why you should REALLY support brokers

BrokeRage

Conrad wrote: »

I agree. We dont let London cabbys lose until they've undertaken The Knowledge, which I think typically takes around 2 years, yet we let some spotty oik lose on the public after a few weeks.:eek:

Everyone has to start somewhere (I did so 25 years ago). There is a suggestion in your manner that most brokers are spotty oiks. I know that there are currently many good brokers (with Cemap, FPC etc) who are utterly dismayed by recent events.....we were forced to accept FSA regulation and have been utterly let down by the regulator, as have the public.

There is a huge list of FSA failures and it is getting longer by the day....and yet mortgage lenders can get away with unfair price differentials and anti-consumer practices. You should make some comment on that rather than knocking your own contemporaries, because that is definitely not professional conduct.

BTW, there is a lot less need for "The Knowledge" with modern technology, which has also helped mortgage brokers become more effective more quickly. Despite what Cells says, it is not necessary to know about many of the areas he quotes. If he was so smart, he would have already have bought property and then sold it at the "Right time". Sometimes contemplating one's navel can cost a lot of money.

I come across a great many clients and I rarely find any who have been poorly-served by a broker. Maybe there are higher standards in this area (semi-rural South-East) or maybe you have a "What cowboy did this?" approach to your work.

Dan_Collins_2

Cells, if you wanted to buy and you found your dream flat or house, and I said dont buy now or get a mortgage its all going to end in tears what would you do??

We have this chat in the office everyday. How far do you go with it, I need to make a living and if somebody buys a new build even though I said dont but they want it, what am I to do. Turn business away??

Silvercar

I have been self employed for just over 3 years. It took me a while to get going and last year was a great year. Although it windled off slightly once NR went pop. This year has been a car crash. I am down £15k easy. I am losing out because i do my job properly and have been able to sleep at night. I also push the client towards the best deal so I cant tell a client to go with a deal when I know that lender has a better one direct. I need my rep to stay intact!

Things are getting better, but it may come to late for me. I am looking for a new job and new industry, I have had it financial services I think. The last 9 years of my life have become a waste!

HelpWhereIcan

Damn, I promised myself I would leave this thread alone and get on with some work.

Financial Ombudsman Service are not normally seen as the adviser's best friend but...

http://www.mortgagesolutions-online.com/public/showPage.html?page=796919

Mortgage advisers have been buoyed by the Financial Ombudsman Service's annual report, which revealed that intermediaries were now the least complained about sector, with only 2% of registered complaints.

The results also improved for IFAs, who received 4% of complaints, in stark contrast to banks, who received 59%.

The figure has been hailed as an endorsement that intermediaries provide "good honest advice".

Peter O'Donovan, mortgage manager at IFA Bestinvest, said that service from advisers kept borrowers coming back. He said: "With brokers facing a really difficult time, lenders' pursuit of dual pricing is disappointing. Borrowers are attracted to the cheaper rates, but it does not mean that product is best for them. That is what an adviser is for, and it would not surprise me if complaints against banks went up even more next year as clients will feel they are receiving a sales pitch, not advice."

UK007BullDog

Yup, that is why I left banking. Once a broker always a broker....

druss

Where did it all go wrong?

When regulation came into effect several things happened.

1 Most lenders reduced the amount in commission they pay brokers, they did not want to be seen to entice brokers to use them more than others and they wanted to treat customers fairly.

2 The same lenders then started ramping up their arrangement fees.

3 The lenders also started to charge huge fees when clients left them.

4 The FSA introduced their costs.

5 The FSA decided an informed client was one with 15 sheets of paper to read rather than 2 (some clients barely read the 2 pages.... now you can imagine with 15......)

6 The FSA's view to regulating the market is to keep increasing fees so the dodgy brokers will go away.

7 In many cases it's only the dodgy brokers who can easily afford the increases in fees as they charge 5k a pop no questions asked.

8 Unsecured credit is still NOT regulated and believe me when you see clients with £115,000 on loans and credit cards it's frightening they were lent that much in the first place.

9 Mortgage brokers have to prove that the advice is affordable.

Now thats not to say there arn't any dodgy advisers out there, there are!

But take into mind:-

If a broker is self employed the advice is his responsibility for the next 25 years.

If a broker is employed his firm is responsible but chances are he will be long gone when a complaint is made.

A Lender's mortgage person wll not provide any advice, is employed to get volume at all costs and only cares for his targets.

If you were arranging a mortgage which would you see?

The advantage of using a quality mortgage broker is they will ask questions, play devils advocate get you thinking about your finances.

I have sat in front of people who consider themselves very financially estute and left them pondering over issues they had not even thought about.

I educate those who know little about finances in a way that they will understand so they can understand for themselves.

I choose to see people in their own home, evenings and weekends if required.

I often see clients with adverse credit and manage to place them with a high street lender.

I can spend hours with a client and could tell them best advice is do nothing, go direct, dont buy a house, dont take a mortgage you cant afford it. For this I earn NOTHING.

The lenders will try to take advantage of the current situation and push brokers out of the equation as they would argue they are not needed as much. We will then return to the days of the lenders dictating their fees and charges, lock in clauses, hard sell products at uncompetitive prices..... STOP PRESS oh we allready have.

The FSA and the lenders should appreciate that independent advice is needed now more than ever as people are suffering and will suffer even more unless the credit crunch goes away

I agree with some ones earlier comment about standardising mortgage commission but would go so far as to doing this across the board, it should be the same for adverse, btl, self cert etc this way there is no product or lender bias, people would stop being sold adverse mortgages when they could get cheaper.

As to clients paying a fee for services rather than receiving commission the general public are not raedy for this, in fact the ones who need the most help would be the ones who couldnt afford any advice, they would end up choosing the wrong deal for themselves if trying to sort themselves, be ripped off by the lenders if they went direct or miss out on the whole process completely.

Do I charge a fee for my services? yes I do!
Do I provide benefit to my clients YES I do!

When i get told to compare my hourly rate to a solicitors or accountants I think, they dont work at weekends or evenings, they dont even do most of the work, they pay someone to do it for them and then rubber stamp it. Brokers are not allowed to get someone unqualified to provide the advice and then rubber stamp it!



When politicians were asked why mortgages were regulated the three answers they gave were

Endowment fiasco (not a mortgage brokers remit)
Loans and credit card debt (still unregulated and nothing to do with a mortgage broker)
2nd mortgages/secured loans (started to be regulated this year)

Lenders have one remit - make as much money as possible.

Brokers have one remit - provide quality advice.

I can see that not all clients will need our help and wish them luck in the search for a mortgage, but the majority of borrowers do need advice even if they don't realise it.

BrokeRage

Very accurate Druss....I would summarise that by saying that the only place to get advice is through a decent mortgage broker or an IFA. Anywhere else is information or sales. If you are buying through anywhere that can't tick the "Advice and recommendation" box, then don't buy unless you are completely sure what you want and what the pitfalls are.

Finally, if anyone wants to charge a fee of more than 1% of the mortgage loan amount, I would ask them why they are over-charging.

Graeme7777

Hi,

This question is for the advisors who were in the business the last time the UK housing market went south. Is the mortgage market in a better, similar or worse state now?

Dan_Collins_2

I was not but know or many and dealt with the fall out as late as 1999!

Form what I can make out, loan size is higher and unsecured borrowing is higher. Property price was a little lower and the % of 100% mortgage was higher. Unemployment was worse.

On the plus, we have fixed, discounts, daily interest, flexible and all sort of over mortgage products to make them cheaper and fit our lives. I think while we have jobs we can ride this. The US will get worse, so we are also waiting to see what happens there.

I think if you look at the saying, the bigger you are the harder you fall, then it is worse.

BrokeRage

Graeme7777 wrote: »

Hi,

This question is for the advisors who were in the business the last time the UK housing market went south. Is the mortgage market in a better, similar or worse state now?

It is worse. Now it is strangled by regulation, controlled by big business and the income-to-borrowing ratio is much worse. All the ingredients are in place for a crash unless the first two elements are rapidly encouraged to improve the situation for potential borrowers and existing mortgage-holders (such as those stuck with Northern Rock).

druss

Graeme7777 wrote: »

Hi,

This question is for the advisors who were in the business the last time the UK housing market went south. Is the mortgage market in a better, similar or worse state now?

Great question Graeme! as it stands now the market is better than it was back in the eighties houses are still selling, just that sellers are having to lower their expectations.

We have a media who now love to stir up a storm in a teacup all in the name of entertainment.

We have much lower interest rates than we had then and much lower unemployment, we also still have a growing population and are not building enough appropriate housing.

Our councils have pushed for flats flats and more flats to try to meet their new homes targets which has caused a glut of 1/2 bed unsaleable property in city centres across the uk.

The overiding factor will be how long the credit crunch lasts, if it continues then this in itself will cause the market to drop in a self fulfilling spiral.

Unfortunatley this situation has stemmed from the US and the losses there, money markets lose a fortune and stop lending to determine how much money they will lose.

Money market stop lending
Lender cant Borrow
Lender reduces lending
Borrowers struggle to borrow
Borrowers struggle to buy/remortgage so dont buy or decide to sell
Seller struggles to sell due to lack of buyers able to get finance so starts dropping price
Lender sees prices dropping panicks and makes criteria for getting mortgage harder
Borrower struggles

etc etc etc.

How long will this last? who knows could property spiral down YES, could the situation sort itself out YES.

My opinion is where you are able dig in, plan long term, take a longer fixed rate.

If you take a longer term view all should be fine, we are still an island, we still have a shortage of housing, people live longer so dont die sooner sounds callous but it means there in their home for longer, we have a population of approx 60 million which is expected to hit 90 million in 20 years time.

My question where will they all live?
How much will property be worth then?

I can see the country returning to the point when you lived with extended familly, you live with your mum dad aunt uncle nan grandad just like we used to years ago, unless your lucky enough to own a home and dig in through the tough times.

The media is missing the point if repo's rise where will all these people live? in rented of course which will create a demand for buy to let homes to be made available.

We live in a country barmy enough to allow subsidised rent for people in council houses who's children left home years ago, they have 2 jobs and take 2 holidays a year, drive a nice car etc.. we then pay for younger couples and thier children full rate to live elsewhere because we have not got any council accomodation for them.