The rules being brought in by the Financial Conduct Authority (FCA) primarily focus on delivering good outcomes for retail customers of the financial sector.
A recent review conducted by the regulator found that while some firms were prepared for the changes, others fell behind and risked not being compliant. This was carried out in October when firms were required to detail their plan of action for Consumer Duty.
Mortgage Solutions wants to know if mortgage firms feel ready for the incoming rules.
Brokers, do you feel prepared for Consumer Duty?
A recent report by tax planning consultancy Less Tax 4 Landlords said a small uptick in buy-to-let mortgage rates could reduce landlord profits by thousands of pounds, especially if it is owned in the individual’s name.
Other factors such as interest rate rises, inflation and the increased cost of living are also having an impact on landlords.
As well as this, there is the prospect of higher taxes, with former Chancellor Rishi Sunak, pledging to raise corporation tax to 25 per cent next April if he becomes Prime Minister.
This has raised concerns that the cost burden may cause some landlords to exit the market.
So, with all that mind, brokers, are you seeing more landlord clients disposing of property due to rising costs?
Are you seeing more landlord clients disposing of property due to rising costs?
The date to apply for the Self-Employment Income Support Scheme for the fourth and final time passed in June, the furlough support is due to come to a close in September and payment holidays will end at the end of this month.
By now, people are either already depending on their own incomes to pay their way to or preparing to do so once the forbearance ends.
So, with most borrowers on track to being self-sufficient again, is it time to strike criteria which relates to changes in income due to the pandemic?
When should lenders start considering the removal of pandemic-based criteria?
When asked in a Mortgage Solutions poll: “Will sun and an excess of delayed fun with family and friends bring a summer of service difficulties?” around 73 per cent of brokers said that they were already seeing lumpy service levels.
This compares to just 18 per cent of those surveyed who thought it wouldn’t make a difference and just over 9 per cent who thought that everyone was too busy or well-managed for that to happen.
It comes after the news from Prime Minister Boris Johnson on Monday that many Covid-19 rules would be lifted on 19 July, meaning that people can socialise and travel normally after nearly 18 months of on and off restrictions.
Some brokers thought that the learning curve the sector has been on over the past year or so would help lenders and brokers navigate the summer months, whilst others took a more negative view.
Lessons learned
Chapelgate Private Finance associate director Colin Payne said he didn’t believe service levels from “freedom day” onwards would be impacted negatively.
He explained: “Lenders have learnt a great deal over the course of the last 16 months on how best to manage their processes and barring the odd exception the vast majority have had extremely good service levels.
“This is despite receiving a huge increase in volume due to pent up demand from Brexit, the sudden need for people to seek a home with outside space and the Stamp Duty holiday.”
He pointed to lenders using automated or desktop valuations, using mortgage verification schemes to verify income and reducing documents required.
He added: “So whilst the early days of the pandemic created problems for brokers and lenders alike, these have in the main been successfully overcome, which can only be good news for service levels going forward.”
Chess Mortgages adviser and director Bob Singh said that service levels over the summer would be a “game of two halves” for brokers; those with cases at £250,000 and below and those with cases priced higher than £250,000.
He said that brokers who deal with larger cases would experience a bit of a slowdown but not experience too much disruption as lender capacity is expected to increase.
Singh added that there could be service disruption due to further stamp duty deadlines but hoped that lessons had been learnt from the last month.
He said: “Freedom day will be a green light for many to go out and have a good time. Home buying may not be a big priority for some. The expected slowdown in the marketplace coupled with the spectre of rising inflation and possible mass unemployment following the end of the furlough scheme are factors which could slow down the relentless rise in house price inflation fuelled by the stamp duty benefits announced last year.”
‘Shabby’ service
Jane King, mortgage and equity release adviser, Ash Ridge Private Finance, said that the summer would not make much difference to service levels.
She said that there has been some “very shabby service standards” over the past year from some lenders as underwriters, administrators and tech support have been working remotely.
She also noted that some business development managers had been late in returning calls, which had delayed cases.
King said: “We have had to manage client expectations and make sure that this does not reflect badly on us as many of us have been working long hours and trying our best to get cases through. The stamp duty holiday stampede has not helped.”
She added: “As a result I think I am so used to it that it won’t make much difference. I have been advising clients for the past year that if they want fast turnaround times then we need to maybe select a lender on this priority rather than rate and this may well continue to be the case.”
Self-employed borrowers have been particularly hard hit over the last year, but as lockdown eases, the economy opens up and a new tax year arrives there appears to be light at the end of the tunnel.
So with lenders widening availability for employed customers, is this also happening for your self-employed clients?
Are product availability and criteria improving for self-employed borrowers?
Bank of England data shows house purchases were at the same level as last July and anecdotal reports suggest August continued to be busy.
But taking a break from the pressures of work is essential and especially so during this unusual period.
So this week Mortgage Solutions is asking if you managed to fit in some time away from work during the summer?
Did you take a summer holiday this year?
Some 74 per cent said they predicted a shift towards properties near green spaces while 68 per cent believe homes with private, non-communal space will become more desirable.
Lockdown restrictions have been a challenge for everyone, but those without gardens have been forced to spend a hot spring trapped indoors.
So this week, Mortgage Solutions wants to know if you have begun to see a rise in the number of buyers looking for a home with its own garden.
Have you seen a rise in house hunters seeking a home with a garden compared to before the pandemic?
