Funding, product availability and supporting the intermediary market

Lending approaches differ from institution to institution with sources of funding playing a key role within this - whether retail, wholesale, or a combination of both.

As a building society, we largely fund our mortgages from retail deposits which is something we have done for well over a hundred and fifty years now. However, it’s important to point out that limits remain on the amount of wholesale funding mutuals are allowed to use, and we have to maintain a balance across our lending proposition - in terms of the types of products we can offer at any given time - to ensure our members funds are not over exposed in any one area.

This represents a tricky balancing act, even in the more mundane lending conditions, so I’m sure you can appreciate the additional pressure being placed on product teams due to a host of economic factors domestically and internationally which are impacting all types of lending proposition.

On the flip side, we can also fully appreciate that current market conditions are leading to a raft of new challenges from an advice perspective with intermediaries requiring that bit more support along the way. As such, it was encouraging to see IMLA and AMI come together to produce an online guide to help advisers generate a better understanding of lender funding, product pricing and availability in the wake of lingering interest rate volatility and short notice product withdrawals.

This online guide answers questions such as:

- How are fixed rate mortgages funded, and what is a swap?
- Why can some lenders offer more notice of product withdrawal than others?
- Can product withdrawal deadlines be kept within the 9-5, Monday-Friday?
- What would happen if a 24-hour product withdrawal notice period became mandatory?
- What needs to happen next – what can lenders and brokers do?

There has been a clear need for lenders to ramp up their product-related communications in recent times but – as outlined in this guide - when operating in such a highly unpredictable lending environment, it remains difficult to offer assurances around the shelf life of any individual product. Although, that doesn’t mean we can’t stop evolving and improving service offerings where possible.

Here at Hanley, we’ve recently made the commitment to provide our intermediary partners with a minimum of seven days to submit a full mortgage application (FMA) following any product withdrawal, providing a decision in principle (DIP) has been agreed. The aim of this move is to help ensure that our intermediary partners have sufficient time to collate all the necessary documentation to support a full mortgage application and mitigate disruption for them and their clients when and where they can.

Many different lenders are supporting the intermediary market in many different ways, and I think we can all agree that providing advisers with strong lines of communication, transparency and as much notice as possible around any product changes and repricing is the way forward. So, let’s hope that lender/intermediary relations can keep trending in the right direction in order to better service a range of client needs in what remains a transient and uncertain financial climate.