by Mark Johnston
More Lenders Working With Brokers!
It seems that since the financial crash back in 2008 the business practices of brokers have come under scrutiny and the question of whether they are acting in the customers’ best interests has been raised.
However, due to the mortgage market’s current resurgence it has prompted a 50 per cent of intermediary lenders to increase the number of brokers they work with during 2013, according to research by the Intermediary Mortgage Lenders Association.
It is a given that borrowers want to ensure they have the right mortgage at the right price, but do not necessarily want to or have time to and the inclination to search for the best deal. Therefore many home buyers enlist the services of a mortgage broker to find them the best terms and rates.
So if a lender wants to drive business volumes, then working closely with brokers is often the most successful option.
Mortgage availability has also improved in the first six months of the year.
In the last quarter of 2012, 63 per cent of brokers were unable to source a mortgage for a mainstream borrower, while 67 per cent had the same problem for a near-prime borrower. These figures had fallen to 37 per cent and 46 per cent, respectively, in the second quarter of 2013.
When the Mortgage Market Review (MMR) comes into effect in April 2014, the Financial Conduct Authority (FCA) will require lenders to complete affordability assessments and to verify income in all circumstances.
As mortgage brokers introduce significant levels of new business to lenders, pressure will intensify for them to play a role in the compliance process as vital partners with lenders.
Lenders work exclusively with mortgage brokers and rely on them to be the gatekeepers to bring them suitable clients. They also to some extent, rely on brokers to capture key information such as income verification, affordability assessments and credit approval
In a recent survey, lenders identified two key factors in deciding to work with a particular broker: the credit quality of the business they introduce, and the quality of their loan application information.
In line with this Santander introduced payment on quality in an attempt to enhance their relationships with their broker network. Other lenders may follow this example to offer preferential terms to a network of brokers who demonstrate that they can be trusted to consistently deliver customers who meet the lender’s desired profile and assist the lender to meet new compliance guidelines.
Intermediary Mortgage Lenders Association (IMLA) executive director Peter Williams says: “Both lenders and brokers have high hopes that business will continue to grow for the remainder of the year. The quality of advice and service are absolutely essential to the consumer experience and IMLA is working hard to uphold good practice among brokers.”
In conclusion the place for the use of brokers remains as strong as ever but brokers do need to take proactive strides to fully establish their worth. A good broker’s experience should be invaluable in helping lenders find the right customers.
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