The temperature outside may be dropping but, as lenders race to meet their end-of-year targets, whose performance was distinctly chilly during the past quarter and whose lit a fire under the market? Mortgage Strategy’s latest survey finds out.
Whatever the season, Halifax seems able to weather any storm, topping our poll for the fifth consecutive quarter.
“It’s had another great quarter in terms of rates and service,” says Perception Finance managing director David Sheppard, adding that free purchase valuations would further heat up the Halifax proposition.
Trinity Financial product and communications manager Aaron Strutt says: “Advisers like how you can call up and get a case agreed on the same day — subject to valuation.”
Meanwhile, Chadney Bulgin mortgage partner Jonathan Clark praises Halifax for saving clients from “unnecessarily high rates”. He adds: “It will tolerate a modest element of poor credit performance, which other prime lenders would decline.”
Santander for Intermediaries
It’s been a scorcher of a quarter for Santander as the lender climbs two places in our poll. Just Mortgages senior mortgage and protection adviser Matt Tilbury thinks it has “one of the best propositions for BDM support”.
Despite its top rates, Santander’s service has not slipped, says Clark, adding: “It continues to streamline its application process.”
Riach Financial Advisers mortgage adviser Bob Riach has been impressed by “the speed of offers and daily email updates”.
Strutt, meanwhile, thinks Santander’s interest-only policy is a draw. “It requires £150,000 equity in the property at the end of the term,” he says. “With other lenders it’s much higher.”
RBS (NatWest Intermediary Solutions)
It was clear skies for RBS last quarter and the lender has maintained third position. London & Country associate director of communications David Hollingworth commends its service.
“Adding cashbacks into the equation helped deliver a strong quarter,” he says.
Strutt welcomes the lender’s income multiples and rates. “Once cases are submitted, they go through smoothly,” he says.
Clark adds: “NatWest will consider cases outside its normal criteria but its low proc fee and overdue product transfer facility still frustrate.”
There were a few clouds over Virgin last quarter, leading it to drop two places to fourth. Although Sheppard welcomes its broker support for new business and rate switches for existing borrowers, he says: “Its porting applications, which still have to be done on paper, need improvement.”
Clark feels Virgin is doing every-thing right to attract business but its rates have “gone off the boil recently”. However, SDL Group commercial director Rob Clifford says: “Virgin scored highly due to its excellent BDM support.”
Coventry warmed up considerably last quarter, gaining two places on the leader board. Personal Touch Financial Services head of propositions Victoria Jefferies says: “Coventry consistently provides strong service and products.”
Clifford’s advisers praise the lender for “excellent BDMs, who can provide fast offers”, while Hollingworth says: “Coventry will try things others aren’t doing, such as seven-year fixes.”
Clark also appreciates Coventry’s fixed rates, but adds: “Its relatively strict affordability calculator and inability to take different income sources into account are holding it back.”
Barclays had a mild quarter and maintained sixth position.
“These days it’s expected that Barclays’ service level will be consistently good,” says Hollingworth. “When it adds aggressive pricing to the mix, including leading two- and five-year fixes, it’s a hard act to follow.”
Clark praises the lender for a number of market-leading products. “Its product transfers are even sharper, so it’s no surprise it is finding favour with brokers.”
YBS (Accord Mortgages)
It was an unsettled quarter for Accord, resulting in a fall of two places.
“Service slipped a bit, with offers not as fast as they were,” says Sheppard.
According to Clark, although Accord’s rates are no longer market-leading, it has “excellent service and BDM coverage, with underwriters prepared to stretch affordability for the right client”.
Hollingworth adds: “This quarter gave a stark reminder of its ability to price when it opened its 0.99 per cent two-year fix to 80 per cent LTV.”
Meanwhile, Alexander Hall technical director Richard Merrett welcomes the lender’s loan-to-income changes. “This aided affordability for a broader spectrum of clients,” he says.
Nationwide for Intermediaries
Things look brighter for Nationwide as it gains one place in our poll. John Charcol managing director Walter Avrili commends its “very swift and effective product transfer service”.
Riach cites “generous affordability calculations” and “consistently good service”, but Sheppard disagrees. “A case was referred to surveyors who did not seem to know why; this led to an eight-day delay,” he says.
Tilbury calls Nationwide’s processing systems and times “poor”, adding: “Its lack of BDM coverage and support is also an issue that needs to be resolved.”
HSBC has replaced Clydesdale Bank on our panel, with brokers becoming acclimatised to its ways. Strutt praises its BDM. “Without her we would not have been able to get clients such fantastically low rates,” he says. However, Tilbury is keen to see a new online system.
“To provide an excellent service, lenders need to offer an easy-to-use online system — something HSBC currently fails to do,” he says.
Sheppard, meanwhile, is getting to grips with the lender’s processing. “It’s not always clear which fees are payable, even when outlined on the key facts illustration,” he says.
TSB Bank suffered a cold snap this quarter, dropping one place to ninth. Clark says: “TSB’s rates continue to languish down the best-buy tables and its delayed product transfer facility frustrates brokers.”
Hollingworth, however, says some of TSB’s remortgage five-year fixed rates performed “very well”.
Riach is a fan but says rates have only recently become competitive, with the launch of several fixed products and rate cuts on existing deals for homemovers and remortgage borrowers.
“I’ve had good service from TSB in the past, so I hope it
will continue and improve,” he says.
Wild card: Precise Mortgages
Precise is this quarter’s Wild Card. Hollingworth says: “Precise offers something different. It’s a dynamic lender that’s ready to identify alternative markets, backed by a committed sales team.”
Clark adds: “Precise offers a home for the most challenging cases with instant online underwriting decisions and cascade pricing.”
Tilbury praises the lender’s improved Help to Buy products but says: “It needs to strengthen its broker support capabilities; its existing systems are not sufficient.”
Merrett adds: “Precise has concentrated mainly on buy-to-let, where it excels. It would be good to see more residential innovation.”
View more on these topicsFeatures
When you apply for a mortgage you will be provided with information about a firm’s service. You must also be provided with some form of a mortgage illustration document(s) at the point where a product is recommended or chosen. Alternatively you can ask for it at any time. When the lender finally agrees to lend the money to you (after they have carried out all the necessary checks), they will send you a Mortgage Offer. This guide explains why it’s important that you understand the information and documents you will receive and how i can help you get a better mortgage deal
Key messages about the mortgage service
Ask your lender or adviser to explain their mortgage service on your first meeting or when you contact them and ask for it in writing.
The ‘key messages about the mortgage service’ must be explained to you when you talk to your lender or mortgage adviser.
It has to cover:
- Whose mortgages you are being offered – for example a lender will generally only offer their own mortgages whereas a broker might arrange mortgages from across the whole market. They must make it clear to you if there are any limitations in the range of mortgage products they provide. You need to know how much of a choice you’ll have.
- How much you will need to pay for the service. This might be nothing, a flat fee, or a percentage of the mortgage amount, or both. You should also be told if an adviser gets paid commission.
- If the mortgage details are being provided on an information-only basis and you’re making a decision on your own also known as “execution only”, this should be made clear to you. Brokers and financial advisers have to offer advice.
This information must be provided clearly and prominently, as part of the initial conversation (in the case of a meeting or telephone conversation) or on screen (in the case of internet sales) or in a document (in the case of a postal application).
Double check whether you’re getting advice
You will receive advice on most mortgage sales. However there will be exceptions.
For instance, you might reject the advice you’ve been given, or want to go ahead based on information you’ve gathered on your own online or by post.
This is known as an execution-only sale and the lender will write to you making it clear you have not taken advice and it hasn’t assessed the suitability of the mortgage for you.
Having advice from a qualified expert offers you extra protection.
If the mortgage turns out to have been unsuitable you can complain to the Financial Ombudsman Service.
You might lose this right if you choose an execution only sale.
As a general rule, an execution-only sale is where there has been no dialogue between you and the firm during the sale though there are exceptions if you’re simply asking for more details about your chosen mortgage.
You can find out more about your rights if you get poor advice in our guide below.
Financial mis-selling – what is it and what to do if you’re affected.
Do you need to pay for mortgage advice?
You don’t necessarily need to pay an upfront fee for mortgage advice as some mortgage brokers offer a fee-free service.
Instead of getting paid by the mortgage borrower, they take a commission from the lender.
Follow the link below to find out more about the different types of service offered.
Read our guide on Choosing a mortgage – how to get the right deal.
Mortgage illustration document
When a lender or an adviser recommends a mortgage, or when a lender gives a mortgage offer, they have to give you a mortgage illustration document which is tailored to your mortgage needs and explains:
- Your monthly repayments
- Any fees or charges you have to pay upfront to get the mortgage
- The overall cost of the mortgage, including interest, over the full term
- The rate of interest or Annual Percentage Rate of Charge (APRC) and the type of interest (i.e. fixed or variable)
- What happens if interest rates rise and how this affects your repayments
- If there are any special features of the mortgage, such as the ability to overpay or underpay
- If you can make overpayments to the mortgage and any penalties for doing so
- What happens if you don’t want the mortgage any more, and
- The length of the reflection period (i.e. at least 7 days, or more depending on the lender).
This document is usually known as the keyfacts Illustration (KFI).
By 2019, the European Standard Information Sheet (ESIS) will replace the current KFI.
The ESIS document is similar to the KFI but will have more detail about the mortgage and the terms they’re offering you.
Some mortgage advisers and lenders might give you the ESIS when they recommend a mortgage or make a mortgage offer.
While others might continue to give you an enhanced version of the existing KFI document with supplements of any additional information as needed until then.
You will also get this document even if you decide to go with an execution only sale.
How the keyfacts Illustration can help you
The keyfacts Illustration document or the ESIS if that is given to you instead, makes it easy for you to compare the total cost of mortgages side by side because the documents contain the same information, usually presented in the same way.
For example, you can quickly compare monthly repayments, and what happens at the end of any introductory deal.
Of course, you should also read the mortgage offer small print before signing up to any mortgage deal.
Don’t be caught out by charges you weren’t aware of.
Read our guide below to understand more about the different fees and charges that you need to compare.
Learn more on Mortgage related fees and costs at a glance.