Confidence is king

With inflation falling and rates stabilising, it appears that, economically, the worst may be over. If the job market stays buoyant and wage growth continues to outstrip inflation, the picture could improve for homeowners, albeit slowly.

The security of regulated advice will be vital next year

While we await interest rate cuts, potentially later in 2024, competitive pressure between lenders should continue to nudge mortgage rates back down.

Furthermore, the supply-and-demand imbalance should prevent a significant house-price slump. In fact, a modest cooling in the UK House Price Index will be helpful for aspirational owners, who’ll benefit from an affordability-boosting combination of falling prices but rising wages.

As consumer confidence slowly returns, we should see more open-market remortgages, fewer product transfers, increased stock, a slightly bigger purchase market and, with it, a healthier housing market.

Political posturing

With a general election looming in 2024, all political parties are likely to leverage housing to win votes.

It’s likely 2023 will set a high-water mark for the proportion of mortgages arranged by intermediaries

A stamp duty reform, inheritance tax changes, a revival of Help to Buy in a new or altered form, rental market reforms, planning policy changes and commitments to build more social, green and affordable housing: everything is on the table.

Every policy change creates winners and losers, however. All we can hope for is a well-thought-out policy, delivered in consultation with the industry and with sufficient notice to plan for implementation.

Doubling down on the duty

The Consumer Duty is here to stay and firms ignore it at their peril. But it creates enormous opportunities for advisers. These include a move to providing holistic, ongoing advice, which will create significant additional advice and revenue potential.

While the outlook for next year may appear scary and complicated, our role has never been more important or necessary

Just as we can no longer overlook the need for more protection and general insurance conversations, we shouldn’t ignore surveying, conveyancing, estate planning, pensions, wills or any other area where we could write, refer or signpost customers towards a better financial future. The Consumer Duty encourages us to ditch brief, product-focused transactions and embrace lifetime relationships with customers.

Diversity delivers

The need for greater diversity is two-fold. In a smaller, more competitive market, ensuring you’re able to fulfil every possible customer need, from new prospects or within your backbook, will be vital for success.

The supply-and-demand imbalance should prevent a significant house-price slump

This means referring what you don’t or can’t write, upskilling where you can, and building lead-generation opportunities from outside your usual sources of business. Whether that requires local partnerships, mutual referral schemes, or better social media and marketing, the opportunity is out there.

Second, the benefits of a diverse and inclusive approach to people within our industry will remain crucial. Next year, I firmly believe, companies that are open, supportive, accessible and welcoming will set themselves up to succeed.

A need for intermediaries

It’s likely 2023 will set a high-water mark for the proportion of mortgages arranged by intermediaries. Increasing uncertainty and complexity, rising rates and the potential financial jeopardy resulting from poor decision making are driving up demand for quality, regulated advice. I predict this trend will continue.

In a digital and connected world, where many are time poor but driven by urgent and often emotional need, the number of potential financial pitfalls into which an unassuming customer can fall is disturbing. The security of regulated financial advice has therefore never been more compelling.

With a general election looming in 2024, all political parties are likely to leverage housing to win votes

So, while the outlook for next year may appear scary and complicated, our role has never been more important or necessary. That is a very encouraging and motivating thought as we prepare to embark upon the year ahead.

I wish you all a productive and fulfilling 2024.

Alex Beavis is group director, mortgages & protection, at Sesame Bankhall Group

This article featured in the December 2023/January 2024 edition of MS.

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In October 2023 at the Mortgage Business Expo in London, two of the seminars I attended strayed from the main theme to talk about the key role of business development managers (BDMs).

Totally unscripted, the participants and delegates found themselves talking in depth about BDMs — some glowingly, some with obvious frustration. Whatever the underlying sentiment, the topic was evidently up for discussion — even if not planned.

The general consensus was that, during challenging times — such as we find ourselves in right now —brokers need support from BDMs more than ever. However, the standard and level of support proffered have by no means been consistent across the industry.

Just how important are BDMs to brokers, and what specific support do they require right now?

There is a good pipeline of BDMs, especially in the specialist arena

Shaw Financial Services mortgage broker Lewis Shaw believes the most fundamental aspect is being able to speak to a BDM as soon as a problem occurs, or for clarity on a quirky bit of criteria that isn’t on the website.

“The biggest bugbear most brokers have is being unable to speak to a BDM because the lender doesn’t provide one or they don’t answer their phone,” he says.

The Mortgage Mum senior mortgage broker Sonya Matharu agrees that BDMs are a vital resource yet says too often there is radio silence when their services are urgently required.

“They know the intricacies of what’s involved with each lender and can provide instant clarification on any questions we [brokers] may have — which in the current market [where lenders are reducing rates and reapplying] is so incredibly valuable.”

She agrees with Shaw that reliability is crucial too.

To be honest, we don’t need motivators; we need communicators

“As we know, the world of mortgages can be pretty fast moving, especially at the moment, and having this information readily available can help us not only to provide a more streamlined service to our clients but to prepare them in knowing which aspects of an application may be impacted.

“But that happens only if BDMs are available.… So I’d say the biggest support BDMs can offer — outside their expertise — is their availability.”

From the lenders’ viewpoint, Leeds Building Society head of intermediary partnerships James O’Reilly reveals that, in the current economic climate, brokers are increasingly turning to the company’s team of BDMs for support.

“Our intermediary teams — based in the field, on the phones and on webchat — are focused on giving timely communication of any changes, sharing product knowledge and industry trends, and helping to solve complex cases.”

Success in building and managing relationships with clients and stakeholders is often a key factor that can lead BDMs to more senior roles

He adds: “Building a collaborative relationship between brokers and BDMs helps us all to work efficiently and to more easily navigate the complexities of the role.”

It takes time

But how are these trusted relationships between brokers and BDMs built up? As Shaw stresses, it doesn’t happen overnight and it can’t be rushed.

“As Warren Buffet says, ‘You can’t have a baby in a month by getting nine women pregnant.’ Some things just take time.

“What helps is consistency. Lenders can have a habit of changing teams around and reallocating BDMs to different areas, which can be disruptive and both brokers and BDMs are often left thinking, ‘Well, what was the point of that?’ Change for change’s sake isn’t a good idea.”

BDMs know the intricacies of what’s involved with each lender and can provide instant clarification on any questions we may have

Keystone Property Finance head of sales Moises Cruickshank (a former BDM at the company) believes the BDM role has developed over time, with different demands and expectations now evident.

“To build strong relationships with brokers you need to demonstrate a thorough knowledge of the market and be able to provide valuable consultancy. The BDM-broker relationship has evolved over the years and become less transactional than it was.”

He adds: “Honesty is also key to building trust with brokers; they need to be able to rely on you consistently. Being responsive and providing quick decisions are another important part of the relationship.”

Cruickshank stresses that, internally, it’s important for BDMs to be in tune with their under-writers. Adopting an underwriting mindset can help brokers to present their case in the best way for a quick and positive decision.

“I find sitting with our underwriters is vital to having a clear sense of the way in which they view complex applicants and securities.”

Necessary evolution

O’Reilly believes BDMs have had to evolve to meet changing industry dynamics and technological advancements.

“Today’s BDMs need to be tech savvy: understanding digital tools, customer relationship management systems and online platforms,” he says.

The biggest bugbear most brokers have is being unable to speak to a BDM because the lender doesn’t provide one or they don’t answer their phone

“Data analysis has also become more crucial. BDMs need to interpret data to identify market trends, assess the performance of products and make data-driven recommendations.”

In addition, O’Reilly emphasises that the regulatory environment in the mortgage industry has also become more complex, most recently with the introduction of the Consumer Duty.

“BDMs must stay updated on changing regulations and guide brokers accordingly. The ability to communicate effectively and build strong relationships is now more crucial than ever.

“The mortgage industry has seen many market changes and BDMs must be adaptable and proactive. Educating brokers about new offerings, processes and industry trends is an important part of the role.”

Cruickshank agrees that the role is different these days.

We need BDMs who are open to providing collaborative support so that, when we have a case we need to place, we can work together

“BDMs are less reactive and rather than responding to instruction they are on the front foot, shaping cases. This change is due to the complex residential and buy-to-let markets that now exist.”

Matharu does not think the essential skills of a BDM have changed radically.

“Still the best thing a BDM can provide to brokers is reliability — and to execute that well they need two things: an ability to problem solve, and knowledge of products and processes.”

The product knowledge is obvious, she explains, but the process knowledge is what really elevates the experience from a broker’s perspective. For example, when changing the products for a lower rate post-offer, each lender operates differently.

“For some it’s a simple amendment, but for others their process can involve a risk to the client’s application.

Having the ability to turn a ‘No’ into a ‘Yes’ is an important skill

“BDMs being forthcoming with these insights is so important. Yes, it’s our job as brokers to ask this question and find the information, but BDMs are uniquely placed to share vital insights we might not have otherwise discovered.”

Matharu adds that this is especially helpful to newer brokers.

“It also helps in highlighting any knowledge gaps that BDMs themselves might have — helping to level up their own expertise and continue the cycle of helping one another.”

Shaw is very specific about what or who constitutes a good BDM and it relates to his earlier point about person-to-person contact.

“A good BDM looks like Jordan Corsellis from Halifax, Louise Archer at Accord, Mark Wheatley for Coventry BS and Mitchell Jackson at Skipton BS.

“They all have one thing in common: you can actually speak to them — and if they’re in a meeting they ring you back once they’re out. Communication is what brokers want, and great BDMs do it well.”

Seeing the bigger picture

Being able to see the bigger picture is something Cruickshank is keen to highlight.

“A good BDM in today’s market possesses in-depth know-ledge of not only their own products but those from the market as a whole. This is something Keystone encourages and helps BDMs to achieve with training and development.”

A good BDM looks like Jordan Corsellis from Halifax, Louise Archer at Accord, Mark Wheatley for Coventry BS and Mitchell Jackson at Skipton BS

He explains that there have been plenty of occasions where his team has recommended products and solutions to brokers who have hit a roadblock searching for a lender to accept their case.

“Having the ability to turn a ‘No’ into a ‘Yes’ is another important skill, perhaps by presenting a different limited company structure to shape the case differently,” adds Cruickshank.

The idea that BDMs are there to provide motivation is given short shrift by Matharu.

“To be honest, we don’t need motivators; we need communicators. As brokers, we work with our clients to find the most suitable product for them. This means we’re not going to place a client with a particular lender just because we’ve been motivated to do so.

BDMs are less reactive these days. Rather than responding to instruction, they are on the front foot, shaping cases

“We need BDMs who understand that and are open to providing collaborative support so that, when we have a case we need to place, we can work together to see if it’s one they can help with.”

The future

Before the credit crunch, BDMs from lenders often had a reputation as product pushers. But a great deal has changed since then, with BDMs increasingly viewed as educators rather than sales people.

The Financial Conduct Authority’s Mortgage Market Review of 2014 has had a lot to do with this. The stipulation that borrowers should have greater certainty about whether they could afford their mortgage, both when applying and in the event of future rate rises, moved the goalposts significantly, with any BDMs following a hard-sell approach effectively stymied.

I’d say the biggest support BDMs can offer — outside their expertise — is their availability

Back in 2014 Mortgage Strategy asked the question: would the local BDM soon be a thing of the past? Would lenders increasingly invest in telephony and virtual BDMs?

Undoubtedly the investment in tech by lenders has taken place, but some may have focused on the virtual or remote at the expense of the physical BDM. Rather than tech being used alongside experienced BDMs, tech has predominated.

Costs may have been cut in the short term but, just as borrowers need a personal touch during challenging times, so do brokers. Lenders whose BDMs demonstrate transparency and who provide essential, tailored support exactly when it is needed are unlikely to go out of fashion.

Good-quality pipeline

Of course, the ongoing need for BDMs is one thing but the supply of good practitioners is another.

BDMs need to interpret data to identify market trends, assess the performance of products and make data-driven recommendations

In what is undoubtedly a more complex market these days, are there enough people of the right calibre coming through to fill these roles?

Cruickshank is in no doubt.

“Yes, there is a good pipeline of BDMs, especially in the specialist arena. We are seeing more BDMs getting to grips with this area of the market and undertaking additional studies such as the Certified Practitioner in Specialist Finance — which I am undertaking myself!”

In terms of developing new talent, O’Reilly believes it is important for businesses to invest in and nurture the next generation of BDMs, ensuring a continuous supply of skilled advisers.

He also maintains there is plenty of incentive to embrace the BDM role.

Good BDMs have one thing in common: you can actually speak to them

“BDMs have financial expertise, technological insight and a deep understanding of the intermediary and the customer, which puts them in a great position to rise through the ranks.

“Success in building and managing relationships with clients and stakeholders is often a key factor that can lead BDMs to more senior roles.”

One would hope that, as these senior roles are taken up, the key function of the BDM will remain in focus.

This article featured in the December 2023/January 2024 edition of MS.

If you would like to subscribe to the monthly print or digital magazine, please click here.

The post What makes a good BDM? appeared first on Mortgage Strategy.

The lender said products are offered at 60%, 75%, 80%, 85% and 90% LTV to help all borrowers find a solution that works for their individual circumstances.

It added that this is the biggest rate drop since Christmas last year and the second time it is reducing rates since the Bank of England held rates at 5.25%.

MPowered said rates on its five-year fixed range starts at 4.38% previously 4.84%, and rates for remortgages start at 4.68% previously 5.14% – both with a £1,999 arrangement fee.

On five-year fixes without an arrangement fee, rates now start at 4.53% previously 4.99% for purchases and 4.78% previously 5.04% for remortgages.

On the lender’s prime residential two-year fixed products, rates have seen reductions of up to 0.42% with purchase-only products starting at 4.79% for 60% LTV with a £999 arrangement fee.

For those looking to remortgage, two-year fixes start at 5.19% for 60% LTV with a £999 arrangement fee.

Rates on its range of three-year fixed products have also been reduced and have fallen by as much as 0.47%.

For purchasers paying an arrangement fee of £1,999, rates begin at 4.59% on its purchase-only products at 60% LTV and 4.68% on remortgage products.

Those not paying an arrangement fee can benefit from rates starting at just 4.99% for purchases and remortgages.

On its 10-year-fixed range, rates have also been slashed by up to 30 bps and now start at 4.59% at 85% LTV for purchasers paying a £999 arrangement fee and 4.69% for remortgagers paying the same fee.

MPowered said its two and five-year purchase products for loans above £200,000 also come with an incentive of a £500 cashback on completion.

And for those refinancing, there is a choice of either the legal assist solution or £500 cashback or for remortgages over £200,000, £1,000 cashback.

MPowered Mortgages chief executive Stuart Cheetham said: “The Christmas break is a perfect time for people to review their finances and think about moving house, which is why we thought it was a great opportunity to launch new rates to help them. Keep calm and carry on is our motto for the Christmas season! We don’t have falling snow, but we do have falling swap rates, and with increased stability in the market, there are very positive signs for borrowers in 2024.

“As always, borrowers looking to take advantage of these new rates should seek independent professional advice to ensure a comprehensive understanding of the products on offer and how they match up to their requirements.”

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This is a significant change from three months ago when only 20% thought house prices would rise.

The Building Societies Association (BSA), who published the report today (7 Dec), said this data is the most optimistic outlook since September 2022.

And it is likely to be influenced by the halt in bank rate rises, lower mortgage interest rates which are now becoming available and the fact that house prices have risen for the last three months.

The report showed that there is a corresponding shift in those who think house prices will fall in the next year.

One in four (24%) respondents believe this to be the case compared to 39% in September.

Barriers to Home Buying

The report also showed that while the biggest obstacle to homeownership continues to be mortgage affordability, the proportion of people who said this is a barrier has fallen to 68% in December, from 71% in September.

Raising a deposit continues to be a significant barrier to buying a residential property, but this is also showing signs of reducing.

This month 58% of people cited this down from 60% in September.

Lack of job security is however starting to creep up, with 22% saying this was a barrier, an increase from 19% in September.

Affordability concerns

When homeowners were asked about the affordability of their monthly mortgage payments over the next six months, the majority did not express any concern about keeping up with their housing costs.

About 85% of mortgage borrowers are confident about keeping up with their monthly mortgage payments.

These figures have remained relatively unchanged over the last year, however the proportion who said they are not at all confident increased to 5% in December.

Whilst this remains a small proportion of the total, it does demonstrate that the number of people experiencing financial difficulties is rising.

BSA said building societies and other lenders are continuing to offer practical, tailored support to borrowers who may be struggling.

Those who rent their home are a little less assured, with around three-quarters (73%) feeling confident about meeting their housing costs.

Market sentiment

The report also showeed that sentiment in the housing market remains subdued, but stable.

The proportion of people who think now is a good time to buy a property is just 16%, around the same as it has been throughout 2023.

Those who specifically think now is not a good time to buy a new home is considerably higher at 41%, rising to 46% for first-time homebuyers.

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The market failed to sustain the strong performance recorded last year, according to  data from the Finance & Leasing Association (FLA).

Commenting on the latest figures, FLA’s director of consumer & mortgage finance Fiona Hoyle said: “Recent trends in the second charge mortgage market reflect a strong performance last year that has not been sustained during 2023 and the subdued economic outlook. The distribution by purpose of loan in October showed that 61% of new agreements were for the consolidation of existing loans, 12% for home improvements, and a further 23% for both loan consolidation and home improvements.”

In June, the second charge mortgage lending returned to growth, the first time that new business has increased by both value and volume since January.

However, the FLA said quarterly lending in that same month fell 9% by volume and 10% by value compared to the same quarter in 2022.

Over the past 12 months, lending increased by 10% on the previous 12.

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The securitised loans were selected to include only owner-occupied, high LTV loans recently originated by the specialist mortgage lender.

Kensington has been an active RMBS issuer in the UK market but it has been absent from the public securitisation markets for two years.

In March, it was purchased by Barclays Bank UK PLC.  As part of the acquisition, Kensington continues day-to-day business operations as usual, supporting a broad range of borrowers that the High St would typically not serve.

The securities transaction, which was completed yesterday (1 December), is the first public deal under Barclays ownership.

This trade has been designed by Kensington to de-risk a portfolio of mortgages from Barclays’ balance sheet rather than to raise funding for the business.

Kensington started the marketing of this bond in early November, privately placing the residual consideration and the unrated bonds to third party investors.

It publicly announced the deal last Friday to the markets in order to achieve a more broadly syndicated process for the remaining mezzanine notes. Barclays is retaining the senior notes of this securitisation.

The lender said the reception from the markets was strong from the beginning of the process across all offered tranches. It resulted in high coverage levels for the Class B to E notes, being respectively 5.1x, 6.8x, 5.0x and 2.9x oversubscribed at IPTs.

Coverage reached on average 4.3x at final terms, and pricing tightened on average by 40bps from IPTs to land at DMs of +160bps, +245bps, +350bps and +535bps respectively for class B, C, D and E notes.

The final levels across mezzanine notes ended up inside all recent UK RMBS mezzanine notes placed by UK issuers this year. Kensington also enjoyed a very diverse orderbook with 10 unique investors allocated for a total of £70m notes offered.

Kensington Mortgages capital markets & digital director Alex Maddox said: “This deal is a successful first public trade for Kensington under Barclays’ ownership; we have managed to attract significant and granular orderbooks, with depth and variety of the investors involved.

“This demonstrates a continued level of confidence from investors in the Kensington platform. The strong position we have built over the years in the UK RMBS market has helped us print an excellent transaction, pushing spreads across mezzanine notes to their tightest levels since April 2022.”

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Data from HomeLet Rental Index shows that rents in many regions have decreased from October to November.

And that tenants are paying out hundreds of pounds more each month compared to this time last year.

The average UK tenant can now expect to pay £1,279 per month for their rent, a staggering £221 more every month than what the post-Covid rental market offered in December 2021.

Across the country average monthly rent is up just under 9% (8.85%) compared to the end of 2022.

The data shows that as rising prices fail to match wage increases for many, tenants in the UK are paying nearly a third (33.2%) of their wages on rent. This is a 2.1% increase compared to last year.

In the capital, people can expect to pay nearly two-fifths (39.3%) of their wages in rental costs. This is despite the support announced for tenants by Prime Minister Rishi Sunak in the autumn budget.

The average rent in the UK decreased month on month from October by -0.3% and now sits at £1,279pcm or £2,174pcm in London.

There was a negative variance for most regions in the country excluding Wales, West Midlands, and the East of England. These regions saw a mean average +0.5% monthly increase.

HomeLet said its data give a stark view into the reality of the cost-of-living crisis in the UK.

The index, which is released monthly and analyses archived rents, utilises data from over 1 million references processed each year on behalf of the UK’s letting agents. It represents the up-to-date view on the UK’s private rented sector.

HomeLet & Let Alliance chief executive Andy Halstead said: “Despite huge yearly increases, our November data actually reports a dip in monthly rent prices across most regions compared to October. Rent is down -0.3% across the UK from last month and as much as -3.2% in Scotland, which also saw a decrease last month.

“I hope this is a sign of more positive movement in the market on the horizon, as spiralling costs are beneficial for neither landlord nor tenant; and we strive to support both. Especially for landlords with mortgages, the outlook is bleak for some time to come. The worst outcome possible for landlords is tenants failing to pay rent, everyone loses. There has never been a more important time for landlords to protect their rental income.”

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There is a growing confidence among landlords as 51% of those looking to remortgage say they would take a five-year fixed rate. This is an 11% rise on April figure. It was 46% last December.

Landbay said that five-year fixed rates are regaining the popularity lost after the disastrous Liz Truss mini-budget last autumn. Before the budget, 68% of remortgaging landlords had opted for this type of mortgage.

However, the number of remortgaging landlords opting for two-year fixes has remained the same as in April. Almost a third (32%) said they would opt for a two-year fix.

This is despite the figure showing growing demand on last December when only 24% said they would choose this type of mortgage.

The survey also reveals a small rise in those choosing variable tracker rates, with 13% of landlords reporting that they would opt for a variable tracker rate mortgage compared to 4% in April. But the figure was higher, at 17% last December.

Fewer landlords– only 4% – chose long-term fixed-rate mortgages (7/10 year terms) – compared to 7% in April and last December.

Landbay sales and distribution director Rob Stanton said: “Our survey shows a renewed appetite for five-year fixed rates, demonstrating an increased confidence in interest rate stability.

“The increase in landlords opting for variable tracker rate products shows that some may be hedging their bets that base rates will come down sooner rather than later, while others may see these products as a temporary solution.

“At Landbay, we always track the market. In the past few weeks alone, we have made four reductions to our fixed-rate products.”

The post More landlords opting for five-year fixed rates, survey finds appeared first on Mortgage Strategy.

It said the dashboard will also streamline the case management experience.   

The technology-driven mortgage platform said on average brokers are now able to retrieve all the information about their deal almost five times faster.

And that brokers have found the new portal easier to find a product dashboard, retrieve a case, and submit a DIP or enquiry.

The broker dashboard launch follows a week of significant changes across the LendInvest Mortgages product suite.

Last week the lender released a series of bridging, buy-to-let and residential product suite changes including reduced rates and higher loan sizes. 

The AIM-listed firm offers short-term, buy-to-let and homeowner mortgages.   

LendInvest head of sales Paula Mercer said: “This launch marks more than just a technological leap; it’s a tailored response to the needs of the industry, offering a superior, streamlined application and case management experience. 

“We’ve listened closely to our brokers and used their feedback to deliver a tool that not only accelerates but also enriches the mortgage journey for brokers and clients alike, setting new benchmarks for quality and efficiency in the digital mortgage space.”

A broker involved in Beta testing added: “As somebody who’s processing a lot of cases you need to know exactly where you are and what stage you’re at [in a case]. In this [portal] everything’s already there.”

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