What the papers say

Happy New Year to one and all.

Let’s hope 2008 brings us some welcome relief from the current market turmoil and lending challenges. In this review of the trade press for the last weeks of 2007, I’ll try to ignore any mention of the credit crunch, Northern Rock or a year of two halves and concentrate on some of the other news stories that could impact on the mortgage intermediary world.

The year of the margin

It’s interesting that the current situation is causing lenders to review their own strategy; the ones that can lend at least.

MS reveals new business acquisition for lenders costing around 45 basis points more than retaining an existing mortgage when it comes to the end of its introductory rate.

But with the need for lenders to ensure they have sufficient capital for new mortgages where they can lend at higher rates, it’s clear that margin will be the focus for the majority in 2008 and not necessarily customer numbers.

This supports the general view that this is definitely the end of the provision of cheap loans to UK consumers.

Data protection at the fore

Data protection is in the news again following the government’s inability to keep child benefit data safe. This time it is Norwich Union in the Financial Services Authority’s headlights, being stung with a £1.2 millon fine for not keeping information safely away from fraudsters, as highlighted in MM.

What this tells us all is that customer data security is something which is of a high priority, not only to the big financial institutions, but to any of us who have a laptop computer with the name and address of our clients on. We can all take simple measures to protect ourselves and our customers from the fraudsters; measures we ignore at our peril.

Non-conforming sector set up to fail?

There has been a lot of negative reaction to the publishing of a report by the Citizen’s Advice Bureau (CAB) called ‘Set Up To Fail’, which suggests that advice in the non-conforming market is failing people with poor credit ratings.

As reported in MSL, the CAB has reviewed 1,200 case studies and come to the conclusion that this vulnerable sector of the population is being poorly served by the industry.

In some cases, the report suggests that consumers are encouraged to present false information or even that intermediaries are submitting information without their clients knowing about it.

But the mortgage intermediary community has challenged the findings of the report with the view that the issues raised are limited to a tiny minority of brokers in the market.

The positive points from the report are the promotion of education within consumers and the encouragement to participate by asking more questions about the advice they receive; moves that will undoubtedly help to improve consumer confidence and awareness.

Social responsibility

For better or for worse, politicians are getting involved in the mortgage market again. This time it’s the Conservatives as they call for payment shock help to be provided by the industry.

Reported in MI, Conservative party leader, David Cameron, has asked lenders to remember their social responsibility and not leap to repossess a property should the borrower get into trouble having come off their introductory product rate.

In response, the Council of Mortgage Lenders has said that repossession is the last resort for any lender and that its members are doing everything to help customers adjust to the changing market climate.

What’s missing in this debate is the voice of the broker. Having completed a factfind on the consumer they are best placed to understand their circumstances. How long will it be before brokers are brought into the loop in this debate?

Buy-to-let: An improving market?

Finally, we end with a good news story showing that the buy-to-let market in 2007 improved significantly over 2006. Paragon Mortgages’ buy-to-let mortgage index showed returns on landlords’ property up over 20 per cent with London and the East Midlands leading the way. Compare this to just 7.4 per cent from an investment in the FTSE All Share and it shows the strength of the property market for those willing to invest in it.

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