To celebrate the 20th anniversary of The Mortgage Partnership we catch up with Ian Ward (pictured) to find out what makes him and his business tick.What are the qualities that make a great packager/distributor?
For me, it comes down to four main considerations if I was a broker looking to decide on a packager partner.
Do they have a whole of market proposition? – brokers should be looking for the widest choice of lenders.
How experienced is the team? Brokers should expect to deal with people who have an intimate and proven knowledge of the sector and a deep understanding of what individual lenders are looking for.
How much do they believe in communication? – using a packager who keeps you constantly in the loop on case progress is a must. Proactive packagers like TMP, allow their brokers to get on and concentrate on new business and prospecting.
Service ethic – Everyone talks about it but few provide it. Good service starts with how an enquiry is handled, providing certainty with strong alternative solutions, ensuring that the case is packaged correctly and that information to support the application is asked for as early as possible and only once and then keeping the introducers informed throughout the process.
Why does the market still need packager/distributors?
So many clients do not fit the template that high street lenders have created for their ideal client. The rise of specialist lending came as a direct result of the need for alternative lending sources. Packagers provide a vital link between brokers and lenders.
New lenders particularly have recognised the value of using packager/ distributors to gain fast access to the broker market by using them as their marketeers, first line of communication, enquiry taker and fulfilment to offer stage proposition. This saves them money through not having to employ a purpose built front end in house service. Brokers get access to a number of lenders all under one roof, usually covering specialist first charge, second charge, bridging and commercial. At TMP we also offer lifetime mortgage options including equity release.How did you get into the mortgage business?
My ambition was to be a fighter pilot, but following successful selection there were no training slots, and other alternatives offered did not inspire me. Consequently, I was talked into making an application to join NWS Bank in Chester in 1987. Following a very relaxed interview, I was soon processing mortgage applications at the Bank, which went on to become The Mortgage Business (‘TMB’) in 1989 where I held various roles, culminating in achieving an underwriting mandate of £250k which was big back in those days. We had a two tier sign-off process and manual, human underwriting, so I enjoyed having to justify why in certain cases I was recommending approval of a customer’s mortgage application, That ability to look at cases with an underwriter’s eye is something which has been embedded into TMP’s philosophy for the last 20 years. Very few of our competitors have the same level of experience which adds tremendous value by only delivering cases to Lenders that actually fit their criteria.
TMP has just celebrated its 20th anniversary
What changes have been significant in that period?
Clearly while the mechanism by which mortgages are completed has not changed, the tools we use have. Whereas, I was brought up with paper applications in an analogue market, we have seen the adoption of fax machines (such innovation!) and finally the internet which has been the biggest change to how business is conducted and information is delivered and received. When we started there was a largely voluntary code of conduct run by the MCCB and since then we have watched the industry move from soft regulation to a highly regulated state. The outcome has definitely made the industry more professional and better trained.
How did you keep going when others failed?
We have always run a tight ship and when the downturn came in 2007/8, we were not bloated in terms of manpower or exposed in terms of borrowing. The fixation at the time was expansion and many of our competitors were very highly geared and relying on higher and higher procuration deals with lenders. This model was unsustainable and when the crash came, many packagers could not downsize and survive. Although we also had to lay off some staff, we were sufficiently well capitalised to cut back and still provide a service to brokers that still needed help.
How important is it to have a 20 year track record?
Well, we are one of only a few packagers who have a 20 year unbroken record and there is no doubt that brokers like longevity. It demonstrates that as a packager you have adapted to the changing market and therefore and particularly in our case, have tried and tested systems in place that they can rely on along with the personnel with the experience to properly listen and then come up with suitable alternative solutions. In our business 20 years is a lifetime and we are proud to still be thriving.
What areas of the market do you see as becoming more important to brokers?
Without a doubt lending into retirement. The demand is growing all the time and lifetime mortgages and equity release products are going to become more important as the need for this type of funding increases. There is a juggernaut coming down the track full of clients approaching or near retirement with interest only mortgages and not a snowball’s chance in hell of paying off the loan. Also those clients with poor pension provision, a growing problem. Downsizing can provide some of the answers, but lifetime mortgages including equity release properly presented can provide solutions for those who want to take a lump sum or draw down equity from their property. It is good to see regional lenders like the Saffron, Leek and Dudley building societies putting new products in place. This is going to be the growth area of the next ten years.
Is BTL going to decline because of the actions of the Treasury over tax relief and stamp duty?
I think there is no doubt that BTL as an investment has already started to suffer and as the tax relief changes start to bite, profit yields will be squeezed. However, it will remain as a viable strategy for long term growth through capital appreciation and income, provided rental yields are sound. Location of property and the right advice over the potential savings via limited company wrappers will be crucial. Changes to underwriting demands for BTL portfolios as called for by the PRA come into force in September – another opportunity for advisers to guide and assist landlords.
What advice would you give to brokers who are new to the specialist lending market?
Make use of distributor packagers like The Mortgage Partnership who will do the heavy lifting in terms of research and find options that would take the average brokers far too long to find. Packagers are fantastic resources, if you can find the right one to work with, and will save you time and money as well as keeping you abreast of the right customer outcomes.