"We are probably in a more normal interest rate environment now than we have been during the last 15 years": Steve Fletcher, Vernon BS

We spoke to Steve Fletcher, CEO at Vernon Building Society, about the Society's move to a broker-led model, his predictions for mortgage rates in 2024, and what solutions he would like to see introduced for the first-time buyer market.

Related topics:  In The Spotlight,  Mortgages
Rozi Jones | Editor, Barcadia Media Limited
5th April 2024
Steve Fletcher Vernon BS
"Brokers now deliver c. 85% of our new business, which helps us reach customers right across England and Wales."

FR: Tell us a bit about your background and your current role at the Vernon.

Having contemplated full-time retirement in 2017, I was tentatively enquiring about NED positions when I was introduced to the Vernon Building Society board, who were recruiting for a replacement CEO. After working in various financial services firms since I left school at 18, I felt 36 years was long enough! Between 2005 and 2017 I operated in various roles for Clydesdale & Yorkshire Bank, predominantly leading the retail network, although I also held direct responsibility during my time, for the contact centres, third party mortgage distribution, and even small and medium business.

The recruitment agency acting for Vernon (Warren Partners) recognised long before I did, that my beliefs and values were an ideal match for Vernon Building Society and the VBS board’s search.

The board convinced me not to retire and instead to join them on a full time basis, although it didn’t take too much persuasion because I soon realised what a fantastic opportunity had fallen into my lap. I agreed to join them on a two year contract, determined to finally hang up my pen two years later. It’s now been over six years and I’ve loved every minute.

As CEO at Vernon my role is quite simple. All I need to do is: create an environment where people love (or at least don’t mind!) coming to work; and where people share a passion for delivering great customer experience and genuinely care about improving standards in our workplace and our communities. And as a custodian of this proud Society, now in its 100th year, I’ve got to make sure we are always moving forward, ready to withstand any challenges and seize any opportunities, to remain a force for good for the communities we serve. I feel the best way to do this, is to create the environment, and surround myself with great people, and that’s what I’ve focused on over the last six years. Today, is the best collection of people we’ve ever had, and next year it will be even stronger.

FR: How has the Vernon’s intermediary proposition evolved and what should brokers know about working with the Society?

It was in its infancy when I joined as we had until then largely relied on direct business. We still provide high street mortgage advice through our mortgage advisers, and we feel this is an important service for local customers. Brokers now deliver c. 85% of our new business, which helps us reach customers right across England and Wales.

In my early days here, my main focus was in helping colleagues to understand how important brokers are to the long-term financial stability of the Vernon and to therefore treat them as highly valuable friends and definitely not the opposition! I expressed the conviction that for brokers to choose to introduce their customers to the Vernon, we needed to become ‘brilliant at mortgages’ and look after brokers and their customers, in the same way as we look after existing members.

We’ve come a long way in that time, and now have the best internal processes we’ve ever had and the most knowledgeable colleagues we’ve ever had, from the frontline, through the processing team and in our underwriting team. The knowledge and attitude of our people is undoubtedly our prize asset and the major compelling reason why brokers choose the Vernon.

We cannot, and do not, try to compete with larger lenders' rates. But brokers should know that they can rely on the Vernon to take a highly personal approach to trying to help them help their customers. You can count on us answering phones, responding quickly to emails, and trying to find ways to do business rather than reasons not. We’ll also help you submit applications as easily as possible and to underwrite them quickly and to answer any queries at any time you need our help. Above all, brokers should know that if there’s a way to approve a deal which isn’t straightforward, you’d be worth picking up the phone to us first, we’ll try to help but if we can’t, we won’t waste your time.

FR: How do you foresee mortgage rates continuing to change over 2024 and beyond?

We only have the same crystal ball as everyone else! I have to say though when the market was getting carried away with rate cuts at the beginning of the year, our FD told me it wasn’t going to happen. She was right, again! I could only therefore offer views which have been circulated following the February MPC, which is potential reductions by the end of the year to between 4-4.5% and then c. 3- 3.5% by the end of 2025. But who knows, there’s going to be an election later this year, and how can you predict the type of global conflicts which have broken out since the world was closed down with Covid.

But what I would say is that we are probably in a more normal interest rate environment now than we have been during the last 15 years, although if you’ve only been in the industry since post 2008 you’d be forgiven for thinking I’ve lost my mind, or worse!

I do think that the regulatory interventions post 2008, have been very helpful in avoiding big problems in the mortgage market since rates began to rise from January 2022. We’re all ‘bound’ by these regulations (e.g. affordability guidelines) and brokers and mortgage advisers are really well placed to provide good advice to mortgage customers. My youngest son is 24 and currently looking for a first-time buyer property, and I personally wouldn’t put him off taking out a five-year fixed rate now, because of all the reasons why we know this makes sense. I think more than ever, this is a really important time and a great opportunity for professional brokers to help customers through the ‘noise’. There are a lot of ‘smart’ people who don’t ‘get’ mortgages and brokers have a huge role to play.

FR: What solutions would you like to see introduced for the first-time buyer market?

Building more houses would help in a lot of places, although price and supply isn’t the main issue in most of the North West, where we are based. I think it’s always been hard, at least initially, for first-time buyers and then it gets easier. The usual government incentives around stamp duty, etc, have always proved to be successful, and HTB ISAs and LISAs also help. Innovation from lenders could help too, like we’ve seen lately from for instance Skipton Building Society.

At the Vernon, our HeadStart mortgage is an unbelievably good product, which allows sons and daughters to get their own place and at the same time mums and dads retain all the value in their home. I’m hoping other lenders will find that product hard to follow, because it does rely upon brilliant personalised underwriting. I’m afraid this product is still a best kept secret, as is our Buy 4 Uni product, which can avert astronomical university rental fees and create more first-time buyers at the same time. But they are superb innovative products aimed directly to support first-time buyers.

FR: If you could read one headline about the mortgage market in 2024, what would it be?

‘Mortgage market finally on the move’.

More like this
to our newsletter

Join a community of over 30,000 intermediaries and keep up-to-date with industry news and upcoming events via our newsletter.