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.

It seems that there are many struggles of this type going on in all walks of life at present. The small business against the big boys, local shops battling supermarket giants and the average person trying to get loans from big banks. There are more battles to come no doubt with the emergency budget on Tuesday bringing the widely expected tax increases and cuts, meaning many local communities are gearing up for a big battle to save services that are important to them.

Meanwhile, there has been lots of talk about the changes to the FSA and how this will affect not only all of us in the finance industry, but the wider economy as well.

As with any proposal such as this the devil really is in the detail, but it is interesting that whilst these changes were made in order to try to simplify the much-maligned tri-partite system, there now seems to be more than 3 new bodies to be created! No doubt these will be filled with most of the current employees of the FSA and surely the creation of these new bodies will come at quite a cost.

Would it just have been simpler and cheaper to install Mervyn King as Hectors boss? The FSA has no doubt learnt painful lessons from the last few years and should in theory be well placed to move forward.

The fact that one person is now in charge and has clear responsibility is of course sensible and long overdue. Mervyn is quite right to ask how can he assist in bailing out banks in the future without a detailed knowledge of their day-to-day practices? The Bank of England is the right choice to ultimately regulate the banks themselves.

However, there is still the unknown question as to how far the new body is going to seek to “control” lending practices, as it is a dramatic move to set specific lending policies for banks that are, in effect, independent businesses. Ultimately this says that lenders cannot be trusted to operate as a commercial entity themselves which, unfortunately in some recent experience, seems to have been the case.

Although there was no specific mention in the Chancellors Mansion House speech of the new entity actively restricting for example, Loan-to-values, there are still whispers that this could be the case. Whilst I have no issue with sensible guidelines being set down which lenders can refer to, simply stating that you cannot borrow over 75% LTV, for example is perhaps too simplistic. Lenders did not get into trouble just because they were lending at high loan-to-values, but because many of the business models were flawed and relied on borrowing money from elsewhere without any Plan B.

The real issue of course, is around risk to the lender, whether they are pricing correctly for that risk, assessing the client’s ability to pay and setting aside enough capital to cover the risk. It does seem sensible however to look at an overall risk cap percentage for major lenders so not all of their lending is based in higher risk areas.

What would be more prudent is to look closely at the customer’s ability to pay the loan, with careful consideration given to self-certification and “fast-track” mortgages and ensuring that full and proper advice is given to all customers who walk into a branch to get a mortgage. There are still too many instances of borrowers being able to get large mortgage loans without any advice.

This “advice” issue is of paramount importance and there have been some encouraging signs from the FSA recently that a level playing field for mortgage advisers, whether independent brokers or in branch, should be in place.

It should be remembered that the Government also has to think carefully about the health of the housing market and first-time buyers already struggling to get on the housing ladder. Deposits in London especially are hard to raise as it is, and if these measure are too prescriptive and draconian the whole 1st-Time Buyer Market could be severely restricted for years to come.

The balancing act is for any new rules to effectively ensure that lending institutions are more secure and enable them to compete effectively, without ultimately punishing the borrowers themselves.

Of course we must give this fresh, new approach time to work and we can only hope that they take time to engage the industry, listen to the concerns of brokers, lenders and the public alike and come to some sensible conclusions for the benefit of us all.

As the Flight of The Conchords manager, Murray might say, “Imagine that!”

Given that it is the very customer base who most want to use interest only this is quite a big deal.

They have also gone further with loans below £500,000 in that applicants can no longer just say they will pay the loan off via the sale of the property, their buy-to-let portfolio or general bonus payments, but must have either a pension or some kind of savings plan. Is the return of the Endowment nigh?

On the face of it this seems to be unfair on those who have a legitimate reason for taking out a mortgage on an interest only basis, however when looked at a bit more carefully there are some sound reasons.

Unfortunately many people have used interest only as a way of making sure they can actually afford the mortgage in the first place and deferred worrying about how they are going to pay it back. Is there really anything wrong with a lender insisting, as they always used to a decade or so ago, that they can see a structured plan in place to repay their debt?

Also, is it really right that someone can borrow 90% LTV and say they will pay the loan back by selling in a few years time? This does not happen with smaller personal loans so why with large ones?

For me, whilst I do see where Lloyds are coming from and they are perfectly within their rights to do so I would rather see underwriters employed to make a case-by-case, sensible,  judgment rather than a one-size fits all approach.
There are many wealthy individuals for whom interest-only is the correct method and gives them the flexibility they require.

It is a topic that is being discussed within every lending institution and it will be interesting to see if other lenders do follow suit.

For me, something does need to be done to limit the scale of interest only borrowing and borrowers need to be much more aware of how realistically they are going to pay the loan back. Pensions and savings plans are underutilised, as for that matter is life insurance to protect the mortgage that is written into trust.

Too many applicants do tend to ignore brokers advice on these points as they are so focussed on buying the house of their dreams and choose to save money on the very things that can help keep them in the property.

The move by Lloyds shows that lenders are not going to allow the blasé attitude of the past decade to continue and, to be fair, there is a lot of merit in this. However, as with anything, sensible advice and a sensible underwriting policy could give us all the best of both worlds.

Looking forward, we’re not expecting borrowing levels to accelerate significantly in the run-up to the General Election, and they may even fall back slightly post-Election.

Come the second half of the year we’ll know far more about how the mortgage and residential property markets are likely to fare in the short term.

While it’s considerably easier to get a mortgage than it was a year ago, it is still considerably more difficult — and rightly so — than three years ago.

There has been a slight improvement in product availability and rates in the 80%-85% LTV range, although at 90% loan to value the market is still very limited.

Borrowers need to be aware that the days of sitting pretty on an SVR are coming to an end, as we have seen most tellingly with the recent increase in Skipton Building Society’s standard variable rate.

However, activity picked up towards the end of January and into February so we expect to see stronger figures from February on until they begin to tail off again in the second half of the year.

January’s figures shouldn’t dampen the spirits as the mortgage market has got off to a flyer compared to this time last year, with hundreds of new products hitting the market and enquiry levels rising dramatically.

Many people have put their lives on hold for two years and increasingly seem to have decided that now is the time to make that move, or hedge against future rate rises.

As competition has seeped slowly back into the market, lenders are being forced to look beyond the 60% Loan-To-Value and below market, which is now saturated. They are starting to venture into higher LTVs and are even returning tentatively to the buy-to-let arena in search of higher margins.

But let’s not be under any illusions here, the mortgage market, like the economy, is still in the very early stages of recovery and could be set off course by any number of external factors. But in the meantime, now is the best time in a long time to take advantage of some highly competitive products.

Some of us have already been talking about this since the start of the year, and it is nice to be backed up by some weighty reports. Moneysupermarket.com, for example, have stated that even when taking the new mortgage product arrangement fees into account the “best” fixed rate and the “best” tracker product over 2 years will beat the majority of lenders SVR’s.

With a lot of publicity around those mortgage lenders who have already increased their SVR’s recently and other lenders rumoured to be following suit, many borrowers are looking to mitigate the risk of further rises and taking advantage of some great fixed rate product offerings.

Others are finally jumping on the much trumpeted Offset bandwagon, with offset tracker rates below 3% currently this is a marvellous time to really make the offset work and shed years off the mortgage term.

Of course, it is important to note that whilst this is the case, generally speaking this only applies to those with at least 25% equity in their properties. Whilst this area of the mortgage market will always have the very best headline rates, the continued squeezing of lenders in this area has meant that some are beginning to look further afield for higher margins.

We have therefore seen not just an increase in mortgage products available at higher loan-to-values, with 90% LTV looking like the new 100% LTV, but also lenders are returning to the large loan and buy-to-let arenas.

The buy-to-let mortgage market is most interesting, as this seems to have started to return much quicker than many expected with lenders such as BM Solutions and The Mortgage Works actively looking for new business. BM Solutions have also made a tentative step at reducing the high percentage  Arrangement Fees that discouraged many and have reintroduced products with competitive rates and much lower, flat Arrangement Fees.

There is however, one potential drawback of this policy. The cost to lenders in terms of capital adequacy requirements of lending in perceived “riskier” areas or at higher LTV’s, means that overall lenders may have to lend less in pure volume terms. This is a worrying thought as lenders are not exactly throwing their, or rather our, money around at the moment.

Overall, it is nice to have a broader spread of mortgage products back and I suspect that lending will continue to ease, albeit it slowly over the remainder of the year. Whether rates remain this low remains to be seen, however, and I do believe that the first half of this year will be the best time to remortgage, potentially for quite a while.

The political soothsayers have been having a field day showing how we were the first into recession and the last out, and that the road ahead is going to be a frankly tortuous affair. Even Alistair Darling could not rule out the possibility of a dip back into the negative almost on the eve of the election.

The fact is that many economists have been caught a little short yet again with the apparent weakness of the recovery and there will no doubt be a lot more scratching of heads and gnashing of teeth in the days ahead.

So where does that leave us all? Well, I like to think I am a glass half full type of guy, (though my wife may disagree), and to be fair a 0.1% rise is a hell of a lot better than a 0.1% drop or a big fat 0! There is hope!

In fact, the International Monetary Fund, (IMF), has just raised its projection on how much the global economy will actually grow this year. It expects unemployment to stay roughly at the same levels, however they also stated that “a key risk is that a premature and incoherent exit from supportive policies may undermine global growth and its rebalancing”.

Meanwhile the World Economic Forum in Davos has begun which should provide an interesting boxing match between bankers and regulators, with many bankers railing against the Obama plans in the US already.

It is likely to be a heated few days, but everyone needs to understand that for the financial industry to move forward with confidence there needs to be a balance between financial institutions competitiveness and effective regulation.

Too much weight on either side could only add to the issues.

Meanwhile, the mortgage market seems to have a little spring in its step if early enquiry levels are anything to go by. More products are popping up left, right and centre and lenders are starting to get back to doing what they should be doing, lending.

I don’t expect too much to change leading up to the election, with the main issues potentially coming with a hard budget by the new Government, whatever the colour. Together with the end of support like the car scrappage scheme and Quantitative Easing, as well as measures to start cutting the deficit there are some undoubted tough times ahead.

Whilst we all want decisive action to get us out of this mess, as with any issue, there is a danger of being too decisive and over-correcting.

Whether we will indeed be limping for a generation remains to be seen, so sing us out Dr Robert, sing us out.

It is of course no surprise that in recent times the popularity of the fixed rate product has waned as people come to terms with the financial environment. The “as cheap as possible please” line has been even more popular than usual as not only have many clients expected that Bank Base will stay low, but also that low tracker rates now are a shot in the arm to many, helping to keep the wolf from the door.

It is however, easy to become blasé about this status quo and get sucked into the cheapest is best vacuum. The reality is rates are going to rise and margins on tracker products are higher than ever. The conversation with those clients in these times perhaps should not just be around can you afford a 1% rise, rather over the next few years, can you afford a 2%, 3% or even more rise?

I suspect as we get closer to the time that it looks like rates will finally rise again we will see a growth in the number of fixed rate products being taken. We are at least starting to see more enquiries from those who see a fixed rate as their next logical move.

Of course it all depends on your interest rate point of view, but I do worry that actually more fixed rates should be being taken now, especially by those who have been enjoying a prolonged “holiday” on a lenders low variable rate.

The good news is that with some competition returning to the market fixed rate products are becoming more attractive, so the difference between a tracker and the security of a fixed is becoming more blurred. Once that first change in Bank Base occurs no doubt there will be a panic rush to the sanctuary of a fixed by many, but as ever, it all comes down to obtaining sensible advice.

It is not all about whether a tracker rate “beats” a fixed rate, it is about what is good for each individual client, and for many, even if they do end up paying a little more, the knowledge of security is priceless.

Most lenders seem to have got in on the act with some competitive tracker products and fixes as well as more higher loan-to-value products making an appearance.

This is of course good news for consumers and mortgage brokers alike as more choice comes back into the market. The one thing to watch, however, is the continuance of not just some strict underwriting policy, which is hard to really argue against, but some more “unfair” policies if that is the right word.

As usual it seems that the self-employed often bear the brunt of this, and one particular rule adopted by a couple of lenders is that of the effect a reduction in net profits have. For example, take an equity partner in a leading law or accountancy firm who earns a share of net profit. They earn six figures and the net profit of the main multinational firm runs into millions. Obviously we have just been through one mother of a crunch, just emerging from recession so many businesses have had a down turn in figures.

So, this firm has a slight downturn in net profits which means the partner’s share of equity reduces by no more than a few thousand, i.e. less than £10k. At least one lender stated they would not lend because net profits had reduced! Of course they have, is this not expected given the financial turmoil of the time?

It seems unfair to say to self-employed people if you have a good established business and you have just had a dip due to world events that you would not lend at all. Many employed people have agreed to take a cut in wages or bonuses to see themselves through and keep a job, but they are not told they cannot get a loan at all.

At least base it on the reduced figure, as you would on an employed person’s current salary, rather than having a broad stick approach of we can’t lend! Am I wrong to think that? Surely this downturn is all expected and does not mean that every self-employed persons business is going down the tube? Many of these people are safer bets than an employee who could be shed at any time, and I am not talking about those in a new business with no accounts, but long standing businesses that can show years of audited accounts!

I also understand why some lenders still seem to be carefully cherry picking those clients they want to lend to, but would rather see sensible reasons written into a policy rather than making more random excuses.

It is all very well to have tighter criteria, but there does need to be some common sense attached rather than a computer says no approach. It is a shame that some good people are struggling to take advantage of the low rates at present, whether trying to buy their dream home or trying to remortgage onto a fixed rate in the face of a potentially rising rate environment.

While no-one wants a return to the lax policies of the past when a passport and a smile got you a large mortgage loan, there is still room surely for a sensible middle ground.

I would say, however, that this does mean many more people seem to be coming to Professional Mortgage Brokers for proper advice after having had issues direct with lenders; so as they say, every cloud…

I guess that is why in much online writing and message boards many use the kind of annotation symbols I used to find rather annoying but have now embraced with glee, you know the ones; lol,
:-0)* (no idea on the last one, but you get the idea).

Anyway, the point is that because much of what I write, certainly in the banter with colleagues over company issues, is tongue in cheek, I think I am going to have to go further and start annotating my expressions after almost every line. Maybe I should do that with all my writing so people understand the tone in which I am addressing them.

In fact maybe all people in business should do that, and it could be very useful in our own industry. I would love to see new rate release emails from lenders with a bit of honest annotation, as well as some media releases.

Go on, try it

I know you may well be asking what is mortgage related about that, but not everything in this blog needs to be about that does it (genuinely furrowed brow)? I often think my best blogs are when someone says to me, “what the hell were you on yesterday?” (self-obsessed smirk as if anyone actually reads this).

But, talk about mortgages I shall (stifling yawn), after all that is ostensibly what I do!

There does seem to be a bit more get-up-and-go about the market at the moment with a plethora of new product releases, some of which fly in the face of recent SWAP rate increases, especially on a fixed rate basis. Lenders do seem to be a bit more relaxed about the future and are starting to concentrate on the core business of actually lending money again, (about bloody time to).

Whilst there is an undoubted return of a semblance of competition to the market, I still feel it is highly likely that the fixed products available in the first part of the year will be better than those available in the latter.

It was also a little bit sad to see the Abbey and Bradford & Bingley brands disappear into the ether of the past and it is a shame to lose something so quintessentially British , certainly where B&B were concerned.  However, Santander is a strong brand with a good reputation and I like what they have been doing, (slight crawl).

Anyway that’s progress folks, something we badly need and I am all for that.

QXRSUDQZ6FTK for all those wondering this is my Technorati claim reference I have to post into a blog – I don’t really know why either