FR: Dudley is the only mutual to adopt an intermediary only distribution policy - why is this important and what message would you like to give to intermediaries?
As a response to the Mortgage Market Review, Dudley Building Society decided that it would distribute its mortgage products only via the intermediary sector and use a panel of carefully selected partners. We wanted to demonstrate our total support for the broker community and the primacy of whole of market advice to give customers the best deal available.
FR: You have issued a 'mortgage misfits' challenge - how can this problem be tackled and what products would you like to see offered more widely across the market?
Our aim is to ensure that introducers are aware that just because the big lenders turn down a case where it does not fit one of their neat boxes, regional building societies like The Dudley treat every case individually. The issue is not necessarily about designing new products, instead we have looked at positive criteria changes, and by making use of our specialism for bespoke underwriting.
As a true mutual we are very passionate about helping people own their own homes. The market has evolved in a way that favours the super prime borrowers with straight forward affordability calculations. We were mindful that some potential borrowers within the market are very much underserved. The only way this will be tackled is with a common sense approach – something that we pride ourselves on here. Also the changes we have made in recent months e.g. scrapping upper age limits across our whole product range, had a bigger impact on serving disenfranchised borrowers than any of our product changes.
FR: How will upcoming regulation and a potential rate rise affect brokers and the wider lending market?
Our partners face a challenge keeping abreast of the volume and complexity of regulatory updates. Intermediaries have just gone through MCD and are already facing further regulation relating to Buy to Let lending.
Brokers need to keep in mind the effect on clients of a potential rate rise, when it does come. Fixed rate and remortgage activity will obviously increase at the time, but good brokers will be making sure that customers are aware of the downside of a rate rise should they choose a discounted or variable rate option today.
FR: Dudley recently removed all upper age restrictions across its entire product range - do you think more lenders will follow suit? How will lending into retirement evolve in the future?
We have seen a number of lenders follow our lead. We believe this market will continue to evolve as people increasingly live longer, and their financial circumstances become ever more complex. We do not see lending into old age as simply as a solution to financial needs, as it also provides the ability for borrowers to materially increase their quality of life.
FR: What will be the most significant changes in the industry over the next 12 months?
Changes in the Buy to Let sector have already been felt with the increase in SDLT and the tapering of tax relief. On top of that we are now looking at changes to affordability and a greater emphasis on stress testing. Never a dull moment!
