With qualifications already required for specialist services such as equity release mortgages (requires CeRER training) and long term insurance products, this could place much more emphasis on financial training on an on-going basis.

The FSA was quoted as saying:

“The growing sophistication of investments generally, might mean that advisers with only the minimum qualification (such as that for advising on packaged products) should be restricted to advising on more mainstream investments.”

The FSA’s suggestion was included within a wider discussion paper on the subject of giving the FSA greater power to intervene in the marketplace in order to protect the consumer.

This move is designed to ensure that customers are only given advice on the more complex deals and products by qualified advisors able to demonstrate both the skill and a high level of knowledge in that area through an additional, relevant qualification and CPD (Continuing Professional Development), according to the FSA.

The struggle reportedly is going to be to identify the products the FSA deems to be non-mainstream or complex and the FSA is open to feedback from the industry on this point.

Currently, to become a mortgage advisor you need CeMAP training and for financial advisors you need CeFA training. Following this training, a person can advise on a wide range of base products and it will be interesting to see what the FSA introduces.

The mortgage club conducted a survey amongst its mortgage brokers and found that every single one of the directly authorised respondents (DAs) believed their business will stay the same or increase. Indeed, only 14 percent believed the volume would remain the same.

When discussing potential to increase their revenue, 65 percent of the brokers expected protection (insurance) to offer the most potential with buy-to-let coming in second at 28 percent.

A fifth of respondents stated Commercial was expected to be their top area for growth. A further 15 percent cited Equity Release (for which mortgage advisors require their CeRER exam on top of the CeMAP exam) and 10 percent selected General Insurance. Other options included Investment Advice, Regulated Pensions and Specialist Packaging.

Over 50 percent of the directly authorised brokers believed that overall mortgage lending would remain approximately in line with the levels seen in 2010. 38 percent believed mortgage lending would increase. A mere 5 percent thought mortgage lending would end lower.

The mortgage advisors’ views on house prices were split. 48 percent believed property prices would be roughly in line with those prices seen in December 2010. Just over a quarter (26 percent) thought prices would increase up to 5 percent and a further quarter thought prices might fall up to 5 percent.

Head of the TMA, Phil Whitehouse, head of TMA, commented:

“Despite predictions of intermediary numbers falling, the results of this survey indicate that DA brokers are looking to 2011 with a good level of optimism.”

Many lenders will not allow borrowers to extend the term of a mortgage beyond the age of 65, but according to Sue Anderson, speaking on behalf of the CML (Council of Mortgage Lenders), this train of thought is already being addressed in conjunction with the FSA’s review of the mortgage market.

First Direct and HSBC have already said they will allow repayment mortgages to extend beyond the normal retirement but in return will want more detail on the pension funds and financial prospects of the borrower.

If other lenders adopt a similar stance, then this could reduce the growing popularity of equity release deals – mortgage advisors need their CeRER training and qualification in order to advise on these.

Employees will also be able to choose their own retirement date rather than have one forced upon them. Many hope this will encourage better retirement planning, as people’s take more responsibility for their choice of when and if they can afford to retire.

The DRA is expected to be phased out by October this year, as pledged in the coalition agreement. There may still be exceptions for some groups of workers but pressure is on to ensure that age is removed from the equation altogether.

How the mortgage market will react and how the mortgage deals will alter remains to be seen but as those studying their CeMAP training to become a mortgage advisor will quickly see, the mortgage market is always evolving.

Those who has already passed their CeMAP exam will have recently received, or be about to receive, a letter explaining a new qualification for mortgage advisors.

The CeMAP is the benchmark qualification that you need if you want to become a mortgage advisor. Recently, the FSA (Financial Services Authority) has issued proposals to make the CeMAP compulsory for anyone involved in the sale of a mortgage, from the call centre advisor to the administrator. Now, the DipMAP has been launched. The DipMAP offers a more advanced knowledge level than the CeMAP but is not necessary for people working in mortgages and as yet, there are no plans to make it such.

According to the ifs, the DipMAP is expected to help mortgage advisors to build a more advanced level of product knowledge and an understanding of the market to help them in the modern, more complex and constrained marketplace that we see today.

Anne Kiem, vice principal at the ifs School of Finance, said: “We are proud to be at the forefront in providing advisers with a qualification that allows them to differentiate themselves in a challenging and increasingly competitive commercial environment.

“While the financial crisis has brought many challenges to the mortgage market there still remains opportunity for growth and diversification, particularly in the area of highly specialised mortgage advice. Increased regulation in the advice sector is here to stay, and there can also be little doubt that product complexity will continue to increase across mortgage types in years to come. In such an environment advanced qualifications like DipMAP can really come to the fore in helping advisers stand out from the crowd.”

The regulated advice sector is undergoing much change at the moment. Financial advisors are seeing the introduction of the DipFA, which will be a compulsory qualification from 2013, as well as the CeFA qualification. CeMAP and CeFA training remain at the core for both mortgage and financial advisors.

From the 11th January next year, anyone taking out a mortgage with the UK’s largest mortgage lender will see a different standard variable rate (SVR) when their mortgage deal finishes – the new rate, called the HVR (homeowner variable rate) is 3.99 percent. The Halifax’s present SVR is just 3.5 percent.

The lender is blaming this new higher rate on the cost of the funding available through the retail and wholesale markets, something which CeMAP course students learn about during their study. In the past, mortgage advisors would find that a mortgage owner would only stay on their SVR whilst they and their mortgage advisor had found the best new deal for them to move onto. However, with Bank of England base interest rates staying at a record low of just 0.5 percent for months now, many homeowners have been taking the risk of staying on this variable rate rather than remortgaging.

Although for many borrowers at the moment this means a lower rate than perhaps they enjoyed whilst on their mortgage deal, it also means that if the Bank of England base rate increases, then their mortgage payments will also rise in line with this. Remortgaging could then be an option, but mortgage deals then could be a very different picture to those we see currently.

Other mortgage lenders have also increased their SVR for new customers.

CeMAP

In an earlier article, we discussed how the FSA’s latest report states that anyone dealing in the sale of mortgages should have a qualification at Level 3 or equivalent – in other words, many call centre staff and bank workers will need to pass the CeMAP exam. However, many in the mortgages market believe this does not go far enough.

According to the Mortgage Strategy website, any face-to-face mortgage sale should be an advised one, whether it is by a mortgage lender or a mortgage broker.

To give any mortgage advice, a person must have the CeMAP exam and so the FSA has certainly made a step in the right direction there but by taking this a step further and insisting on advice, this would stop large mortgage lenders, such as banks, from selling products that are inappropriate. The sale of inappropriate mortgage deals is currently defended by the ‘non-advised’ stance.

The Mortgage Strategy article goes further, saying that customers walking into banks to get a mortgage expect that they will receive appropriate advice. No matter what the Initial Disclosure Document (IDD) states, many still believe the bank has given them the best mortgage product that meets their requirements and yet they may well have walked out with a mortgage that is miles away from the most suitable one.

Ending with this quote, is this stance feasible, should the FSA go a step further and make advice compulsory for all mortgages?

If banks are unable or unwilling to take on the responsibility, the solution is easy – refer customers to an independent mortgage broker.

Mortgage advisors use a variety of systems in their role. No matter how organised a mortgage advisor might be, anyone who has ever bought a home will tell how stressful and drawn out the process can feel and much of this can be avoided through regular progress updates from the lender and an understanding of the steps in the mortgage application process. This new service aims to improve communications and will email the mortgage broker at each of the following key steps:

1. Confirmation application received
2. Completed credit score
3. Copy of valuation report received
4. Mortgage offer sent to customer
5. Completed mortgage case
6. Mortgage case not proceeding

The mortgage advisor / broker will receive an audit trail at each critical point of the application process and can access the new online service, which is updated in real-time. The service offers a summary of all mortgage cases through the advisor, meaning there will be less paperwork too.

Barclays Intermediary Business Director David Finlay stated:

“We know brokers are so busy juggling existing mortgage applications on different systems in the industry.

“This will make a huge difference to brokers in terms of their time, as we know from their feedback that they wanted better updates about their clients’ application process.”

There is a guide available to help mortgage advisors to use the IntroTrack system and they will automatically be registered when they next apply for a Woolwich mortgage.

The Co-operative Bank and its subsidiary company Britannia have launched a two year fixed rate mortgage deal requiring just a 10% deposit and the mortgage is available now.

With an initial introductory interest rate of 5.09% and a low application fee of £999, the mortgage is a welcome addition to the first time buyer market. Buyers can alternatively opt for no application fee at all if they choose a higher initial interest rate of 6.09%.

The Head of Financial Services mortgages at The Co-operative Bank, James Hillon, commented on the new product in an article on the Fair Investment website:

“We are keen to continue to help support mortgage customers and the introduction of the new two year products provides a welcome boost for first time buyers and home movers.

“Customers who want to take out one of these mortgages, will also have the additional flexibility of a range of direct channels, including internet, telephone and branch as well as the added benefits of our high levels of customer service.”

For first time buyers, the mortgage market has been much more difficult since the onset of the recession and the introduction of new products such as these can only stimulate the market’s recovery further.

A CeMAP-qualified mortgage advisor will be able to help any potential buyer or homeowner looking for a mortgage to find the most suitable product for their circumstances.

In its Mortgage Market Review (MMR), the Financial Services Authority has proposed a number of new rules in an effort to prevent the happenings of the credit crunch from re-occurring in the future. One of these rules is set to force any borrower taking out an interest only mortgage to have some form of suitable repayment method in place that will repay the capital at the end of the term. The FSA wants mortgage lenders to take more responsibility in checking that this repayment vehicle is in place.

The CML recently warned that this would not only restrict the number of choices available to mortgage borrowers but would mean that many mortgage lenders would actually withdraw their interest only options entirely.

Critics have claimed that the FSA is giving a ‘knee jerk reaction’ and severe damage could be caused to the mortgage market if this sort of ruling is set in place. Many people see interest only mortgages as a legitimate way to take out a mortgage. Many do this if they have a fluctuating income, such as the self-employed, or if their income is expected to rise quickly in the future, for instance a trainee doctor. Many mortgage advisors are backing the CML’s warning.

Manchester

One reason many mortgage advisors like the Manchester Building Society range is that the building society does not use automated computer scoring systems to assess the applications. Instead, the Manchester BS says a ‘one size fits all’ approach only frustrates brokers so instead an experienced team of underwriters individually assesses each mortgage case.

With individual consideration, this means that complex elements can be considered – a particularly useful point when dealing with complicated prime applications. If in doubt, mortgage advisors can also contact the underwriting team directly if they wish to discuss an individual aspect of a case.

Business relationship manager for Manchester BS, Chris Mitton stated:

“Our newly extended Mortgage Options range remains focused on the intermediary market and is intended to cater for a wider range of client needs.

“In addition to the launch of our new fixed and discounted variable rates, we have also made several improvements to our lending criteria which should benefit mortgage advisers. All products continue to have no booking fees and we have kept arrangement fees at sensible levels.”

Those undertaking CeMAP courses in Manchester to become mortgage advisors may find themselves using the Manchester Building Society mortgage range in the future.