Mortgage brokers affected by recent sub prime turmoil

Almost a quarter of all UK mortgage brokers claim the uncertainty caused as a result of the recent turmoil in international markets has negatively effected their business –with a similar number admitting to being nervous about its potential effects. According to new broker research by GE Money Home Lending, 1 in 10 feel that this instability - and the potential impact on some lenders - poses a threat to future business.

Whilst the vast majority of UK mortgage brokers stress their confidence in the future of the sub prime market (63%), a significant number indicated that they intended to change they way they do business as a result of the environment. Almost three quarters of those respondents claim they would be more discerning about which lenders they do business with - indicating that experience, infrastructure and reliability are key criteria for them. Only 1% of the total sample claim they would no longer deal with sub prime lenders.

Whilst the research highlighted that the problems experienced in the US would make many intermediaries wary about which borrowers they would refer to lenders, they also feel that it is the lender’s role to have robust tools and systems in place to ensure that they continue to lend responsibly and communicate this clearly to their partners. In addition, GE Money’s research found that the vast majority of brokers believe that the constant debate about instability was generally having a negative effect on their customers – with 68% claiming that consumers are worried about its impact upon them.

Ultimately, mortgage intermediaries feel that lenders need to be upfront and transparent in their words and actions – with over half believing lenders should openly declare their long term commitment to the sector, ensuring that they are consistent and reliable with the deals they are offering. Some brokers expressed concern about borrowers being left in the dark by lenders continually withdrawing ranges at very short notice, or those that were unclear about how they intend to deal with cases that are in the pipeline. In fact, a smaller proportion of brokers claim they would reconsider doing business with such lenders.

Colin Shave, Chief Executive Officer of GE Money Home Lending, said: “As a balance sheet lender and with the benefit of GE’s AAA credit rating, whilst not immune from the current turbulence in the marketplace, we believe we are well placed to weather the storm and remain committed to the sector. However, our research shows that many brokers are clearly nervous about the potential impact recent events are having on some lenders and this is creating uncertainty. At this time it is crucial that experienced providers, with solid financial strength and pedigree, reassure their partners of their long term commitment to the non-conforming market, whilst ensuring that any changes to products, criteria or pricing are communicated in a timely, decisive and transparent fashion.”

Duncan Berry, Director of Mortgages at GE Money Home Lending added: “GE Money Home Lending is a prudent lender so we will always take necessary steps to ensure that we are lending responsibly to the right individuals and we monitor the market on an ongoing basis to ensure we continue to do so.

“Our research has overwhelmingly shown that brokers need clear communication and guidance from their lender partners at this time, as well as relevant tools, technology and expertise which will help them continue to refer appropriate customers to their lenders, despite the uncertainty.

“We are committed to maintaining clear communication with our intermediary partners, and we will make sure that they are given sufficient time to understand and absorb any changes moving forward.”