Bringing greater visibility to eligibility criteria is essential
David Copland (pictured) is director of mortgage services at TMA
The mortgage market has gone through a huge transformation in recent years, with new product launches, additional lenders joining the market, and a greater adoption of technology.
The specialist lending sector has also seen a real boon, with a vast array of products available for virtually all borrower requirements.
All of these factors have helped to broaden the options available to borrowers while the advances in technology have undoubtedly helped to increase transparency within the industry. Assistance via the likes of the Knowledge Bank have also supported brokers.
However, despite these innovations and this drive towards greater transparency, there is still one area that remains unclear: the issue of eligibility.
Each lender has different criteria in this regard and a broker tying to evaluate client’s eligibility when dealing with a large panel of lenders is far from an exact science. While brokers and borrowers alike are much more aware of the various rates and deals available from lenders, there is a lot less transparency around eligibility; this is very much a cause for concern.
As part of the recent wide-ranging Mortgage Market Study, this area was highlighted by the FCA as area where they felt more can be done to improve transparency.
The regulator has called for borrowers and brokers alike to have access to information on eligibility assessments, particularly so that brokers can be better prepared when advising the right mortgage for a client.
At the moment, it can be very difficult for brokers or consumers to get access to a lender’s eligibility scorecard, as many lenders claim that this information is commercially sensitive.
To source the best deal, brokers could have to submit multiple Decisions in Principle (DiPs) on their clients’ behalf arguably to the whole panel of lenders in an effort to truly gauge the lending criteria of the lenders and the eligibility of the client. Submitting to a whole panel just isn’t practical.
Completing these DiPs is an arduous, time-consuming task and not at all practical. Although a number of platforms have been launched to simplify the process of sourcing a mortgage they have not been able to solve the puzzle of eligibility. Tools and systems have undoubtedly helped, but as an industry there is certainly more that can be done to improve this process further.
It is no surprise that brokers and clients alike are confused by these dynamics – and even less surprising that the FCA is calling for greater clarity and consideration of borrowers’ needs in this area.