Lenders & Intermediaries Working Together

Transcription

1 Lenders & Intermediaries Working Together Gary Salter, Head of Corporate Accounts, Nationwide for Intermediaries National Mortgage Conference 1 July 2015

2 Agenda Is it really that difficult to get a mortgage? Evolution towards responsible lending The lost art of mortgage broking Lenders and brokers working together

3 Fixed rates at record lows 7.0% Average Fixed Mortgage Rates (75% LTV) 6.0% 5.0% 5 Year 4.0% 3.0% 2.0% 1.0% 2 Year 0.0% Source: Bank of England, January 2015

4 FTB key driver in recent months 48% 46% 44% 42% 40% 38% 36% 34% 32% 30% First time buyers % of house purchase activity Source: CML Regulated Mortgage Survey, April2015

5 MMR BAU for Nationwide DIPs Gross lending & application score Volumes and business mix remained broadly consistent

6 Pre-MMR landscape Responsible lending vs market share Balance of power Affordability Retrenchment Survival of the fittest

7 2014/15 A period of change Creating a more sustainable mortgage market Responsible lending Improved business quality Better customer outcomes

8 Balance of power Gross advances by channel Direct Introduced 20bn 15bn 10bn 5bn 0bn Nov-05 Nov-06 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Nov-13 Nov-14

9 What are the potential issues? Assessing affordability & commitments Lending into retirement Mortgage prisoners Stress rates LTI caps For intermediary use only

10 Pensions and retirement income Pension contributions included in affordability model Retirement income within 10 years from retirement Use lower of state retirement age or declared 18% of new lending flows are into retirement, with majority outside of 10 years Challenge posed by pensions liberalisation

11 Transitional rules Remain supportive of existing borrowers Majority continue to meet lending criteria and are accepted Affordability fail with same borrowing: Existing appeal route Considered favourably by underwriters Investigating process to make it easier for existing customers Rules have exceptions where affordability still required Makes it difficult to automate

12 House price to earnings ratio Source: Nationwide, ONS, Q4 2014

13 LTI cap & stress rate Cap of 15% residential lending at LTI of 4.5x income or higher Stress rate set at 3% above the prevailing rate One positive consequence is lender transparency

14 The lost art of mortgage broking Know your customer Know your lender Plausibility Advice vs affordability

15 Lenders & brokers working together Use the resources available to know your lender Website Helpdesk BDM s PMS Helpdesk It s good to talk Supply the correct documentation

16 You said Clearer, upfront requirements Improvements/changes intermediaries would like to see in lenders processes and policies post MMR: More realistic affordability calculations Having a consistent contact case manager More discretion, as opposed to a tick box Quicker access to ask questions and to have a person to talk to rather than a computer Uniformity. Different interpretations of MMR. They've been caught out with it. Not got to grips with A bit more common sense in lending and more streamlining that all lenders think the same way Too stringent on minor credit faults, more flexibility for customers. More common sense Source: Charterhouse Research, October 2014

17 We did Quick quote & full affordability calculators Removed booking fee Let to Buy Proposition Changes to ERCs for fixed & tracker rates Reduced document requirements Bonus, overtime & commission

18 Thank you for your continued support