L&G's Duncombe plans to diversify mortgage club


Jeremy Duncombe, director of Legal & General Mortgage Club, tackles the impact of buy-to-let regulation and plans for the business to diversify in the latest FTAdviser video interview.

The director of Legal & General Mortgage Club, said while it was understandable for the government and regulators to bring in individual pieces of buy-to-let regulation what we now have is lots of different layers of rules "and we do not quite know what effect each one is having."

Mr Duncombe said: ""So what we have seen is a cumulative effect of all sorts of changes starting to come in at once."

Article continues after advert

In November 2015, during the Autumn Statement, then chancellor George Osborne announced a 3 per cent stamp duty hike on buy-to-let properties, with effect from 1 April 2016.

Yesterday (16 November) it was announced that the Bank of England’s financial policy committee will be granted new powers over the buy-to-let sector from early next year to help it protect the financial system.

The FPC will be able to require regulated lenders to place limits on buy-to-let mortgage lending.

These limits will apply to loan-to-value ratios and interest coverage ratios.

Mr Duncombe said the stamp duty change on its own did not have too much of an effect, but together with other regulations, it helped create a cliff-edge.

Speaking to Emma Ann Hughes, editor of FTAdviser and Financial Adviser, Mr Duncombe said: "What we had was a peak of completions in March 2016 - a natural cliff-edge of completions - which would otherwise have been smoothed out across the year."

Mr Duncombe also tackled the impact of Brexit on the mortgage market.

He said: "There have been positives, as we have seen lower interest rates and the market is still buoyant. There is continued demand, buyers are still wanting to buy and the reduction in rates has brought us a spike in remortgage, which is positive.

"The key thing for advisers is to talk to customers about what is happening.

"It is important to reassure customers that Brexit is not anything like what we saw in 2008 with the credit crunch - it is simply about a change in circumstances."

According to Mr Duncombe, L&G Mortgage Club has had a "fantastic year", and the club has been working with its lenders to bring more products, exclusives, procuration fees and retention fees to its members.

"We also want to diversify our proposition", he said. "We have worked hard this year to increase our proposition, such as bringing in a later life lending and equity release panel, and we are looking at other things, such as commercial finance.

"We want introducers to come in and use us to future-proof their businesses."