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Mortgage brokers are stepping in to help customers navigate rates

There has been a rise in the number of people turning to mortgage brokers for guidance, with many customers unsatisfied with their lenders.

Deciding whether to navigate the mortgage market solo, or enlist the help of a qualified broker, is a major step when it comes to buying or remortgaging a property.

In recent times, with interest rate hikes making borrowing much more expensive than it was a year ago, the market can feel more daunting than it was during the period of ultra-low interest rates many had become accustomed to. And it seems some lenders aren’t offering as much support as customers would like.

New research from Butterfield Mortgages has found that less than half (44%) of customers are satisfied with the support and communication they received from their mortgage provider since the start of 2022, including the period where interest rates began to climb.

Meanwhile, two thirds (66%) of those surveyed said they believed lenders should offer greater flexibility in the current climate. This has led to a rise in the number of people considering using mortgage brokers, with 50% of respondents saying they are more likely to use one to help them understand the products available.

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Branching out for a better deal

Butterfield’s research also found that more than a third (37%) of mortgage customers are now more likely to look at smaller, independent and specialist lenders as opposed to traditional high street options and the big banks.

Alpa Bhakta, CEO of Butterfield Mortgages, said: “Over the past year, mortgage customers have had to grapple with a string of consecutive interest rate hikes, which is evidently creating challenges for many.

“With interest rates once again on the rise, it is increasingly important that mortgage customers feel supported by their lenders and that we, as an industry, are doing everything we can to provide the right levels of guidance, communication and flexibility amid the ongoing economic challenges.”

The latest data from Better.co.uk indicates that the average rate for a two-year fixed rate deal is currently 6.41% across all borrower types. The three-year rate average is now 6.06%, while to fix for five years the average rate is currently 5.97%.

Of course, within these averages, there will be variations depending on the lender, any additional incentives or deals available, and your individual circumstances.

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Pros and cons of mortgage brokers

During uncertain times, and with most forecasts indicating that rates are unlikely to fall significantly in the short-term, navigating the mortgage market and securing the best deal is more important than ever.

Often, buyers and investors with more complex needs tend to use mortgage brokers to help them with their application. For example, those who are self-employed, or portfolio landlords, may use mortgage brokers to help them access the market.

One major advantage of using a broker is that they can save you time, as you will only need to make a single application, rather than potentially multiple ones to various lenders. They can also more easily scan deals across the whole market.

Mortgage brokers are also experts in the field, and can offer some much-needed expertise in the buying and financing process, which many find useful. Having knowledge of the market might mean they can find the best deal for an individual’s personal circumstances and needs.

Some mortgage brokers are able to secure more favourable rates than a borrower would if they went straight to the lender, although this is not always the case. They may even be able to reduce your product fees.

On the other hand, some lenders do not open up their offers to mortgage brokers and only offer them directly to borrowers, so it can still be worth checking you are getting the best rate.

Mortgage brokers also typically charge for their services, and this tends to be either a fixed fee or based on the total loan amount. For many borrowers, the benefits of using a broker make the fee worthwhile, but it will depend on the customer’s circumstances.

By Eleanor Harvey

Source: Buy Association

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Brokers poised for success in 2023, finds Time Finance roundtable

Market resilience and optimism continue to boost confidence amongst brokers and fuel plans for growth, finds Time Finance.

In a recent industry roundtable, the alternative finance provider invited a panel of leading Asset Finance brokers from across the country to discuss market predictions for 2023 and plans to assist recovery and growth of the UK SME market.

The conversation covered the vital role of technology and data, the specific training required to support the next generation of brokers and confidence for the year ahead.

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The overriding outcome uncovered universal optimism from brokers as they told Time Finance of plans to expand their workforce and increase their headcount to keep up with the growing demand for finance from businesses. Upskilling existing employees through bespoke training packages and funder-led broker academies was deemed to be a key priority for the year ahead.

Across the board, investment plans were fuelled by a confidence in the recovery and strength of small-medium business community, who make up 99% of the UK economy. This included bringing in new systems, processes, and technology to quicken funding decisions and adopting a data-led strategy to uncover emerging trends and identify opportunities to offer additional support for clients.

Steve Nichols (pictured), Director Asset Finance at Time Finance, said: “We’re encouraged by the resilience and adaptability of the broker market as they set wheels in motion to invest, grow and bolster their support for SMEs in 2023.

“In the wake of rising costs, supply chain disruption and many other cashflow challenges hampering businesses right now, our roundtable comes at a crucial time and shines a light on the importance of helping businesses feel confident about their future. It’s fantastic to see such a remarkable ability from our brokers to pivot, adapt and innovate, which will only help to poise brokers and our collective clients for success in 2023.”

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Amongst the attendees were Tom Roberts from Moorgate Finance, Carl Johnson from Anglo Scottish, George Parker from Halo Finance, Jack Smith from Love Finance, Ryan Williams from Victor Finance, Tom Perkins from Charles & Dean, and Rob Dermody from PMD Business Finance.

Steve added: “We look forward to hosting many more roundtables and continuing to bring together our valued broker network to discuss the future of finance for SMEs and how best we can support their ever-changing needs. And, as we continue to invest in our own offering and increase our support for SMEs, we too remain optimistic about the opportunities that lie ahead.”

By Lisa Laverick

Source: Asset Finance International

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Four-day week ‘would not work for mortgage market’ ‒ analysis

A four-day working week is a good idea in theory, but not really compatible with the workload of a typical mortgage broker, according to intermediaries.

Last week saw the publication of the results of a trial into a four-day week, with the majority of firms stating that not only had it improved performance but that they were continuing with the structure.

However, when quizzed by Mortgage Solutions, mortgage brokers were split on the idea of a four-day working week. Advocates argued it had helped them to be more productive, working smarter during the week, though there was scepticism about the impact it could have on delivering adequate service to clients.

Boosting productivity

One mortgage broker who is already working a four-day week is Samantha Bickford, mortgage and equity release specialist at Clarity Wealth Management.

She said that since going self-employed, she has worked on the basis of usually having Frdays off, arguing that it leads to a healthier work/life balance.

“This encourages me to be more productive, work harder and smarter during the week, knowing I am taking a day or even an afternoon or few hours for myself at the end of the week. Especially with those dedicating their weekends to their children and family time, this means you have a day for yourself and your own mental health,” she explained.

Gary Boakes, director of Verve Financial, said that he too had been working a four-day week until recently, noting that he “felt I needed the extra time during the day to work on the business rather than in the evening”.

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Maintaining service levels

Stuart Powell, managing director of Ocean Equity Release, said that while he was all for a four-day working week in theory, it presented a challenge for smaller firms in ensuring such a structure did not impact their customer service levels.

“Many firms give people different days off, however for firms with less than five staff, this may reduce coverage for clients and be an issue in holiday times,” he added.

Bickford agreed that fitting in with client expectations and lender service challenges can make picking working hours more challenging.

She said: “If the working week dictates I need to work on a Friday ‒ for example, if this is most convenient for the client or if the week is so busy it is not possible to take the Friday off ‒ I will of course, but in general I believe a four-day week encourages productivity. I have no qualms about working slightly longer days during the week to have this balance.”

Are we working at capacity?

However, not all brokers believe it is a workable option.

There is “no way” a business that interacts directly with the public could succeed with a four-day week, according to Craig Fish, director of Lodestone Mortgages & Protection, who noted that there are times when even not working on a weekend will have an impact on a broker’s business.

He added: “Lenders could make things easier by improving their systems, but the costs involved to do this are likely prohibitive, so I fear that brokers will find themselves working ever longer hours to ensure that the client is getting a first-class service.”

If advisers are able to do the same amount of work in four days that they were doing in five, then they are not working close to their capacity, suggested Andy Wilson, director of Andy Wilson Financial Services.

He added: “I believe most brokers will work quite long and unsociable hours if they want to meet their own and the business’s targets. I also feel most would exceed the four days just to get jobs done and get cases through more quickly.”

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division.

It might work for other industries, but not mortgages

Dominik Lipnicki, director of Your Mortgage Decisions, said that he was sceptical of how practical a four-day week would be for most businesses, noting that while he was a fan of flexible hours, “our clients would rightly expect to be able to be assisted at the very least five days per week”.

He continued: “I am not sure that many mortgage businesses would be able to afford to hire more staff to cover the extra day and if they did, surely, it is the clients who ultimately pay? I think that for some businesses, a four day week might work but that would very much be driven by the type of business that it is.”

This was echoed by Benjamin Blyth, director of Houz Mortgages, who suggested a four-day week does not really suit the mortgage industry as a whole. “We need the engine running seven days a week, but if a four-day week can be scheduled into rotas, it’s great for staff. I can never tie myself to four days because client demand will always vary across the seven days in a week.”

Working smarter, not harder

While many brokers were unconvinced about the merits of a four-day week, there was near consensus that technological developments had given them more control over the actual hours worked.

Chris Barker, managing director of Manchester Money, said that technology today means brokers can “pretty much work what hours they want, and from wherever they want to be, as long as it fits with their clients’ needs”.

Paul Seed, mortgage and insurance adviser at Mortgages 4 U, noted that meeting client expectations was now more about the response times rather than the hours or days worked.

He continued: “Speed of response, especially with live applications, is increasingly critical to maintain a client’s trust. People want to know that they are in safe and responsive hands.”

Embracing the benefits of flexible working can also deliver a better standard of service, too, some suggested. For example, Kylie-Ann Gatecliffe, director at KAG Financial, said that her firm is smarter now in working around clients, removing the need to pull 70-hour weeks.

She continued: “We actually produce higher results, coming in feeling fresh and motivated. Whilst clients can still have appointments on an evening and on a weekend when required, we plan our diaries so the whole team have a balanced week, rather than everyone being stressed and under pressure trying to juggle life/work balance.”

By John Fitzsimons

Source: Mortgage Solutions

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Brokers say COVID-19 has reshaped borrower demand

Research from Masthaven Bank has found that the COVID-19 pandemic has reshaped demand from borrowers.

The survey of 265 intermediaries found that customers’ priorities when looking for both lenders and types of property changed significantly over the course of 2020.

Flexible lending criteria is now a bigger priority for customers than before the start of the pandemic, according to 79% of brokers.

Other factors which have significantly increased in importance are customer service (63%), speed (60%) and flexible product features (55%).

Conversely, 56% of brokers said that low rates are no more important now than before COVID-19 and 54% said the same about low fees.

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This emphasis on the importance of flexible lending criteria could be attributed to the fact that 92% of brokers said that their customers had been negatively financially impacted by COVID-19 in the second half of 2020.

Over a quarter of brokers (26%) say they expect to see more business in 2021 from borrowers who have been financially impacted by COVID-19, whether that involved taking out a mortgage payment deferral, being furloughed or being put on the government jobs support scheme.

An additional 20% said they expected to see more business from borrowers with an impaired credit history.

The research also highlights changing attitudes among customers when looking to move home, with 57% of brokers saying that homebuyers are now prioritising bigger houses to allow space for home offices and a third saying that their customers were prioritising a move out of a city to a quieter area.

Close to a third of brokers (32%) said that more outdoor space was the priority for their customers.

Rob Barnard, director of intermediaries at Masthaven, said: “The coronavirus has affected every aspect of our lives for almost a full year now and looks likely to remain with us for a while longer.

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“It’s perhaps no surprise then that borrowers have re-evaluated what is important to them when it comes to seeking out mortgage providers and the homes that they live in.

“Clearly the fact that many people were forced to stay home for extended periods of time and adapt their houses into offices, gyms or schools, has brought into clearer perspective what they really want when it comes to property.

“This once in a lifetime event could have a long-term impact on the UK’s property industry.

“Borrowers have also been clear about what they want from lenders. With so many being impacted by the pandemic, customers are looking for lenders who have a flexible approach and can meet their needs.

“The stamp duty holiday deadline has also undoubtedly increased demand for speedier transactions, while customer service, which has always been a crucial part of any business, has taken on new importance and become an essential duty for lenders. It’s important that lenders listen to their customers and adapt accordingly.”

By Jessica Nangle

Source: Mortgage Introducer

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Masthaven: Three quarters of brokers confident of mortgage market prospects

Almost three quarters (71%) of intermediaries remain confident in the mortgage market’s prospects for the next 12 months, despite the ongoing coronavirus crisis, research from Masthaven Bank has found.

In a survey of more than 200 intermediaries conducted in May some 65% said they were confident whilst 6% said they were very confident – a quarter said they were unsure.

Only 3% of intermediaries surveyed said they were not confident in the market’s prospects for the coming year.

Rob Barnard, director of intermediaries at Masthaven Bank, said: “Broker confidence is holding up well and that’s such an important part of the market, as it directly feeds through into the conversations intermediaries are having with customers.

“Now that the housing market has reopened and with the news that mortgage payment relief may be extended to help those customers in need, it’s good to see positive sentiment for the next twelve months from the intermediary community.”

The survey also found that more than half (51%) of specialist lending intermediaries are now using video calls to liaise with their customers, while 42% are sending regular email updates.

A small proportion of brokers have introduced live chat platforms on their websites (4%) or extended their opening hours (2%) since the start of the pandemic.

Nearly a third (32%) of specialist lending intermediaries said that they are recommending lenders based on their access to reliable funding.

Jon Hall, chief commercial officer and deputy CEO at Masthaven Bank, said: “Masthaven has remained open for business throughout the crisis.

“We have continued to work with intermediary partners to ensure they have access to a good range of competitive products.

“We have adapted our service offerings, launching a fee-free remortgage range in response to broker demand and increased our use of AVMs where physical valuations have not been possible. Our offices may be closed but we remain open for business.”

By Ryan Fowler

Source: Mortgage Introducer

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Most brokers think lending will recover to pre-COVID-19 levels within 9 months

Three quarters (77%) of brokers reckon mortgage lending will recover to pre COVID-19 levels within 9 months, while half (51%) believe it will happen within 6 months, research from Smart Money People has found.

Appointed representatives are more optimistic than directly authorised brokers, with 59% of ARs predicting that lending levels will recover within six months, compared to just 37% of DAs.

Michael Fotis, managing director of Smart Money People, said “Tentative steps are being taken to get the economy moving, and many lenders are talking loudly about their appetite to lend.

“That said, with job security likely to be a concern for many consumers, and predictions that house prices may decline by up to 13%, it’s really hard to see customer appetite for new mortgage lending returning until 2021 at the earliest.”

Brokers focused on the equity release market proved to be particularly sceptical of a full recovery, as just 19% felt lending levels will bounce back within six months.

BY RYAN BEMBRIDGE

Source: Property Wire

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Supporting brokers through the coronavirus lockdown

During the past few weeks we have seen significant efforts being made by lenders to support borrowers impacted by the coronavirus pandemic. In particular banks and building societies have responded by providing mortgage payment holidays to more than 1.2 million borrowers according to UK Finance. Exceptional times require decisive action.

But it’s not only borrowers who need lender support at this time of significant uncertainty. Brokers also face real challenges as the housing market suffers from the effect of the coronavirus lockdown.

The government has clamped down on people moving home. The number of new mortgage purchases has reduced dramatically, so brokers will clearly be worried about the decline in income from a lack of new business and the impact this will have on the future of their business.

In these unprecedented times, smaller lenders in particular have an important role to play in supporting brokers during this period of lockdown.

New business

Despite the decline in new mortgage purchases, several smaller lenders are still active in many niche areas where there remains a demand. Smaller lenders have a great reputation for providing niche products, which rely more heavily on sound advice from brokers.

At the Tipton we are still lending on our range of buy-to-let products (including ex-pat) for customers who want to purchase or remortgage properties. These buy-to-let products remain a useful source of new business opportunity for brokers as they continue to meet the needs of both first-time and experienced landlords.

Relationships

Relationships play a major role in any business transaction. They are especially important now when it comes to how lenders interact with brokers. Regular communication is critical at this time between brokers, BDMs and underwriters in order to find the right solution for the customer.

It must be a real challenge for brokers and their customers to navigate the current purchase market. A market which has almost ground to a halt as many lenders make significant criteria changes and withdraw products completely. However it is pleasing to see that many smaller lenders are still offering mortgage products of between 80% and 90% LTV.

Staying in touch

At this time of uncertainty it’s never more important to ensure BDMs stay close to their broker contacts. Brokers still need to remain up to date with a lender’s mortgage offering, to ensure the sourcing is made based on reliable information.

BDMs therefore play a key role in this process by ensuring they remain accessible to their broker contacts and provide them with product and criteria information. For example, like other lenders, the Tipton is now offering desktop valuations on all house purchases, remortgages and buy to let mortgages up to 70% LTV.

It’s also important for brokers to be able to access lenders BDM’s who can in turn access experienced underwriters during this time to help find a solution, particularly for specialist and niche cases. This open and proactive channel of communication between brokers, BDMs and underwriters will be crucial to providing brokers solutions for the specific needs of individual clients throughout the lockdown period.

There is no doubt that some brokers will be under pressure and many will be concerned about the future of the mortgage market. However the mortgage market will recover and brokers will look back favourably to those lenders who provided proactive support in their time of need.

By Cammy Amaira

Source: Mortgage Introducer

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More adverse credit homebuyers seeking advice

57% of homebuyers with adverse credit would seek the advice of a broker to find the right mortgage, up from 40% six months ago, according to recent research carried out by YouGov on behalf of Pepper Money.

The study found that 57% of all adults who have experienced adverse credit in the last three years and are intending to purchase a property in the next 12 months would go to a mortgage broker to source a mortgage for them.

When it comes to finding a broker, 54% say they would carry out online research, which is up from 49% in the last report.

34% say they have an existing relationship with a mortgage broker, down from 44% last autumn and 48% would ask friends and family for recommendations, which is up from 36%.

Paul Adams (pictured), sales director at Pepper Money, said: “It is very encouraging that a growing number of people with specialist mortgage requirements understand the benefits of seeking professional advice, and we have seen a real surge in awareness over the last six months.

“We have also seen an increase in the number of people who would go online to find a broker and also a decrease in the number of people who say they have an existing relationship with a broker. This could possibly be due to an increase in the number of first-time buyers. Whatever the reason, it is clear that there is significant opportunity for brokers with a strong online presence to take on new clients.

“There are, however, still many potential homebuyers with adverse credit, who would go directly to a high street lender or seek advice from friends and family and these avenues may lead to them thinking that they have no opportunities to secure a mortgage. So, we still have plenty of work to do to raise awareness and understanding amongst customers, and potential clients for brokers.”

By Kevin Rose

Source: Best Advice

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Paragon: Brokers predict growth in BTL business

One in five brokers expect to write more buy-to-let business in 2020 according to research by Paragon.

Paragon’s FACT research, which has tracks broker trends, also showed that demand for buy-to-let finance for portfolio extension is also at its highest level for over two years.

Remortgaging continues to dominate brokers’ buy-to-let mortgage business.

Nearly one in four (24.5%) buy-to-let mortgages were written for portfolio extension whilst 50% was for remortgaging purposes, a fall from 55% the previous quarter.

Richard Rowntree, managing director of mortgages at Paragon, said: “Buy-to-let lending has been driven by remortgage business in recent years, so it’s great to see the proportion of lending for portfolio extension purposes increase and hit its highest level for nearly three years.

“It’s also encouraging to see that the balance of brokers expecting to write more buy-to-let business is positive for 2020 as confidence has been subdued for much of the past four years.

“These are green shoots and we hope that they will continue throughout this year on the back of a more certain regulatory, economic and political environment.”

Of buy-to-let landlords remortgaging during the final quarter a majority (61%) were doing so to secure a better rate of interest, with nearly a third (31%) remortgaging to raise capital.

Overall, brokers said that buy-to-let accounted for 17.7% of overall business during Q4 2019, the highest proportion for a year.

By Jessica Nangle

Source: Mortgage Introducer

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Brokers expect rise in demand for holiday let loans

The vast majority (85%) of mortgage brokers expect an increase in demand for holiday let loans, Cambridge & Counties Bank has found.

Of this, 29% expect a significant rise.

Meanwhile, around one in 10 (11%) expect demand to stay flat and just 2% expect a fall in demand.

Simon Lindley, chief development officer at Cambridge & Counties Bank, said: “The UK is very likely to become a much more attractive holiday destination and one result is an expected boom in demand for quality UK holiday lets.

“The specialist lending market for this sector has historically been underserved but Cambridge & Counties Bank is focussed on leading the market and we firmly believe our product provides a dedicated solution in the UK.”

On average, brokers expect lending volumes to grow 11% over the next 12 months with 5% of mortgage brokers predicting volumes will increase by more than 15%.

The key reason given for the rise in demand from property investors for UK holiday lets was a direct consequence of Brexit and the fall in the value of the pound favouring UK holidays, as cited by 45% of brokers.

Other reasons included the favourable taxation for holiday properties (41%); an expected rise in UK holidaymakers choosing UK holidays over the foreign trips (40%); and an expected rise in tourists looking for UK holidays (37%).

Nearly three in 10 (29%) said that better yields from holiday lets versus traditional buy-to-lets was a key driver of growth.

However, almost half (45%) of brokers said that the market in lending products designed specifically to cater for holiday let investors was “under competitive” and ripe for new entrants.

Almost two thirds said products need to be tailored more for their specific needs and 26% found there is little differentiation in the market.

To further boost lending in the sector, two thirds of mortgage brokers (66%) said products should be made available for larger portfolios and borrowings.

In addition, two fifths of brokers said that mortgage terms should be lengthened whilst 31% said income criteria should be relaxed.

By Michael Lloyd

Source: Mortgage Introducer