Life as a mortgage broker in testing times

In 13 years as a mortgage broker, I have witnessed more change in the industry in the past 5 years than ever before. That will be a surprise to no-one. What may be a surprise are two factors that affect the mortgage-broking industry and those who need our services. Firstly, the fact that lender criteria is shifting even now – and in many ways for the better. Overall, and whether for good or bad, the result of the ever changing criteria brings us to the next issue facing those needing mortgage broker services: Secondly, the fact that a huge number of brokers are leaving the industry (Both the good and the bad).

Make no mistake, while the press would have you believe there is no money to lend, the banks are looking to lend where there is a viable proposition. And understanding the mechanics of this shift to more traditional and careful lending creates opportunity for both the borrower and broker.

A short and simple example of this is a deal I have recently advised on. The client’s borrowing is structured on interest only and they would ideally like to remain on interest only, or at least that was the idea before we gave advice. The result of the recent changes with interest only lending means that they do not meet the requirements for interest only with most lenders. The solution to the problem was not to take a higher rate with a quirkier lender and stay on interest only, but to take a 39 year repayment mortgage at a much lower rate with a high street lender. The payments on this are much lower than they are paying for the current interest only deal and yet the loan will gradually reduce and cost over the whole term is significantly lower. Of course, the client will not keep the deal for a full 39 years but the benefits will roll into the next deal no matter how different the structure of the next deal might be. This is a two year solution which we will review and re-set according to market conditions – both those in the mortgage market and in my clients’ own business. The lesson to be learned is that there is more than one way to approach a mortgage. The current wave of successful mortgage brokers are deal makers as well as finance experts.

Sadly however, even some of the good mortgage brokers are choosing to leave the industry rather than keep up with the changes. Although the reduction in brokers is starting to level out, the numbers are still on the decline. In December 2010 30.8% of Appointed Representatives left the industry. December 2011 this amount reduced to 8.1% but is still an exodus nevertheless. Reports say that there are less than 1/4 of the mortgage broker companies left in the market then there were in 2007. This would be a good thing if it was only the dead wood that was leaving, but I have seen some of the good go too.

Life as a mortgage broker with a positive outlook and fresh approach to the challenges of the industry is in fact rather rosy. Every cloud has a silver lining. As a business, the vast majority of our clients contact us because of a referral from another delighted client. As a mortgage broker based in Cardiff and Poole, we are regularly advising clients from South Wales and the South of the UK – from London to Cornwall and up to South Wales and Gloucestershire. It is a wide area to cover, especially because we take a genuine interest in our clients and like to visit each one to give mortgage advice face-to-face. However, we are a team of mortgage brokers so it does not all fall on one person!

If you have any mortgage questions, no matter how tentative, please feel free to get in touch. Talk to Rachel Bowes or Howard Bowes on 029 2115 6918. You can also ping an email to theteam@harveybowes.co.uk

Think carefully before securing other debts against your home. Your home may be
repossessed if you do not keep up repayments on your mortgage

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About harveybowes
Mortgage Broker and founding Director of Harvey Bowes Limited. A mortgage broking practice with bases in Cardiff & Poole, UK. We take a fresh and positive approach to mortgage broking which pays dividends for both our clients and frankly, ourselves. The team at Harvey Bowes are expert advisors in all aspects of mortgages from residential to commercial and buy to let.

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