After a summer of sporting endeavour and all the distractions, now we all have to go “back to school” and get on with the hard work. There will be many firms in our industry banking on a decent three months before Christmas, yes, it’s nearly that time already, to end the year with a bang.
Many of the brokers I have spoken to over the course of the year, certainly in London, have all pretty much said the same thing; that whilst enquiry levels have held relatively stable, actually converting them into business has been the issue.
So whilst this would suggest that demand for mortgage finance has held up, placing it successfully has been a very different kettle of fish. There has been much wailing and gnashing of teeth from the broker community that lenders have been saying one thing publically through advertising some pretty decent rates, all the way up to 90% LTV, stating they are keen to lend, but actually getting the case through involves five times the amount of work it has done previously.
Every broker I bump into seems to have a “you wouldn’t believe what I had turned down by ….” story. Some of these to be honest sound fair enough, but others really do stray into the “any old excuse to say no” category.
So what is the truth? Are those high up in banking institutions sending out mixed messages, has the quality of business introduced by brokers declined, are lenders keen to lend but their hands are tied, has the pendulum swung too far to risk from sales; or is this just the new sensible norm?
Finally, as many conspiracy theorists, (of which I am NOT one by the way), love to point out in the comments that adorn trade websites; are they secretly trying to systematically dismantle the broker base in the UK?
From a lenders point of view, I sense they share just as much of the frustration as we do. Generally speaking they are in the business of making money from lending money, so I am sure they would love to be able to relax things to a sensible level and increase their lending books. They also seem to be suffering what many of us brokers experience from lenders, but from the regulators.
On the one hand publically we see a sensible regulator, gently guiding lenders as to what they should be doing but leaving at least some room for lenders to come to their own conclusions on. However, a different and much stricter message seems to be emerging during actual lender visits, which manifests itself in much tighter controls advocated with little room for manoeuvre. Other lenders then react accordingly and before you know it there has been a whole change in criteria across the board without any actual “rule” being set.
On a wider scale, we have the Government urging and cajoling lenders to lend more, without really giving them the opportunity to relax their risk appetites or capital requirements to enable more lending to take place. The Funding for Lending Scheme has actually been a welcome change, although it has helped with lower product pricing so far, rather than a change in risk attitude.
So we have a classic blame game scenario, with everyone casting aspersions on everyone else as to why business is so hard to get through at present.
The only thing that is clear, is that until intermediaries and lenders can work closer together for the good of the industry, there will still be issues and angst. The good news is that we are starting to see a change once more, with more engagement and cooperation.
Brokers should not just lambast lenders for all their current ills, it is just not that simple. Lenders are staffed by people too, the majority of which really do care. They just need a bit of love and understanding sometimes.