MortgagesMar 14 2017

Mansfield eyes paying proc fees

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Mansfield eyes paying proc fees

Mansfield is considering introducing procuration fees for mortgage retentions, with a decision expected shortly, according to one of the building society’s senior figures.

Increasing numbers of lenders have been bringing in procuration fees - a commission paid to the broker for arranging the loan or mortgage - during recent months, as a slowdown in the market leads to a greater emphasis on product retention and transfers.

Mansfield chief executive Gev Lynott told FTAdviser: “There is a marketplace slowdown in house purchase so for brokers to survive they will need to do more on remortgaging - so lenders should consider ‘should we be rewarding them?’

“That is where the game is going to be - working your existing client base more effectively.”

That is where the game is going to be - working your existing client base more effectively.Gev Lynott

The building society is also planning to enhance the lending criteria in its Versatility range, which was launched in February to cater for the specialist end of the market. Details are expected to be revealed “within a month”.

Mr Lynott said there had been a positive reaction to the product range, which includes family buy-to-let mortgages, self-employed and contractors home loans, interest-only options, and lending into and in retirement.

“We used to have 50 enquiries a day and now we are up to 150 a day – and part of that is due to Versatility,” he explained.

The building society, which prides itself on its face-to-face approach offering personalised lending, has been able to attract some of the consumers rejected by the larger lenders – including buy-to-let customers.

"Buy-to-let demand has really picked up since the regulations were introduced,” Mr Lynott continued, referring to the Prudential Regulation Authority’s changes to buy-to-let affordability checks, which came into force on 1 January, as well as the changes to income tax relief on finance costs.

“We have seen a lot more business come through, partly because of our more flexible approach and because the big players have been forced to tighten up.

"There is more space for us to say ‘we are still here.’

“Someone with a really nice property that is not generating a rental income could struggle to get buy-to-let. But it is a good property, so we will say ‘you have failed the coverage ratio, but have you any other means of paying if interest rates go up?’

“We will consider other assets and income. Because we are manual, we can say we are going to do it.”

Mr Lynott added one of the main problems faced by smaller lenders is getting the word out about their products, and he called for an online database similar to the one brokers can use when finding lenders who will finance self-build projects – a site known as BuildLoan.

“With self-build projects, brokers know they can go to BuildLoan and get access - why could we not do the same with underserved segments of the market?” he said.

The Mansfield chief executive believes custom builds, self-builds and prefabricated homes will all play a role in solving the housing crisis – but he said more needed be done by central government.

“We should be building 250,000 homes per year – where is that going to come from? Legal & General are working on a factory near Leeds that could produce 50,000 homes a year – why can’t the government do that?”

And with advisers currently facing a more challenging market in many parts of the country, he had a few words of advice for drumming up business.

“Advisers have got to think ‘where are the places I can go? If I am getting blocked through my normal sources, there will be lenders that are more nimble and more flexible.

“There are a lot of people fishing in the pond for lenders and brokers, and if the pie is not getting bigger we have to be smarter. If you have got great services, get out there and shout about it.

“It is about how you market yourself and tell the world about what you are doing. Those are the people that will do well in the marketplace.”

Tony Salentino, director of Southampton-based Complete FS, said he would welcome the introduction of procuration fees.

“I think any lender that recognises there is just as much value within their existing client base as new clients coming on board has got to be a good thing,” he commented.

“Rewarding the advisers is a benefit to everyone involved. I think there has to be a recognition for all the work that they do. The retention process involves just as much work, so it seems fair that some sort of recognition is made from the lenders.”

simon.allin@ft.com