the start of 2021 so my first year at the firm has been an eventful one! I actually started in the wealth management industry 13 years ago in 2008 as the credit crunch was in full flow, this experience of disruption stood me in good stead for launching my own self-employed business in 2021. Despite the disruption, the past twelve months have been positive. Thanks to the support of Just Wealth, and Just Mortgages, I’ve forged strong relationships with brokers who are passing on clients looking for holistic financial advice. Without the support of Just Wealth and the brilliant Just Mortgages brokers, it would have taken years to build up the client-base that I’ve achieved, and by asking clients for referrals, my business is continually growing. The pandemic has presented challenges, but has also been an enormous opportunity. Those who have been lucky enough that their earnings were not majorly disrupted could save significant sums with the hospitality and tourism industries restricted. More people are interested in investing than ever before, but this does come with some drawbacks as some are looking to social media, which can be misleading. That’s why providing professional, sensible advice has never been more crucial.

Katy Evans Title: Mortgage and protection adviser Division: Employed Division Location: Just Mortgages, Milton Keynes I’ve been writing business for clients since 2015, and while 2021 definitely brought its challenges because we had to work remotely for much of the time, it has actually been my best year yet. Most of my work involved first-time buyers and remortgages. I think it helped that I have been in the industry for so long and have a good back book of clients, and our head office call our back book for us. I also had a lot of clients who were moving out of London because they were able to work from home. Having said that, I also had a number of clients who were already living in Milton Keynes, such as first-time buyers still living with their families. I do a lot of posts on Facebook, not just about work but also about family and lifestyle so that I’m engaging with people. That has been helpful for letting people know what I do, and means that people message me when they are looking for a mortgage. It looks as if 2022 could be another busy year. In the first half the focus is likely to be on remortgages, partly because of lack of stock. However, first-time buyers are likely to be active as criteria for mortgages have returned to what they were in 2019, with a lot of lenders offering higher loan to value products.

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FEATURE

STATE OF THE NATION

Ahmed Chughtai Title: Mortgage and protection adviser Division: Employed Division Location: Ilford

Gethin Davies Title: Mortgage and protection adviser Division: Employed Division Location: Just Mortgages, Wales

The pandemic, surprisingly, brought with it a busy year. The market was initially fueled with remortgage business, followed by first-time buyer activity due to the stamp holiday grace period. I saw a pretty even split between remortgages, buy-tolet mortgages, and mortgages for property purchases. The remortgages were because I’ve been working in mortgages since 2009 and a lot of people had fixed rate deals coming to an end. The first-time buyers reflect where the market is at the moment coupled with more home-movers. I’ve presently got more first-time buyers asking for agreements in principles looking to still take advantage of low interest rates. My role has definitely enhanced whilst working remotely. A more personal touch came into interviews and conversations. It was important for me to understand how Zoom worked and to be able to show clients how to set up accounts. I’ve also been helping clients who weren’t so tech-savvy by showing them how to do things like convert documents into PDFs or to extract online bank statements. There is a real sense of trust and unity like never before. One thing I’ve focused on in 2021 was reviews and recommendations. I took it on myself to drive Google reviews, and when I ask new customers who have made contact how they got my details they almost always say I came at the top on a search that they did on Google or via word of mouth.

I’ve only been active as an adviser for about six months. I was previously working in a management role for a national hospitality group, which involved over 150 sites and travelling over 1,000 miles a week. I decided to change career when I was on furlough, and trained online with the Just Mortgages academy. I’ve been told December is often quiet, but I’ve had so many clients who have had offers accepted and we’re in the process of processing those applications. I don’t want to jinx things but I’m on track to do my busiest ever month in December, which is quite something considering how busy it was throughout 2021. I’m aligned with an estate agency, and predominantly I’m looking after first-time buyers and people moving from their existing home – usually either upsizing because the family is growing, or downsizing because the family has left home. It’s very exciting for me, because it’s never dull in this industry. No two clients or properties or mortgages are ever the same, and rates, criteria and affordability are continually changing. All the income that I generated in 2021 came from the second half of the year, so I’m really interested to see what I can do when I can hit the ground running at the start of 2022 with a good pipeline. I’ve got plenty of clients who will be moving house early in the year, and I’m already seeing appointments coming through that will trickle into 2022.

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Tony Richards Title: Divisional sales director Division: Employed Location: Just Mortgages, West It was a very changeable year for the mortgage sector in 2021 as the criteria of lenders was constantly altering. This meant it took the consultants in my team longer than ever before to place a client with a mortgage lender. Almost all cases – even straightforward ones – needed to be investigated with multiple lenders, which inevitably had a huge impact upon time management. At the same time, the volume of mortgage business we were dealing with increased significantly. We also saw more clients taking out protection than ever before, which I think reflected how the pandemic has made people very aware that anything can come out of the blue and affect your health and income. Overall, the West region had a very good year and our written value went up considerably. Experienced consultants saw an increase of 30% to 40% on their previous year’s written income. I’ve been with Just Mortgages for over 18 years, and I’ve been working in mortgages for nearly 25 years. My first full year as a Divisional Sales Director was in 2021, and because of pandemic restrictions much of the engagement I had with both clients and my team had to be on Zoom. When I held a strategy day for the West region team in July, it was the first time I’d actually met some of my staff whom I’d recruited remotely in 2020. It was also the first time many in the team had met face-to-face.

JANUARY 2022 MORTGAGE INTRODUCER

FEATURE

STATE OF THE NATION

Martin Kilroy Title: Executive mortgage and protection adviser Division: Employed Location: London

Jessica Brome Title: Operations manager Division: Marketing Location: Colchester We have adapted incredibly well as a business in response to the pandemic. We have developed a strong online presence, and naturally this positioned us at an advantage when work dynamics changed. Our onboarding, support and training has not been compromised by virtual processes, ensuring that our client experience remains at the forefront of our business. One key area of focus which has been highlighted this year with our clients is financial security, especially in uncertain times. We have seen that clients place a higher value on how they could be impacted financially both now and in the future. This has led to an increase in referrals to Just Wealth, our wealth services division, ensuring that we provide an all-encompassing financial solution for both new and existing clients. Our continued dedication to our digital strategy and brand awareness has resulted in a substantial increase in our organic lead sources. Our website enquiries have more than doubled in 2021 compared to 2020. I expect this to continue to be an area of growth in 2022 due to our strong online presence, and the additional support we offer our advisors. With bespoke digital marketing packages, a dedicated support team and enhanced training, our advisers will continue to offer tailored advice to clients across multiple communication platforms.

MORTGAGE INTRODUCER JANUARY 2022

Having been in the market for over 20 years, I have experience in resilience. 2020 and 2021 were no stranger to this, and while the pandemic was a worry, particularly with the immediate shift in remote working, like many others in the market, I adapted my business model to succeed in today’s landscape. The beauty of this baptism of fire meant that many brokers had to upskill and become more tech savvy. Although there have been challenges, the first six months of 2021 were my most successful since 2013. The second half of this year told a slightly different story. Those who did not catch the stamp duty deadline held off on purchases in case house prices came down due to many assuming there may be some bargains to be had. However, house prices kept rising even though we are now witnessing more normal levels of demand. I am now seeing more people return to London, especially the younger market who want to experience the buzz and excitement the capital offers. It is incredibly difficult to predict anything for 2022 as the landscape is changing all the time, but it is fair to say that the successful vaccine rollout has given people a sense of security, and I am optimistic that in 2022 we will see business as the old usual as confidence continues to grow in the housing market.

Preeti Ferrier Title: Regional development director Division: Self-employed Division Location: West Midlands In the peak of the pandemic, the UK government offered substantial help to people. The support schemes it proposed really did help the market to survive during what could have been a volatile time. This year with the stamp duty incentive, we noticed that larger properties flew off the shelves. This opened the door for first-time buyers and provided those who weren’t even considering a move the opportunity to upgrade their properties. This was particularly significant to people who experienced a shift in working environments during the pandemic as it meant many homebuyers were looking for bigger properties with additional space to work from home. More recently, there have been some signs of cooling in housing market activity. For example, the number of housing transactions were down almost 30% year-on-year in October. This was almost inevitable given the expiry of the stamp duty holiday at the end of September, which up until then had given buyers a strong financial incentive to bring forward their purchase. As for the market 2022, it is unclear what impact the new Omicron variant will have on a buoyant housing market. The good news is that fewer people are being made redundant than expected after the end of the furlough scheme, which should provide a further boost to the market. We are therefore confident that, even with some uncertainties around, market conditions should remain good for all.

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FEATURE

STATE OF THE NATION

Adam Davis Title: Senior new build mortgage specialist Division: New build Location: Midlands

Marcus Docker Title: Founder & managing director Providence Global Finance Division: Self-employed Location: London

Most of the work I do is with developers on new build sites although I am now dealing with more shared ownership and on track for my best and busiest year ever. Around two-thirds of new build house purchases I deal with are for first-time buyers but I also work with housing associations. We get 10 to 20 shared ownership referrals a day although not everyone meets the criteria. I didn’t have as much Help to Buy (HTB) business last year but that is because of the regional house price caps that were introduced in April. I am based in the Midlands and the cap is £255,600 but there are some expensive areas so many new builds don’t qualify for HTB. Last year’s highlight for me was helping a HTB borrower who had three house purchases fall through due to a down valuation, gazumping and the developer keeping the property. The fourth house was beset with problems and delays due to the conveyancer. With the help of my admin assistant Rachel Day, we pulled out all the stops, phoning the HTB agent and getting a 10-day process completed in three hours. The mortgage offer was due to expire at 6pm and we received confirmation of completion at 5.45pm. The client phoned me in tears thanking me but being able to help in tricky situations is what I love about my job.

This year has been very different to every single one of my previous 12 years in the industry and it has taught me that, in the face of adversity, there is one hell of an opportunity! This was the first year of business for Providence Global Finance. We set up under Just Mortgage self-employed arm and there have been lots of small and humble wins throughout 2021. The ‘WFH’ message sparked a change in people’s living arrangements in preparation for a future of flexible working. This coupled with higher LTV’s meant there was access for buyers with smaller deposits. Greater availability at lower rates made it nearly impossible not to save money for existing borrowers. This seismic shift in demand meant that lenders have been pushed to meet pre-pandemic servicing times. Nonetheless, we are immensely grateful for the efforts made by our lending partners who have been working solidly and the trust shown in us by all of our customers. The early successes of Providence Global Finance are down to the fantastic team we have and the partnerships which surround this business. Despite the speculation on the negative impacts on property demand reported throughout 2020, there really couldn’t have been a better year than 2021 to begin this journey.

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Scott Sander Title: Divisional sales director Division: New build division Location: Colchester The new build lending market in 2021 has been both exciting and challenging. The Help to Buy (HTB) scheme was closed to home movers in April and is now only open to firsttime buyers. This has taken away 19% of the market and we have seen HTB cases dwindle. But in its place has been a surge in shared ownership enquiries and we are now working with more housing associations. Previously around 85% of our business was HTB, now it is roughly 50/50 with shared ownership, which is a sizeable shift in nine months. We have taken on staff to specifically deal with shared ownership and become experts in that area. We also started working on the new First Start Homes scheme and have placed our first few cases with Newcastle Building Society. We have been dealing with discounted property sale for six years but the First Start scheme gives a nice branding that will promote homeownership and a new opportunity. My highlight of the year has been the growth of our new build division year-on-year during two extremely challenging years coping with the pandemic. The stamp duty holiday fuelled the housing market but I think business would have been there anyway with COVID making people reassess their accommodation needs. I am optimistic for a strong 2022 with more growth in our new build division.

JANUARY 2022 MORTGAGE INTRODUCER

FEATURE

STATE COVEROF THE NATION

Marie Carpendale Title: Compliance manager Division: Compliance Location: Sheffield

Adrian Stoker Title: Executive Mortgage and Protection Adviser Division: Employed Location: Crewe, Cheshire I have been in this industry for 32 years. 2020 and 2021 were two of the busiest years I have ever experienced. On the whole, we have had to diversify and fight for the business more than ever before, but those who remain are coming out better for doing so during this exceptionally busy time. The key in this is diversification. I’m based in an estate agency in Crewe, Cheshire and typically receive appointments at the agency. When the national lockdowns happened, this stopped so I explored new areas for lead generation and the clear winners were Google and social media channels. In Q4 of 2021, I noticed a significant rise in the number of investment purchases with first-time buy-to-let clients entering the market and I predict this will continue in 2022. People are wanting to invest money in Crewe which is to be expected when you consider the area has excellent transport links and HS2 is being extended here. My colleagues call me ‘grandad’ because I have worked in the market for so long, and in 2021 I became an actual grandfather. My granddaughter is my inspiration with pushing through these busy periods in the market. I love my job and I take great pride in what I do, which is why I’m still doing it 32 years later. I sincerely take my hat off to all those in the industry who have risen to the challenge because it truly is a credit to us all.

MORTGAGE INTRODUCER JANUARY 2022

The past year has been a challenge, but a rewarding one. The self-employed and employed divisions have both grown so quickly, that our compliance team has had to expand to ensure we can continue providing brokers with the safety-net they need to deliver for clients. My role primarily focuses on resolving any issues that arise. While we always strive to prevent anything becoming an issue, we are all human and mistakes do happen. However, by working closely with both lenders and our Just Mortgages’ brokers, we can ensure any issues are resolved as quickly and efficiently as possible. While Just Mortgages has grown incredibly quickly over the past year, we still see our firm as a family. Our motto is to create a culture of positive compliance, and we can only do this by building relationships with brokers. On occasion, when mistakes are made, we do have to have difficult conversations with brokers, and these have been trickier in the past year. It is never as effective having those types of discussions over a video call and ideally, we would conduct these face-to-face. However, overall we have all coped brilliantly adjusting to our new ways of working and delivered exceptional outcomes in difficult circumstances.

Linsey Davies Title: Head of talent acquisition and business support Division: Recruitment and business support Location: Cardiff Following on from a difficult 2020, the past twelve months have been much better. While we still had the furlough scheme and various lockdowns through the year, these came as less of a shock and we were much better placed to adapt to the challenges. Overall, we’ve done a fantastic job recruiting people into Just Mortgages in 2021. Our academies and assessment days have been able to run face-to-face again which was really important for us. We feel you need to be able to meet in person to really know someone and that is crucial to ensure we bring in the right people. While some have decided to leave the industry, we’ve spread the net wide this year looking to bring in new talent. With the issues in some sectors, like hospitality, it has been a source of pride for us that we’ve been able to support so many into a new career that they can achieve as much as they want from. The key for us is finding people with the right attitude and skills. If they are personable, happy to put themselves out there and have a good work ethic, we can support them to develop the knowledge they need to be a broker.

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EBS

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We are experts in providing specialist mortgages for properties and projects that have a positive environmental or social impact. We consider a wide range of construction types or properties that need substantial work including self‑build, custom build, retrofit and shared ownership.

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ecology.co.uk/mortgages 01535 650 770

Building a greener society Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Community and commercial mortgages offered by Ecology Building Society are not regulated by the Financial Conduct Authority. Financial Services Register No. 162090.

For Mortgage Intermediaries use only. Details are correct at time of going to print.

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11/01/2022 17:19

PANEL

REMORTGAGE

TAPPING INTO REMORTGAGE POTENTIAL Jake Carter outlines the discussion at Mortgage Introducer’s recent round-table, which looked at how the remortgage market will develop in 2022, and how brokers can make the most of its potential

ata from CACI suggests there is approximately £120bn worth of business due to mature from existing products between January and June this year. As a result, it is expected that brokers will be looking to capitalise on the amount of remortgage activity that could become available in 2022. While there will be a rise in the number of customers looking to remortgage, in order to compete, brokers will need to beat the competition to the punch. A large part of the expected remortgage activity will come from the buy-to-let (BTL) market, as there was a rise in the number of BTL mortgages written at the end of 2016 and start of 2017. Between December 2016 and January 2017 there were between 3,008 and 4,167 BTL mortgages written. This figure then increased to 10,717 over the following year to January 2018, before dropping below the 10,000 mark since. In this month’s round-table discussion, Mortgage Introducer asks representatives from VAS Group, Barclays, Wilton Property Finance, Try Financial, finova Mortgage Services, John Charcol, Connect for Intermediaries, and Countrywide Surveying Services their views on the remortgage market.

TAPPING IN There are many ways for brokers to make the most of the remortgage potential on offer this year. Ray Boulger, senior mortgage technical at John Charcol, has seen mortgage approvals drop which has resulted in the number of purchases following suit. He says: “While this has been ongoing, approvals for remortgages have risen, which is not surprising considering that if people are not moving house, then they will be looking to remortgage.” Boulger adds that from a broker perspective, whether people are remortgaging or doing a product transfer, there is still business to be had. So, if purchase business declines, brokers will still have activity through the increased number of remortgages that are expected in 2022. Melanie Spencer, head of finova Mortgage Services, says that in order to make the most of the current environment, brokers must become more data-centric. She says: “In order for brokers to tap into the remortgage potential this year, it relies on them accessing data on past customers in order to get ahead of the curve and ask them to remortgage early.” When customers reach the final few months of a mortgage term, it is commonplace for the broker

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“The purchase side has been incredibly active since COVID, and therefore brokers have likely neglected to collect customers’ information on when their renewal will be” CRAIG CALDER who agreed their previous deal to contact them and ask whether they would like to pursue a remortgage. Spencer explains that brokers should be focusing on both the short-term and long-term use of data. “Data is key to their customer journeys throughout the lifetime of the customer,” she explains. “Brokers should become data centric and understand the long-term value and investment of data.” She believes there are areas brokers should focus on in this regard; for example, they should consider the data quality they hold and obtain from their clients, as well as understanding opportunities and marketing. Spencer also notes that brokers should prioritise retention marketing and maintaining a consistent channel of communication. She adds: “All of this can be complemented by the right tool set, which can improve efficiencies within a broker’s business, to allow them to focus on what brokers do best, which is speaking to the customer and giving advice.” There are generally three component parts to any adviser’s day, says Jane Benjamin, director of mortgages at Connect for Intermediaries; these are prospecting, advising and relationship management. She believes that in order to capitalise on what the remortgage market has to offer this year, brokers will need to give each point equal attention. In order to best approach this, Benjamin agrees with Spencer that brokers must start by reviewing their back books and marketing to their client database. The next step is to allocate the resources needed, such as a dedicated admin person to look for the opportunities in their database, if they do not have a system that will do it for them. Brokers that have a system which ﬂags renewal dates will be more efficient, and Benjamin believes that those without one should invest in a system for the future.

Finally, Benjamin says that information and knowledge sharing is powerful in an advice relationship, with proactive activity and regular contact in order to continually cement the relationship She adds: “The role of an adviser is not just with the customer or introducer. Information and collaboration with lenders on industry data is also really helpful to improve customer outcomes.” Fahim Antoniades, founder of Wilton Property Finance, says: “Technology is a force multiplier, it makes things more efficient.” However, he warns that technology must be clear and decisive in what it achieves for the user. Agreeing with Benjamin and Spencer, Antoniades points to the importance of client retention through the use of technology. “The key for brokers is keeping in contact with clients so that they think of you when they come to remortgage their homes,” he explains. Antoniades also believes that the remortgage opportunity this year is in brokers’ favour, as many of the mortgages which were arranged five years ago were done so by brokers, which increases the chance that clients will look to utilise their services again. MAINTAINING RELATIONSHIPS Another important aspect of a broker’s day-to-day life is maintaining relationships with other brokers and firms. Benjamin explains that referrals to other firms and individual brokers is an important part of gaining more customers. Antoniades concedes that many new recruits miss the significance of retention, and that this is perhaps something that is learned over time. “Part of what you learn as a broker is making use of every opportunity that arises and maintaining relationships with customers,” he adds. →

“In order for brokers to tap into the remortgage potential this year, it relies on them accessing data on past customers in order to get ahead of the curve and ask them to remortgage early” MELANIE SPENCER

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REMORTGAGE Benjamin explains that this does not all have to fall at a busy broker’s feet, and that sometimes, moving a client on can be a key tool in retaining them long-term. She explains: “Brokers should not be fearful of efficiency, they need to play their part in the process and pull on support for the rest. “They shouldn’t be worried about not doing everything themselves. Referring clients to a specialist is often the best scenario for everyone involved. “If it is not your skill-set, use your time and energy wisely and refer to an industry expert or partner in that area who will be working with you as an introducer to support your customer.” KEEPING ORGANISED Stephen Todd, chief commercial officer and cofounder of VAS Group, believes there is a massive opportunity for brokers to contact past customers with regard to remortgaging. Todd says: “This is the year people want to have a bit of fun, after all what has happened with COVID. “People are planning to go on holidays, do things with their kids, renovate their houses, and therefore there is a lot of opportunity here for brokers to capitalise and find an agreement that suits all involved.” However, this can be a complex thing to organise. Aaron Scott, broking manager at Try Financial, explains that when he first became a broker, in order to keep on top of when clients would expire from their current mortgages, he kept a Microsoft Excel spreadsheet and logged all the information. He says: “You can keep track of the dates your customers’ mortgages expire, and then you will have a good pipeline of remortgage cases to follow up on. “However, I think it is often the case that brokers want the easy new business, rather then looking to client retention and remortgages.”

“The key to efficiency for brokers is to be able to monitor when existing clients are coming off an existing deal, so the better technology systems in place, the better the efficiency” RAY BOULGER

“If it is not your skill-set, use your time and energy wisely and refer to an industry expert or partner in that area, who will be working with you to support your customer” JANE BENJAMIN While this may seem like a simple solution, Scott goes explains that he is surprised how many brokers neglect client retention, as product transfers are among the easiest deals to complete in terms of both time and difficulty. Meanwhile, Craig Calder, director of mortgage products at Barclays, says that while having information on a client’s mortgage history is helpful, it depends whether the broker has time to act on it as to whether it is truly beneficial to collect the data. Indeed, if collecting data proves to be time consuming without the benefit of streamlining processes elsewhere, this is counterproductive. Brokers therefore need to carefully consider their systems. Calder says: “The purchase side of the market has been incredibly active since COVID, and therefore brokers have likely neglected to spend the time to source and collect customers’ information on when their renewal will be. “As well as this, contacting existing clients to ask whether they would like to renew their mortgage is also likely to have been missed, due to the demand for purchases.” Calder explains that prioritisation is essential and brokers must understand what can be overlooked and what cannot. Matthew Cumber, managing director at Countrywide Surveying Services, says he has also seen the market driven by acquisitions rather than remortgages recently. Cumber expands on Calder’s point that organisation is key for brokers to maintain their back books and expand their business through customer retention. However, he does note that capacity is often a stumbling point. Cumber says: “There is only so much one broker or a single brokerage can do, so it is important to prioritise and refer well.”

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REMORTGAGE OPERATING EFFICIENTLY Vast amounts of data, a considerable workload, and the naturally small capacity of most brokerages, means that efficiency and streamlining is key. Spencer suggests that due to this dynamic, advisers are often good at providing advice, but due to the workload, neglect remortgages. She says: “Technology and processes are key here, as they can assist brokers with retention while they focus on purchase activity.” Benjamin explains that this is not just about keeping track of clients. Knowing a lender’s contact strategy timeline for product transfers is important in order for advisers to be knowledgeable and open to opportunities in the market, as well as fully understanding each customer’s requirements and aspirations, both now and in the future. She believes that this will not only create an efficient business, but also identify new opportunities for that customer and their family, with a clear review timescale. “For example, we know that with rising house prices and a lack of housing stock on the market, the leap for first-time buyers is becoming even more challenging,” Benjamin explains. “Therefore, a refinance conversation that is wider than just the immediate product transfer will potentially give thought to family members for the longer-term. They will remember the adviser that laid the seed.” Spencer goes on to say that brokers need to focus on the quality of their customer relationship management tool (CRM), the quality of the reporting within this tool, understanding the opportunities to use marketing to improve the CRM, and retention and maintaining communication. “There are so many different categories brokers can look at with the intention to improve efficiently,” she adds.

“There is only so much one broker or a single brokerage can do, so it is important to prioritise and refer well” MATTHEW CUMBER

“The key for brokers is keeping in contact with clients so that they think of you when they come to remortgage their homes” FAHIM ANTONIADES

Boulger believes that balancing operational efficiency is more of a challenge for the smaller brokerages than the larger ones. He says: “It is easier for larger brokerages as they have better access to technological processes, which will assist them in providing reminders as to when a customer’s mortgage is set to expire. “The key to efficiency for brokers is to be able to monitor when existing clients are coming off an existing deal, so the better technology systems in place, the better the efficiency.” MAINTAINING MOMENTUM This year will be typiified by an extremely busy remortgage market, which means that conveyancers and other stakeholders maintaining momentum is essential, says Scott. He explains that it is important that everyone involved in the process is able to keep the pipeline moving in order for customers to complete their deals. Benjamin says: “Whether it be a remortgage or a purchase, stakeholders across every part of the process are important. A delay can make or break a completion and crash a customer’s experience. “If you are looking at a remortgage versus a rate switch three months before the current deal comes to an end, the remortgage may win on rate. “But if the legal process takes too long and the client ends up on the variable rate, this could change what would have been the most cost-effective recommendation.” She adds that there is an industry focus group working in conjunction with the Conveyancers Association (CA), and looking at technology and the property transaction process. The association is also looking at how lenders are working with their valuation partners and →

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“People are planning to go on holidays, do things with their kids, renovate their houses, and therefore there is a lot of opportunity here for brokers to capitalise” STEPHEN TODD risk teams with regard to technology and industry intelligence on properties. Antoniades stresses the importance of conveyancers, valuers, underwriters and brokers working cohesively in a quadripartite arrangement. He says: “If one person within the link preforms badly it affects everyone else, which is why it is important for all involved to maintain momentum and keep pushing for better customer outcomes.” Looking ahead, Antoniades says he expects conveyancing to be done differently in the next five to 10 years, with improvements primarily focusing on the time taken. Taking a slightly different perspective, Calder says he believes that in order to continue momentum, it is important to manage the expectations of the customer, and ensure they are entering the process fully informed. “In order to keep the process running smoothly and everyone remaining positive, it is important to set realistic expectations from the beginning,” he adds. WIDER MARKET PREDICTIONS Following the Bank of England upping the base rate recently for the first time since 2018, it is largely expected there will be a further increase during 2022. Calder suggests that, while an increase is expected, a dramatic rise is unlikely, while Boulger is more openended about how much it will rise and what the eventual peak will be. Boulger says he believes the Bank of England is still underestimating where inﬂation is going to go. He also points to how big the energy price increases in April will be, which he says feeds through to other things, including household bills. “I would not be surprised if inﬂation peaks at 6% or 7% this year, I could even see it going as far as 8%,” he continues.

“However, in the second half of the year inflation will begin to fall.” Boulger goes on to say that the Bank of England has a difficult job ahead of it, as for the most part, inflation has risen due to factors outside of its control. As a result, Boulger explains that the Bank of England will have a tough job moderating inflation over the course of the year. He adds: “I think something interesting to consider is what the new normal for interest rates will be. It has been around 0.5% since the Global Financial Crisis, but where is it going to end up next year? My guess is somewhere in the region of 1.5%. However, with the government in large amounts of debt due to coronavirus, it would benefit them to try and keep rates low.” However, Calder believes that the base rate will stay under 1% for at least this year, adding: “You cannot be in the position to make everybody’s home unaffordable, if everything else is going to go up in price. I think the base rate will very slowly creep up.” Looking to overall market predictions for 2022, Scott says: “I feel that brokers more than ever will need to have a diverse skill set. “With the pandemic and furlough, I feel a lot more people will be falling into the ‘adverse credit’ category. This is where they cannot simply go to their high street bank for a mortgage, or it may be that the specialist lender is only accessible via a broker.” Scott goes on to say that those brokers who already have the knowledge to place complex cases are best prepared for the coming years. Meanwhile, Cumber takes a different perspective, and says that he expects 2022 to be a quieter year, more akin to 2019. “I think the market will remain strong despite increases to interest rates and inflation pressure,” concludes Cumber. M I

“I feel that brokers more than ever will need to have a diverse skill set. With the pandemic and furlough, more people will be falling into the ‘adverse credit’ category” AARON SCOTT

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

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INTERVIEW

COVER

Ahead of the game Jessica Bird speaks with John Ahmed, director of Movin Legal, about the pressures facing the conveyancing market and his thoughts for the future

ince conveyancing services group Movin Legal launched about six years ago, the business has seen steady growth, boosting its back office, getting more business development managers (BDMs) on the road, and staying ahead of the IT curve. John Ahmed, CEO of Movin Legal, says that the process of improvement and adaptation is constant and ongoing, particularly at the start of a year full of uncertainty. TAKING UP TECH Looking back over his career in both financial and legal services, Ahmed notes that one of the key lessons, both from a business and market perspective, is the driving force of technology. He explains: “That first year was all about developing our systems, along with the intermediary service structure, and then we launched out into the marketplace. “You have to stay ahead with technology, and we are constantly reviewing ours, making it as easy as possible for the intermediary to place and service their business.” The past decade alone has seen vast changes and improvements to the use of technology in consumers’ everyday lives, from communication methods to retail. Financial services businesses have varied wildly, from holding fast to older practices, to being fast adopters of new ideas such as Open Banking and artificial intelligence (AI). Conveyancing, however, has at times struggled to keep the pace, Ahmed says: “The market has not really changed fundamentally over that period although there

MORTGAGE INTRODUCER JANUARY 2022

have been some positive changes made to the systems and processes within the industry, with technology driving that. “This has made the property market faster, and that continues, to a degree. But in conveyancing we lagged a little bit with the online processes.” He adds: “Within financial services and legal services, change is not always welcome, because people like to do what they’ve always done – things they understand. “When you bring about change, it can be popular because it saves time and money, but some things are not so popular, because people can’t see where it’s going to save time and money, and they already have a business model pitched around their current process, so they don’t want that broken. “There’s always resistance within any industry, and legal services are no exception.” Nevertheless, Movin Legal has always worked to bridge the gap, providing a tech-enabled route to conveyancing. Despite the market’s reluctance, one of the lessons learned across almost every industry since the onset of the pandemic has been the importance of technology as an enabler. Few businesses, even within the legal sector, could afford to hold fast to outdated processes, and in the process, many have learned the benefits of advancements they might previously have missed. When it comes to addressing future trends and challenges, Ahmed says the straight answer is to focus on further technology, but adds that it is more complex than this, as there is an equal need to understand the importance of the human element. “There are certain areas where you’re always going to www.mortgageintroducer.com

INTERVIEW

COVER need people, for the foreseeable future anyway,” he says. “We are gearing up and recruiting people right now. There is technology for intermediaries to make good use of, but of course the whole financial services and legal industry is a people business, and without people, there’s no business. “Technology is great, if used correctly. If it isn’t used correctly, it ends up with more frustration. Having good people makes the job go smoother – technology can’t talk to people and reassure them in the style of a person.” LESSONS FROM COVID Ahmed notes various other lessons from the past couple of years, not least of which was the issue of bandwidth in the conveyancing market. Each facet of the property finance market experienced its own strains as a result of, for example, home working and the inability to get out on site. For conveyancing, it was the success of the government’s stamp duty holiday that threw a small spanner in the works. While there was a dip following the end of the stamp duty initiative, demand is still being stimulated by various other factors – the ongoing housing shortage, for example, or changing consumer needs. Therefore, rather than a lull during which the market might recuperate, the pace has largely continued. There are many ways in which snarled processes have affected the property market as a result of the stamp duty holiday, but one of the most significant victims has been the conveyancing market. Ahmed says: “It has led to a lot of frustration between the financial services sector and the legal sector. That’s nobody’s fault, but clients have been shouting about deadlines – because if they miss it they have to pay the stamp duty. “Whilst it’s been good to stimulate business, it has most certainly brought out frustrations, because the legal sector has its bandwidth challenges.” This concern is not new, and Ahmed points out that it stems from 2008, when the financial crisis saw many leave the market altogether. While numbers have been slowly recovering since then, this rush of new business created a strain that some legal firms were not prepared for. Ahmed adds: “The market was bouncing along, growing up organically, and then all of a sudden you’ve got this massive influx of business and you just simply haven’t got the people to cope with it. “Conveyancers are getting a fleecing from advisers. I can understand why the advisers are doing that – a lot of them are not supported on communication – but sometimes the reason for that is the more they communicate, the slower the process can become. We are getting people through that gate as quick as possible.” As a result of this proof that the market needs more capacity, Ahmed says there is likely to be a considerable www.mortgageintroducer.com

John Ahmed

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COVER uptick in recruitment, which he adds will need to focus on training new blood, rather than simply moving experts around the market. The issue of bandwidth, Ahmed explains, has helped many to realise the importance of technology in ensuring that processes are as slick and fast as possible. This suggests that the market may be more willing to adapt in the future.

else, but we were really lucky because our system – being as new as it is, and with the technology behind it – allowed the job to be done much slicker in the first instance. “That helped us enormously, where some of the other key players and legal firms were falling down. “We were much further ahead of the game, in terms of being able to flex the bandwidth.”

EDUCATION One of the reasons that conveyancing has received a perhaps unfair amount of the blame for delays during COVID-19 is a lack of knowledge around what goes into this part of the process. “There’s a fundamental lack of understanding about what a conveyancer does,” Ahmed explains. “There’s a lot of risk involved, and people are often making the biggest purchase of their lives, so there is quite a lot which has got to be sorted out.” This is, of course, compounded by the sense that the more time is spent communicating back and forth, the longer the process will take overall, though Ahmed does think that communication from law firms could be significantly better at times. To help address this issue, in November 2021 Movin Legal launched a continued professional development (CPD) course, in order to help introducers learn how the conveyancing process works from start to finish. This, Ahmed explains, helps them manage their clients, because they are more likely to understand where there might be a logjam, what is needed upfront, and why the process takes the time it does. “I would encourage intermediaries to get booked in there and get a good overview,” he says. “It’s not just the overall, high-level stuff, it’s also some of the finer detail, because that will enable them to speed up the back part of their mortgages, and therefore speed up their service, too.” Nevertheless, this does not mean that Ahmed feels there is a gap within the broker community. Quite the opposite, he explains: “Most brokers just want to do the mortgage, and most are really good at that. We’ve seen some absolutely excellent service from mortgage intermediaries and brokers during the issue of the market boiling over. “Mortgage brokers have been absolutely fantastic, really clued up really on the ball, understanding how to manage their clients – all credit to them.”

“There’s a fundamental lack of understanding about what a conveyancer does. There’s a lot of risk involved, and people are often making the biggest purchase of their lives, so there is quite a lot which has got to be sorted out”

MOVIN AHEAD While the conveyancing market faced stress and criticism, the pandemic helped Movin Legal to cement its position and prove the value of its own investment in streamlined processes. Ahmed explains: “Did we have some challenges? Yes of course we did. We had challenges like everybody

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This issue of bandwidth is not, however, simply a matter of upping speed, particularly when it comes to the complex conveyancing sector. Ahmed still points to the importance of being able to provide a human at the end of the phone, even if there is slightly more cost. This personalised touch is a significant part of Movin Legal’s approach to service, as is the carefully deployed use of technology. The other side of this is its approach to selecting its panel of legal firms, which includes an in-depth risk assessment that looks beyond the surface figures, and aims to consider whether the firm is, as Ahmed puts it, “intermediaryfriendly.” He adds: “You can be the biggest legal or financial firm in the world, that doesn’t mean to say the service is going to be very good. Some people have got to where they are by offering a really good service and product, but then as they’ve got to such a huge scale, that’s changed over time.” Ahmed explains that this examination is not only about attracting new business and increasing sales, but forming a working partnership with each firm and providing risk management. It helps, he adds, that many of the Movin Legal team come from the property building and financial services industry themselves, so are able to fully understand the nuances of this market. “I’m not saying that there’s never a car crash,” says Ahmed. “Of course there is, but it’s about how you get out of the car and put the bits back together again positively. “If you communicate well you can get any job done, and we have had very few of those problems, and we haven’t lost many referrals either!” He concludes: “The key point is: always remember your brokers. We ensure that the legal firms are right for the brokers, and that’s ongoing.” M I www.mortgageintroducer.com

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“It’s been absolutely rammed since We’ve been extremely busy. We’ve we came in this morning. I wish have three BDMs here today and I’d brought more staff with us as we’ve all not really had a chance I’ve been speaking the whole way to take a breath. It’s been a great through and I need a lot of water to experience. Great venue, it’s light, get me through the rest of the day!” it’s airy, it’s just a lovely place to have the event. Marcus Dussard, Sales Director, Hampshire Trust Bank

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The cost of PII As the cost of Professional Indemnity Insurance (PII) continues to climb for both first and second charge mortgage brokers, Loan Introducer speaks to Chris Davies, executive director, financial lines group at Howden, about what brokers can do to lower their costs

Why is the cost of PII for brokers increasing?

Unfortunately, the cost of PII is increasing across the sector as a whole, not solely for mortgage advisers. The actual number of insurers that write this class of business is quite small and this problem was exacerbated a couple of years ago when we saw one of the major insurers unexpectedly leave the market. In an economic sense, any shortage of supply tends to create an increase in cost. These general increases have then been made worse by the financial uncertainty caused by the effect of the Covid pandemic. How can firms lower their PII costs? This is a question we are often asked but it is difficult to offer a specific answer unless looking at an individual firm. As brokers, our job is to understand the firm’s individual business activities and present them to underwriters in such a way that plainly sets out their commercial and trading risks, which understandably drives the premium. In our experience, the better informed we are about the firm and the risk control framework it operates, the better premium - or policy terms- we can negotiate on their behalf. We often find that very good firms with excellent compliance procedures don’t take enough time to differentiate themselves in the proposal form and unless we tease out this detail they wouldn’t get the benefit of lower premiums. Unfortunately, completing the proposal form is often seen as a chore but the more time a firm spends on it the better. Likewise, we often get a better picture if the

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Are costs for brokers who offer second charge mortgages usually higher? Not necessarily, the key factor here is the business mix of the firm. Clearly, we would expect that brokers operating exclusively in this area would perhaps be seen as higher risk than firms that only transact mainstream consumer mortgages with lower LTV ratios. Client affordability assessments are common place but as a general rule of thumb, the larger the debt burden on the individual client, the higher the likelihood that they may experience payment difficulties, which could in turn give rise to future complaints. Why is it important brokers have PII? The Financial Conduct Authority’s rule book sets out the minimum level of PII that every regulated firm must have. On a commercial level, PII protects a firm against claims made by clients - or third parties- that allege negligent advice or services have been provided to them. An important feature is that PII also covers the firm’s legal costs of defending such a claim. Compensation claims can be brought against firms even if they provided the advice or service for free. Do you envisage costs coming down? Right now, having more insurers that are prepared to write this class of business would make the most significant difference to premiums i.e. increased capacity and competition. The good news is that we believe that we are starting to see premium increases flatten and whilst this is not as beneficial as a reduction, we are hopeful that these early signs could provide reasons for firms to be more optimistic about the direction of future premiums. Are the costs going to be too much for some firms do you think? Unfortunately, we are very well aware that over the last five years or so, firms have experienced a significant increase in their overall trading cost, including the indirect cost associated with additional regulation as well as direct costs such as higher regulatory fees, PII and staff costs. All the while dealing with the business and economic turmoil caused by the global pandemic. Sadly, we are aware of firms that have simply found these increases too high to continue. However, we hope that this trend ceases: we will need a thriving mortgage advice sector to meet the UK’s lending requirements as the economy recovers in the years to come. M I www.mortgageintroducer.com

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SECOND CHARGE

Seconds for consolidation BarneyBrilus Steve Drake chief executive officer,, officer, Specialist Money Evolution Mortgage Group

022 is here and it means the very first thing I have to say is a Happy New Year to all readers of Mortgage Introducer and Loan Introducer. We are of course a few weeks into the new year and the holiday season might already feel like a long time ago but I hope you were able to catch up with friends and family – in a safe environment – and that COVID didn’t hamper that, although I know there will be many of you who were selfisolating over that period. Once again, it is not likely to have been the Christmas/NYE that many of us envisaged but I suspect you will have made the most of it. Let’s look ahead now because while we should obviously focus on the past in order to learn from it – tell that to the government – we have to consider what this year will bring and how we can make the most of the opportunities that present itself. This year is different of course in that the housing market isn’t benefiting from the same level of government support it had for most of 2021. That might present certain challenges, and we are also likely to be in a different interest-rate environment, fuelled by rising inflation and the need for the Bank of England to do something to get

this under control. What however we do tend to get in the first few months of any year is a motivated customer base. That time away from work does often provide people with a chance to reflect on some ‘home truths’, particularly during the pandemic when their working situation is likely to have changed and what they need from their home has shifted. There is also the nature of dealing with debts – another consideration that tends to become more prominent once the holiday season is over. In the lead up, many people have a ‘I’ll deal with it in January’ mentality to their debts – which is understandable – however that period is now over and they are looking at ways they can get that debt down and the cheapest/most effective way to do that. In the seconds sector, it often seems like we can be looking at ways not to mention debt consolidation. It’s absolutely right that seconds are increasingly used for other means, most notably home improvement and the like, but it’s also the case that the number one reason for taking out a second-charge mortgage remains for debt consolidation purposes. And, as our most recent Secondcharge Mortgage Tracker revealed, in the three months to the end of November, seconds were much more likely to be needed by debt consolidation borrowers, particularly when compared to the six months prior to that when we were seeing a greater usage by prime borrowers. However, over half of those prime

Don’t be shy of talking about the debt consolidation solution that seconds can deliver

MORTGAGE INTRODUCER JANUARY 2022

borrowers are still using a secondcharge mortgage for debt consolidation purposes, so it won’t take a genius to work out that these products are always likely to be used to pay off costly debt. In a way, as a sector, we need to embrace that, and 2022 might be a year all round which is focused on the fundamentals of why a customer might need a second-charge and what it could mean for them, especially if they are paying off much more costly debt, for example, credit cards or other types of loans which can come with some eye-watering rates. There is undoubtedly an attraction to paying off all that expensive debt in one full go, and using the equity within a property in order to help fund that. Again, let’s not be shy of talking about the debt consolidation solution that seconds can deliver. These can be significant amounts, accumulating significant levels of interest far above what the homeowner will pay via a second charge. Particularly if they are a prime borrower who is able to access the very best rates in the marketplace. Our Tracker reveals that the average value of debts consolidated by a prime borrower through one of our secondcharge mortgages is over £23k, while it’s over £15k for a debt consolidation borrower. On average each of those customers is paying off five different debts with the money, again showing that bringing that into one payment and not potentially having to juggle those payments/debts, while they accrue interest, can be a big positive. Therefore, let’s not think that the number one reason for taking out a second-charge mortgage is something we need to shy away from talking about. As advisers we want you to know that you have this option in the locker, especially at a time of year when clients are often motivated to start as they mean to go on, and clear those debts that could be something of a millstone. Helping them do that will be a huge positive and will allow them (and you) to start the year as they mean to go on. M I www.mortgageintroducer.com

LOAN INTRODUCER

SECOND CHARGE

Dismissing the myths Tony Marshall MD, Equifinance

hile I know it does not look it, but I have been around the second charge mortgage market for a long time and have made dozens of presentations and been involved in countless conversations with brokers about all things second charge and there was always some confusion about whether we should talk about second charge mortgages or secured loans. Since the sector came under the purview of the FCA, it is rare now to hear many brokers talking about a secured loan. The regulator rightly believes that the more apt description is as a second charge mortgage secured against a property. Mentioning second charge mortgages to customers might have been met with plenty of blank looks before the Mortgage Credit Directive (MCD) over five years ago, but since it brought first and second charge mortgages under the one regulator, it is now the accepted term. In my view, the name went some way on the road to a wider acceptance by giving it more credibility, particularly when comparing it with its bigger cousin, a first charge mortgage. Funny what changing a few words can do, isn’t it? There have also been a number of recurring themes that brokers keep coming back to and I thought I would share the most common ones. TOO EXPENSIVE – NO

Rates are at historic lows in the second charge sector, and it can no longer be argued that across the board second charge mortgages are expensive. Of course, they can never match the pricing of first charge lenders, but as second charge lenders secure their loans as a second charge which carries added risk, rates charged reflect that extra risk. www.mortgageintroducer.com

The myths around second charge don’t tell the true storu

one method over another, we recognise that our job is to make sure that customers are getting the benefit of a ‘whole of market’ approach that plays no favourites, so the advice received is unbiased and completely in tune with their needs and circumstances.

TOO COMPLICATED – NO

There used to be some truth in that second charge mortgages were administered differently than first charge mortgages, which could lead to confusion if they were not explained properly. We also had some pretty impenetrable rules on working out early redemption that did not help the cause. All of that is gone now and has been for some time. They are now probably the most transparent and simple products to understand and speak to customers about with conviction. TOO SLOW – NO

PERSPECTIVE

The original 14 day cooling off period, during which lenders and brokers could not contact their client once an offer had been made is now just seven days starting from the moment a binding offer is made. However, a client can opt out and complete the deal at any time within the 7 day period. The important thing that needs to be remembered is that the argument between second charge mortgages and remortgages misses the point. Both methods of raising capital have their strengths and weaknesses. As advisers, rather than favouring

In March, I was disturbed that the reporting on second charge was decidedly downbeat throughout the trade press. Considering that 2020 had shut down so much activity because of the pandemic, it was laughable that COVID was completely ignored as a factor while ‘reporting’ how new business figures were so much worse than previous years. As the year progressed, lo and behold, lenders came back to the market, figures kept on improving to the point where we are now recording record figures. The message for 2022 is that second charge lending is here to stay. It proved its value in 2021 to brokers whose clients powered a home improvement surge after lockdown and found that a second charge mortgage could be so much more of a precision tool than the blunderbuss approach of a full remortgage. M I

JANUARY 2022 MORTGAGE INTRODUCER

SPECIALIST FINANCE INTRODUCER

DEVELOPMENT

Four trends for smart investors in 2022 Roxana MohammadianMolina chief strategy officer, Blend Network

s 2022 gets underway, I’d like to reflect on the strength and resilience of the UK property market. With prices and rents hitting double digit growth in some areas of the country, the post-pandemic property boom has seen many investors looking for their next investment opportunity. So, what are the four property trends smart investors are watching for in 2022? PRICES RISE, BUT MOMENTUM EASES

We expect prices to continue to increase, but not at the speed witnessed throughout 2021. Rightmove has predicted that the frantic pandemic property market will ease and return to ‘closer to normal’ this year. They expect the national asking price of a property, which is currently at £342,401, will rise by 5% in 2022, meaning an increase of around £17,000.

Meanwhile London is expected to see the slowest growth, only 3%. PRS STAYS BUOYANT

We expect to see continued strength in the UK rental market. According to Zoopla, the private rented sector (PRS) is expected to rise by 4.5% in 2022. Their UK Rental Market Report shows that average UK rents were up 4.6% in the year to October 2021, after climbing 3% in Q3. Rent increases have hit a 13-year high as demand for property doubled in major city centers. ECO LIVING GAINS CENTER STAGE

With climate change high on the agenda, we could see binding targets on homeowners to improve their homes’ energy performance. UK homes made up 15% of

greenhouse emissions in 2018. The government recognizes that to achieve Net Zero, we need to have largely eliminated emissions from our housing stock by 2050. As a result, it recently published its Green Finance Strategy setting out its target to grow the market for green finance products. In summary, while the 2022 UK housing market is likely to remain buoyant due to a structural shortage of housing and pandemic-related trends, we believe the market will be less frenetic and more stable than last year. We believe this renewed trust in the resilience of UK property will strengthen the market, leading to increased levels of development and investment activity. We and some others in the market see Birmingham and Manchester as prime investment locations for 2022, with both cities seeing some of the strongest house price and rental growth forecasted of all UK cities in the next five years. Both Birmingham and Manchester are also well-established investment hotspot with a skyline evolving as rapidly as its rental growth. M I

MIDLANDS AND THE NORTH CONTINUE TO OUTPERFORM

We expect Prime Minister’s Levelling Up policies to continue closing the North-South divide. JLL’s 2022-2026 UK Residential Forecast report explores the top performing regions and cities, considering social, economic and market factors to create the most accurate forecast. At 7% growth, West Midlands is expected to lead UK house price growth during this period, 2% above the national average. Scotland, Yorkshire, and the Southwest are expected to see similar growth levels.

Birmingham (pictured) and Manchester are prime investment locations for 2022

MORTGAGE INTRODUCER JANUARY 2022

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SPOTLIGHT

Assetz and the year a Jessica Bird asks Stuart Law, CEO of Assetz Group, what he is expecting for the year ahead, from both a business and market perspective

s with any year, the start of 2022 has everyone looking to the future. For Stuart Law, CEO of Assetz Group, thinking about tomorrow is an integral part of doing business today, and having been founded originally in 1999, this business has certainly seen its fair share of change. “We’ve always been involved in property finance, and very substantially in funding new housing – that’s one of our main strengths,” Law explains. “Over the years, the Assetz Group as a whole has funded about £2.5bn of new housing. “Since 2013, that basically translates into having funded well over 6,000 new homes just within Assetz Capital. We’ve done about 16,000 new homes in the group as a whole. “In last couple of years or so we have funded around one in 12 of all new homes built by [small to medium (SME)] housebuilders.” SUPPORTING SMES This experience helps Assetz to understand the trends impacting the market, and in particular those affecting SME housebuilders, which Law warns have decreased considerably in numbers over the years. He says: “A few decades ago there used to be 25,000 small housebuilders, and there’s now about 2,500. It’s beginning to recover, but that’s really what we’re about. “We are definitely expanding the market, and we have extremely substantial levels of capital available for housebuilders and SMEs generally. “Right now, we have around £1bn of capital to lend over the next 12 months, and the numbers just continue to get to get bigger as more people and institutions are attracted to what we do.” Supporting SME housebuilders has a wider importance than simply being good business. Looking ahead, Law notes that the UK needs to address the ongoing housing crisis. “We’re really bothered about addressing the housing crisis and being nationwide,” he explains. “And we love having an impact, so we love addressing the base to the middle of the housing market.” While larger housebuilders also have an integral role to play, Law explains that SMEs will be an important

MORTGAGE INTRODUCER JANUARY 2022

factor in dealing with both the housing shortage and the need for improved energy efficiency in 2022 and beyond. SMEs, for example, can make use of infill sites, with infrastructure already in place, as well as taking a more agile approach to developments around modern methods of construction (MMC) and energy efficiency.

Stuart Law

ASSETZ IN THE YEAR AHEAD When discussing what 2022 holds for the business, Law says: “We have a huge amount of capital to lend, with possibly the broadest market range of any lender, and the focus will remain the same in terms of SME housebuilders and trading businesses looking for secure commercial mortgages and for bridging. “But we are definitely going to continue to increase our support for the healthcare sector.” He adds: “The ‘care’ word is very loose and misunderstood. It covers an awful lot of sectors. “For example, we are involved not just in retirement homes and medical care homes, but also supported living, where, for example, people might be returning into the community from some kind of establishment.” Law explains that this might include housing for children with learning difficulties, older members of the community, or even those leaving prison. “There’s 50,000 bed shortfall in the UK for supported living, so it’s a very big sector,” he continues. “It’s very typical as the type of sector that interests us. Of course, that shortfall means there’s business to do, but it’s also about an unaddressed problem. “Why would we fund something a bit meaningless when we could do something useful? That’s very much part of the purpose of the company, and one of the reasons people join us. We’ve chosen to do something good, as well as something economic.” EXPECT THE UNEXPECTED With innumerable factors influencing the housing market, predictions can be hard to pin down. For example, in the early stages of the pandemic, many commentators discussed the ‘death of the high street’ in stark terms, but the situation proved to be far more nuanced. www.mortgageintroducer.com

SPECIALIST FINANCE INTRODUCER

SPOTLIGHT

r ahead “In villages and towns it’s quite the opposite,” he says. “In London the high street may be decimated, but in other settings it certainly isn’t, and there are reasons for this due to how people live and work in different cities and the country.” He adds: “It’s an interesting world out there at the moment. We’re perfectly confident, but remain careful about a number of sectors and a number of challenges the country’s going to face in the near future.” The need to be ready for anything also manifested in 2021 in the issue of materials costs and shortages, with developers, brokers and lenders all learning the importance of contingency planning. While Law notes that some elements of this, such as soaring timber pricing, are starting to return to normal, much of these issues are likely to be long-term. While some economic issues are causing pain points for this market, Law asserts that high inflation is likely to drive more capital in the direction of alternative finance, as investors will want to take their money out of the banks and invest it elsewhere. ECO-FRIENDLY FUTURE For Law, a key concern going into the next year is that Energy Performance Certificates (EPCs), while serving a certain purpose in quantifying the issue, are not reliable enough. He predicts that the actual running costs of homes is going to become increasingly important as a way of framing environmental impacts. The need for eco-friendly housing, he adds, might drive an increase in house prices, considering the increase cost of either building or retrofitting. However, this should be paired with an increased focus on lower energy bills to show the entire picture when discussing the perceived ‘cost’ of going green. The other side of this coin is that those homes that are either impossible or too expensive to retrofit are going to fall in price. Law adds: “I think we’re going to see a two-tier market, with old houses that are expensive to fix and new houses that have low energy running costs. It’s going to be one of the biggest factors driving the housing market for decades to come, because the cost of fixing the old housing stock in the UK is just uneconomic. “So, I think we’re going to see a sustained housing boom in terms of building – it’ll take time, because we’ll need to simplify planning and all the things everybody keeps talking about, but I think climate change is what’s going to push that over the edge. www.mortgageintroducer.com

“From a broker’s point of view, that’s going to be one of the biggest growth markets over the next 10 or 20 years, because we’re just going to have to build ourselves out of the climate problem.” NEED TO BE NIMBLE The property market needs nimble businesses – whether these are lenders, borrowers or brokers. This reinforces the importance of the specialist finance sector in picking up the slack. “People are going to be driven once more to alternative finance, just like in the Global Financial Crisis,” says Law. “Alternative finance is supported by institutional capital mainly, and institutions sense the opportunity, so this is the next big wave of growth for institutions to get access to. That’s why we we’re at our highest level of availability of funding lines for funding SMEs.” Although there will always be a place for the straightforward, cheap capital provided by the mainstream banks, Law notes that their role may continue to narrow as borrowers’ needs become more complex. To this end, the specialist market is likely to increase in size and competitiveness, with new players joining and populating the market’s varied sub-sections. This, Law says, will drive innovation and help the market as a whole. He says: “I think that the banks will compete very well with those very low interest rate products to vanilla customers via call centres, but anywhere there’s a service required where there’s people required, as well as technology, it stutters – it’s just too labour intensive. “So there’ll be a continued switch, and big opportunities for alternative finance to take more of the market from the banks in areas that they’re retreating from. “Effectively we’re just on a journey where alternative finance eventually could be bigger than the banks, for businesses in particular, as it is in the USA.” This growth, particularly in the face of a mainstream market that is becoming more automated as time goes on, means all the more importance is going to be placed on the role of the specialist broker. While technology will play an increasingly key role in terms of access to and standardisation of information, this market still necessitates a human touch, and that will continue long into the future. Law says: “There’s lots more to come in the use of tech with lending, and it is already well underway. The market is a far different place compared to 10 years ago, but there’s still a long way to go and plenty more that lenders could do to streamline the processing operations.” However, he adds: “Brokers provide a very personal service, and they’ve got a lot of deep experience and relationships. Brokers are very important to us.” M I JANUARY 2022 MORTGAGE INTRODUCER

SPECIALIST FINANCE INTRODUCER

FIBA

A glance behind and a look ahead Adam Tyler executive chairman, FIBA

f you have a conversation with anyone, at any point, from any walk of life, you inevitably end up talking about the ‘C word’, in very much the same way that we used to always get around to discussing the ‘B word’ in the past. But in all honesty, those of us in specialist property finance haven’t done too badly at all. There have been ups and downs, and we can expect some turbulence in the New Year, but overall from a business perspective, we have been alright. It is not for us to discuss in this media the eﬀects on our personal lives, but we can save that for those face-to-face conversations we all hopefully look forward once again to having in 2022.

With that in mind, we have announced our Annual Conference 2022 on 22 March 2022 in Manchester, which will be a great chance to look at all the positive activity we can expect for the rest of the year in specialist finance. Just as we did last year, we want to start oﬀ the year with a positive message about the industry, and March gives us all time to settle into the year, but for it still to be new enough to make plans at our Annual Conference focused on specialist property finance. MEASURING SUCCESS

When running a trade association, there are many roles to cover, but an increasing membership and an increasing number of partners is always a good way to measure the success of what you are trying to achieve. Once again, in 2021 both of these grew tremendously well, leading to us being able to increase the benefits that we provide across those memberships.

The FIBA Annual Conference be held on 22 March, 2022 in Manchester

MORTGAGE INTRODUCER

JANUARY 2022

There has also been a surge in the number of providers coming into FIBA to support our membership. A number of these are tech-focused, and it is impossible to ignore the benefits these can bring to any brokerage, and also to the origination of new business to lender partners from the broker community. These marry up very well with newly introduced diﬀerent sourcing tools, for everything from legal to the insurance support that is required by a broker’s customers. LONG-TERM TRENDS

There are, of course, initiatives that straddle the years, some large enough to require that length of time to get it right, such as the education programme discussed in last month’s magazine, which has the full focus and attention of the whole Industry now, both from the Lender community and also from all the brokers involved. Another launch in 2021 was the Specialist Property Finance Club in conjunction with SimplyBiz Mortgages, and following the success of giving residential brokers access to a wider range of commercial lenders and their products, this is being expanded in early 2022, with a wider range of lenders oﬀering further benefits to introducers through the club. Of course, we cannot get away without mentioning regulation. Disclosure rules changed in January, and as the specialist industry grows year on year, our professionalism will match this, as we are asked to comply more and more. The link back to the education programme completes this loop. There is a limit to the number of words I can provide every month and I am very grateful to SFI as this is one way that allows me to communicate to a wider market, and it has done so successfully all year. So, I would like to thank all the editors at the magazine and those behind the scenes who have allowed me to write every month and contributed to making FIBA a success. I look forward to writing for you once again 2022. M I www.mortgageintroducer.com

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