So what can a bunch of overpaid, oversexed and overinflated egotists teach us all? The answer is simple. In order to deal with adversity and to move forward it is the team that is more important than any one individual, no matter how talented they may feel they are.

In our industry we have been to hell and back with, if the latest rumblings are to be believed, a possibility that more challenging times await us just around the corner.

Fears that a second credit crunch may be approaching are gaining momentum with the end date of support schemes both in the UK and Europe designed to assist banks and encourage lending coming firmly into view.

The fears of brokers and the public alike that we will see a return to more serious dual pricing, more expensive mortgage rates and more dramatic criteria tightening could lead to many businesses and individuals being exposed yet again.

What we as an industry do not want is for the number of brokers to drop past a serious figure of, as AMI have mentioned, around the 10,000 mark. If adviser numbers drop too far then there is an argument that we lose a critical mass that has the power to fight our cause with lenders and take care of the uplift when things eventually do start to return to normality.

For individual firms and the industry as a whole to see this through there has to be a large amount of teamwork.
There may have been some smug grins around when bigger brokers like Cobalt and Charcol went down, as well as several networks, and whilst there is no complaint from me to a clearing of the culture of arrogance and indulgence that blinded much of our industry for a while, these are now very different times and we need to support each other.

It starts from within the company. A recognition that we are all in this together and a dictatorial I am better than you approach will not help matters. The same goes for individual firms or spokespeople openly criticising other brokers. Healthy competition and cheeky banter is one thing, but for now co-operation is what is needed.

This also follows on to the relationship between lenders and brokers. We need to build bridges not burn them. The intermediary sales guys and girls I regularly see people moan to or about are under just as much pressure as brokers are. Their jobs are also on the line and they need our support and understanding to fight their internal battles, whether this be with the risk departments who now rule the roost, a Chief Exec who fails to see the benefit of brokers, or ultimately a regulatory body, Government or European Parliament who struggles to understand our industry.

We all have a simple choice. We can act like the England players and argue amongst ourselves about who is the best, or we can work together as a team towards ultimate success.

Whoever lifts the World Cup on July 11th will know one thing for certain, that they are the captain of the best team and that every member of the squad and training staff contributed to that success.

The main issue is around the nature of advice, especially with the news that Tesco, yes Tesco that well known bastion of professional independent advice, aim to enter the mortgage market. The question to ask therefore, is should mortgages be put on the same shelf as the weekly vegetables?

Now this may be a touch unfair as at present we do not exactly know how Tesco intend to distribute their product, (I am more than happy to discuss this with them), so whilst we live in hope rather than expectation that they will also use independent brokers to provide advice, it all raises the issue around the simple commoditisation of the biggest debt anyone is likely to take on in their life.

It is ironic that in perhaps every other walk of life, the internet generation takes advice. Buy a new TV – compare internet reviews to see if the features meet your needs; book a hotel – jump on trip advisor and get advice on whether you will like the place by thousands of other people, to name but a couple of examples. Even then, many walk into an electronics shop or travel agent and ask for advice to back up their own findings.

Mortgages however, apart from a vague price and basic features only comparison online, are more frequently offered without advice. What is even worse, is that many people who take out a mortgage without any advice do not even realise.

For the thousands of independent brokers who take pride in their work and can see firsthand how making a wrong choice can cost a lot of cash in the long-term this is incredibly frustrating. So much so that many would say even if you do not do business with me, at least make sure you take independent advice somewhere.

For me, supermarkets and financial advice do not really mix unless it is done properly. I have no issue with a separate space in the supermarket where an advisor is on hand to work through the best Tesco product for that consumer and advise accordingly.

Likewise for banks themselves. I am not asking for banks to compare their products to other providers of course, but at least provide advice on which of their own products fit the customer’s circumstances best. It is just simple common sense rather than hiding behind the information only nonsense that many mistake for advice.

Quite simply the rule should be provide advice or don’t provide the product.

HSBC’s new split-rate product is a case in point. This is a good product and full marks to them for making it available with such competitive rates, but this is exactly the type of product that should be advised upon and I would guess that many will take this product and decide on a split without really looking at it scientifically.

It was interesting to see that one of the leading debt charities, the Consumer Credit Counselling Service, said last week that mortgages should only be given to 1st Time Buyers “after study and an exam”. I have said for years that there should be more education, with school leavers at least having 3 or 4 compulsory lessons around debt, credit and personal finance in their final year as a starter.

Whilst the Council of Mortgage Lenders, (CML), can say that there is a case for “strengthening general guidance on credit, so that potential buyers could equip themselves with the appropriate information”, the easiest way to solve part of the problem is to stop the practice of lenders giving out mortgages without advice.

However, the CML then stated that “this raised questions on whether this was what consumers wanted”.

Sorry, but this is utter nonsense to suggest that consumers do not want more guidance on which mortgage is best for them.

Until the regulators take the brave, and correct decision, to level the playing field and insist that a mortgage can only be taken out once advice has been taken, whether from an independent broker, a bank branch or a Supermarket adviser, then we will still be open to issues.

For any incumbent Government, whether one party or a mixture of several, this issue does ultimately need addressing.

We need education and advice, not pre-packed products available on the same shelf as vegetables.

Unfortunately, the sand seems to be capricious ground at best, and another wave of banking losses have been predicted, with reports of anything around the $40 to $50 billion level being the amount that European banks are exposed to. Then again what’s this piddly amount between friends after the recent figures we have seen bandied around?

The question being bandied around is not so much will this issue on its own be enough to cause another sharp financial issue, these losses should be nothing more than a “sideshow” as Stephanie Flanders’ blog describes this far more eloquently than I can here, but really if this is just an example that there are still various other bad news scenarios still to come out that could cause a double dip.

There are some who believe that the gradual recovery we have seen, or believe we have been seeing, is nothing more than a mirage and that more chickens will come home to roost in the second half of 2010.

Some even talk not of U, V or W shaped recession but a double stair, a sharp drop – a period of calm – then another sharp drop. It is true that there is still much to be concerned about, for example will the UK itself be downgraded from its’ AAA rating? If so, though I still believe this will not happen, there could be some nasty side effects.

Also, although unemployment is not quite as bad as predicted, there are no new jobs being created. So whilst some can live on savings and redundancy cheques for while, especially when mortgage rates are low, this cannot go on indefinitely. When rates do start to increase, if lenders have not relaxed criteria to allow those who cannot move the protection of fixed rates then they are storing up some serious issues.

We also have to wean the financial system off the aid it has received and start to pay it back, so any new Government may not be able to avoid a hard period of tax rises amongst other things.

It’s not about painting a depressing picture, but it is important to be realistic.

In the meantime the positive signs of a recovery in mortgage lending still abound. Reportedly more and more applications are in the system for institutions to become banks and lenders, whilst Paragon and Kensington’s’ tentative return to the lending party is welcome.

Mortgage products are increasing all the time, with competition set to increase again next year, and a general election could produce a customary “feel good” factor, as could a decent World Cup run! Two years of issues is a long time, and the growing public hunger for good news could produce the sentiment required for a sustainable, if slow, recovery.

For businesses, especially in our market, the first few months of 2010 will be key to establish a solid core base to take advantage of the early opportunities and ride out future bumps. There is a fine line between being optimistic and just plain naive.

The clever, adaptable companies will continue to weather the storm and be there to reap the rich rewards that will eventually come.

I have been paying alot of attention to the mortgage and financial press as you would expect, reading with both amusement, hearty agreement and utter despair some of the comments with regards to FSA regulation, self-certification, the behaviour of lenders and brokers, the proposed breakup up of some of our much maligned banking institutions, whilst also watching the pleasing plethora of new rates flooding the market.

There is one overwhelming thing that keeps rearing its head in almost every article I read – criticism. As one of my colleagues here said to me the other day, don’t you think everyone is now a critic? It has become too easy to judge everyone else and criticise their views, opinions and decisions, often vehemently and without thinking.

In the national press and on our TV’s criticism is everywhere, it is the new national obsession. Every weekend we each become expert singers, dancers and ice skaters, shaking our heads and muttering over every slight missed note or crooked arm, not bothering to think how difficult it may be for some kid who has never performed in public before trying to sing a legendary song that most so called “stars” would mime their way through. Oh and by the way, what the hell is she wearing?

This passes through into our industry and spills out into our articles. It almost seems that we have lost the power of empathy, or the art of civilised discussion. It seems too easy to simply comment via criticism.

I am not saying that each of us receiving “constructive” criticism is not a good thing, of course it is when it is done in the right way. Mostly, however, the easy quote is not done that way.

How about the FSA’s new proposals? Mr Boulger in his blog produced a passionate, yet reasoned argument about how the FSA had misunderstood the issues. Yes some of it was incendiary, but some of the comments it produced verged on just plain vindictive. (Before I defend the guru, let me just point out that he is guilty of some of his own unthinking criticism himself which perhaps he should take note of, but I’m an understanding chap! Is that criticism?)

One particular quote mentioned the word “dinosaur” and a few that all those who wanted a self-cert loan were “liars”. Hardly a well-reasoned response. Who else in our industry would spot some of the flaws in the FSA’s work or have the balls for that matter to publically raise it?

As an industry under threat we should be working together, not just taking any opportunity to criticise each other. Personally I believe that fast track should be banned rather than a well-documented self-certification product.

What about lenders? Do they really owe brokers a living? Many of them have supported us well for years and when they need a bit of understanding as they battle for their own survival, just blindly criticising their every move helps no one.

I see a lot of moaning, a lot of blaming instead of looking internally and changing attitudes. I saw the inspirational Paul Merrigan talk the other day, and he recited a famous JFK quote that has never been so apt.

“For time and the world do not stand still. Change is the law of life. And those who look only to the past or the present are certain to miss the future.”

So, to unashamedly quote Fleetwood Mac, (having watched a documentary about them boy they have had their ups and downs, but are still going strong), we should not stop thinking about tomorrow. We need to look to the future and start being positive with each other, remember how to empathise, to argue passionately, but constructively. And, most of all, to remember that it is a singing competition Simon !

In a short space of time we have seen the return of some welcome elements of competition which, together with a fall in the cost of funds, has pushed product rates down. Some lenders, such as a re-invigorated Woolwich, have cut their rates by up to 0.6%, whilst others such as a totally reformed Northern Rock, have made an aggressive play to dominate the Best Buy charts.

Yesterdays darlings of the press, HSBC are no longer alone at the top of the charts, and plagued by tales of woe around levels of service, have been supplanted by a return of the rest of the high street.

Woolwich are a classic example with a cheeky Bank Base Rate Tracker at 1.98% until 31/01/2011, reverting to just 2.99% afterwards at current rates, (3.00% APR). They also have an excellent lifetime tracker product with the added benefits of a flexible Offset priced at 2.97%, (3.10% APR).

Their levels of service have been superb as well with many cases going to offer in just a week.

As far as the much trumpeted return of “the Rock” is concerned, their fixed rates, with uniquely flexible features and competitive fees, have brought some much needed choice back to the market.

Their two year fixed rate at 3.69%, (4.60% APR), is market leading at 70% Loan-To-Value, as is their excellent five year fixed rate product at 4.99%, (4.90% APR).

Whilst this competition is welcome, the other main news this week has been around new FSA regulations which, if introduced as they are, could serve to curtail lenders willingness to lend in certain cases.

Many who are self-employed, freelance or with irregular income sources may find themselves sidelined from the market for a considerable amount of time.

Whilst change and regulation is undoubtedly needed to some degree, a broad brush stroke does not necessarily solve the problem, and whilst on the one hand you have a Government ordering lenders to lend more, they are also making it harder for them to do so.

The good news, certainly in London however, is that the positives far outweigh the negatives for the first time in a long while. Though we should not get carried away on a wave of euphoria that all is well with the world, I still expect a slight dip as some kind of levelling off occurs; cautious optimism is the order of the day.

Whilst the majority of the proposals in themselves are not unexpected, the key will be in their implementation to ensure they benefit not only the industry, but ultimately the consumer.

We all know that there has been a need for a while now to drive out the darker elements and re-professionalise the mortgage industry, especially at a time when more and more people need advice.

It is still too easy for people to walk directly into a bank branch and take out a loan without full independent advice.
The major talking point has been around Self-Certification loans where proof of income is not requested. Putting the onus back onto the lenders and making sure they check affordability seems a sensible move, though in reality the majority of lenders have already addressed this.

It is easy to get carried away with regulation after the horse has bolted, however, and whilst the buzzword is all about “responsible lending”, when used properly through approved brokers, backed up with sensible checks; there can be a place for self-certification.

We should not forget why self-certification was introduced in the first place, in order to help the many self-employed people, or freelancers, with irregular income who can clearly afford the loan but have issues ticking the traditional boxes. Arguably some self-employed customers with established businesses are a “safer” lending prospect than many who work on a pure employed basis, especially at the moment.

However, we all agree the concept was taken too far and became much too prevalent rather than being used as a well adjudicated lending tool. I would hope “fast-track” lending practices will follow suit with a return to good old-fashioned underwriting practices where applicant, broker and underwriter work together.

Ensuring Mortgage Advisors are individually regulated with the FSA, and the regulation of Buy-To-Let Mortgages are also moves that have been expected and ones that I expect most of the broker community to welcome.

There will be many who will say that such regulation will only serve to undermine any positive signs of recovery in the housing market and, in the short-term at least this could be the case.

It is essential that we look after the needs and requirements of 1st Time Buyers, the lifeblood of any full recovery, and the danger is that these changes are a prelude to more controversial policies of product regulation, for example introducing any limit on loan-to-value levels or income multiples. It is these types of changes, which will take away sensible underwriting policies, which could be really damaging.

As it stands, and the industry has until January 2010 to make their comments, sensible changes introduced now could mean that future growth is more sustainable and built on more solid ground.

There are some very interesting observations to be made around some of the comments made.

One question is the recurrence of the old favourite as to whether a discounted rate linked to a lenders own variable rate or a Bank Base linked tracker is better advice. Traditionally most brokers and journalists state it would be better to take a product that tracks the Bank of England Base rate rather than a product linked to the lenders own variable rate. Simple reason really, historically speaking lenders have often failed to pass on the full cuts and increased their own rates over and above the Bank of England’s’ own rise.

However, I did note one comment that raised a very interesting point. That is the fact that the margin between variable rates and Bank Base is much larger than it has been for many a year. The question is therefore is this just the new norm? When rates rise are lenders going to keep increasing their variable rates in line or even by more as they have been known to in the past, or is the margin going to “normalise” as Bank Base rises and lenders not pass on the increases as competitive pressures return to the market?

I guess it depends on your view of lenders, particularly certain lenders, and there are more than a few cynics amongst us who would question whether lenders will look out for their customers or keep raising rates.

For me over the next 2 years at least I still see sense in linking to Bank Base rather than be left at the whim of a lender who may need to increase their rates by more than any modest increases in Bank Base we may see in the short-term.

In the long-term however it does seem more unlikely that certain lenders will be able to keep the gap between Bank Base and their variable rate so large. As ever it is another important thing to take into account when looking at which lender to go for. Headline rate is nice, but it is not the be all and end all for many when they start looking at the nitty gritty.

With the number of products increasing once more, a plethora of products available from different sources and increasingly confusing  internet based “Best Buy” tables that sometimes promote their sponsored products at the top rather than the actual very best products, advice seems more important than ever.

On the insurance side of things we have already seen providers such as Direct Line and Aviva saying their products are not available on internet Best Buy tables, so how long before some lenders follow suit?

In the Large Mortgage Loan sector this is already the case, with most of the best products not available on any search provider. At this end of the market, only an experienced Mortgage Broker can really assist, unless you have the time to contact the many private banks who dip in and out of the market at this level.

Now of course I would say that, but it is true.

It’s good to be back.

As far as 3 month LIBOR is concerned this was always the reason that lenders used for not lending during the height of the credit crunch when it was artificially high. Now, according to Moneyfacts, “Three-month Libor is at 0.55 per cent, while the average two-year tracker rate is 3.76 per cent. Two-year swaps, which lenders use to fund fixed-rate mortgages, are at 1.84 per cent, compared with the average two-year fixed-rate deal at 5.13 per cent”.

Now regular readers will know that I understand this is not quite so simple any more, as lenders have to take into account toughening capital adequacy requirements, increasing costs of funds based on perceived risks and the increased costs of attracting savers. In fact there is no doubt that the relationship between LIBOR and funding in its most simplistic sense has changed, perhaps for good like many other economic theories we have seemed to rely on.

However, I still believe there is some leeway and whilst some banks can obtain funds at cheaper rates than others, see the latest HSBC, Abbey and Woolwich products, I am sure more can be done if they really wanted to. In a report last week lack of demand was highlighted for a reduction in lending, but in truth I just do not buy that as demand is not as weak as we are led to believe.

Some positive news on the funding front was the first European securitisation deal for more than a year taking place, with Lloyds issuing an AAA rated mortgage-backed bond equivalent to £4 billion!

As Robert Plehn, head of structured securitisation at Lloyds Banking Group, said “This offer was significantly oversubscribed…we believe we have taken an important step towards helping reopen the European securitisation market.”

This could indeed be a very significant development.

So what of the best and worst mortgage lenders according to Which? In the top 5 for the best we have First Direct, One Account, Coventry, Britannia and the lovely Nationwide. Well done to those with the top 3 all scoring 5 out of 5 for customer service. HSBC as expected did well on rate but scored relatively poorly on customer service and came in 7th out of 17.

So the 3 worst offenders who must try harder? Halifax, Northern Rock and Abbey. In reality only 2000 people were asked and the results were quite close, but it is interesting to see these reports and illustrates to me how using a mortgage broker can help you bypass much of the service issues those going direct tend to experience, as some of those who scored lower on service we do not seem to have an issue with at all.

So I spent most of the past weekend wishing I was up to my knees in a field of mud in Somerset, yes Glastonbury was on and as ever I regretted not actually buying a ticket and making the trip. As they say you have to be in it to win it. But I did metaphorically pitch up a tent in my living room and kick back and relax.

Some truly awesome performances were delivered throughout the three days, but Sunday night produced two of the best with completely contrasting styles. We had a reunited Blur dishing out a raft of classic tracks like Parklife and the timeless To The End, whilst on the Other stage were old skool ravers The Prodigy. This was like the ‘90’s all over again.

So why do I mention this in Monty’s Blog? Well, life is all about choice and to watch both performances live was impossible, yet in the comfort of my own home Sky+ came to the rescue and it allowed me to flick around, rewind and not miss a thing.

This got me thinking, why don’t we do the same with our mortgages, we could just mix and match, i.e. a sensibly thought through fixed rate that has no element of risk just like Blur, you know what you will get and it makes you feel good. On the other hand a more riskier proposition of a tracker rate that has an edge to it just like The Prodigy.

If you manage to combine the two you have the perfect solution.

Matt

It is a great point that Matt raises here, whilst many brokers just go for the easy option, with a little bit of creativity you can actually creat a product which suits your circumstances down to a tee. Enabling you to protect yourself against the full effects of a future rate rise whilst still enjoying lower payments now. Although Blur may say otherwise, there is always another way.

If there is one subject that guarantees to raise blood boiling levels for brokers and lenders alike it is the subject of dual pricing. This type of pricing is nothing new, it has been around for years, although mainly it had been in the brokers favour.

The arguments were simple. By offering better rates to brokers’ lenders, in theory at least, got pre-checked thus better quality clients, did not have to market the products themselves or take the advice risk on. The clients won because they got, on the whole, better quality advice and a much better quality of service than going direct to a lender and not dealing with a decision maker day 1.

Now the boot is on the other foot and we, the brokers, don’t like it.

The lenders argument is as follows. “In a limited market we have a big branch network who cost us money and we can’t have them sitting there twiddling their thumbs. We need to attract clients into the branches to keep them busy and once they are there we need to sell ancillary products such as savings accounts which are desperately needed as we are short of dosh to lend out again.

We can’t just close all our branches, that would not be fair to the local communities or the employees and would be a PR disaster. If we offer brokers the same rates we know that more people would go through a broker, and you would be more successful in selling these products and it would negate our aims.”

Although I do actually empathise with lenders more than the majority of brokers and really do understand their, often good arguments, basically though, what they are saying is that brokers are too successful and people would rather go through a broker to transact!

Getting back to the L&G story then, Ben Thompson, a fine individual and director of mortgages at L&G, stated that dual pricing “is like treating them, (brokers), as second-class citizens. Brokers have long memories and will remember those lenders which have stood by them in difficult times.”

Whether or not the vote was actually a pointless one, (beaks up which Turkeys want Christmas this year), or it was just poor reporting of an important discussion lost in translation, is open to debate. However, Mr Thompson’s comments are interesting and I do agree…in theory.

Brokers do have long memories, I managed to avoid using the Woolwich for a long time as I refused to subject my clients to poor service levels, and now they finally seem to have re-elited themselves and I have had an excellent service from them recently. Really top-draw actually.

If I am not mistaken there are only a couple of lenders who do not dual price, the aforementioned Woolwich, Coventry and Nationwide,who now provide good products and an excellent service. If brokers do have long memories, why are we not all singing their praises, voting for them at all the awards do’s and using them as much as possible?

Let’s face it, some of their dual-pricing competitors’ service is extremely poor at the moment, yet poor old Nationwide and the fabulous Mortgage Works don’t seem to get a look in when awards time comes round. Should they not be feeling a little bit aggrieved after committing themselves to the intermediary market wholeheartedly?

The problem is that lenders know that we have a duty of care to our clients to recommend the best product for them. They know that when things return to normal brokers may find it difficult to steer clients away from market-leading products from providers who were happy to screw brokers when we needed them most. Arguably, they are also screwing the clients when they most need professional and independent advice by forcing them to traipse into a branch.

I do, however, share Ben’s views. What will happen when certain lenders need our love and affection again, in a market where competition is back and rates between lenders are much of a muchness, is that larger groups of brokers, clubs and networks will develop products with and assist those lenders who supported us now.

Now then, is it too early for a Turkey sandwich?