The shrill cries of anguish

The Mortgage Market is, to quote my kids, "pants".  We all know the reasons - or think we do - but the BOE is endeavouring to persuade us that things are really not as bad as we thought they were.

$1 Trillion in subprime losses?  No way, say the BOE.  A mere bagatelle of $170 Billion is more like it.  But, just begin to tot up the costs:  Northern Rock has added £100Bn to taxpayer liabilities; there's a new £50Bn bank funding facility in place, and - apparently - the Government coffers are now well and truly empty.  Which raises just one or two problems for the Exchequer when one recalls that the financial services industry has been - to a very large degree - keeping this profligate Government afloat through tax revenues.

According to our sources, mortgage lenders and packagers have been haemorrhaging employees, and intermediaries are currently howling in protest at the somewhat machiavellan strategies being employed by mainstream lenders in order to dull the pain.  Nationwide, Woolwich, Halifax and Abbey - all of whom in the past having been heavily dependent upon intermediary introductions - are now either only accepting business direct, or are not allowing intermediaries to have access to the tastier morsels.  Not surprisingly, many clients are discovering that they can get better deals by going direct - dual pricing is an iniquitous practice, by any standards.  Senior mortgage professionals have pointed out to the banks that they are biting the hand that feeds them - but the 'short term gain' argument appears to be winning the day.

And don't get me started on HSBC.  That (in)famous remortgage deal is being milked for all it is worth!  Clients seeking to move their mortgage are being offered terms (yippee!), but HSBC want to charge a humungous up-front fee for their trouble (boo!).  If the customer evinces discomfort, apparently deals can be done if they transfer their property insurance to the bank.  Can they do that?

Apportioning blame in the current crisis is about as straightforward as trying to nail custard to the wall.  Nobody at the FSA will be disciplined for the Northern Rock fiasco.  The 'Iron Chancellor' who was happy to take all the credit for the previously booming 'smoke & mirrors' economy is ascribing our problems to the 'global economy' now that Labour have suffered a bit in the local elections, rather than admit anything to do with mismanagement in the UK.

In the meantime, where do we go?  We have businesses to run, children to feed etc etc.

Firstly, it's reassuring to know that some of our professional connections are actively working behind the scenes.  In the following table, you can download recently published statements and some helpful guidance from L&G Mortgage Club and Premier Mortgage Service, as well as some useful comment from some of the Lenders concerned.  Some of this material you could use, proactively, in a newsletter to clients, or as the basis for a press-release to your local paper.  We understand that, behind the scenes, entities like mortgage clubs and packagers are lobbying hard with lenders to bring about a change of approach.