Welcome to the newsletter from HomeLoan Partnership, designed to keep you up to date with topical market news, sales ideas for your business and developments in the HomeLoan Partnership proposition.

What a month this has been! Several times we sat down to write this part of the newsletter and it was outdated before we had finished.

Icelandic banks were dropping like flies, the US government decided to buy up a huge chunk of sub prime debt and Europe responded with a cunning plan to bump start the inter bank lending. So how did the markets react?

The markets took a dive, then recovered, then dived again as each new bit of news was interpreted. Unemployment is apparently on the increase, oil prices are on the decrease and the bank base rate was reduced in an impotent attempt to make something - anything happen. Simple!

I suppose you have to look at the underlying issues to work out whether we have a chance of using the funds as they appear at the pointy end, the intermediary market.

If you were wondering if August was just bad for you, it wasn't, it was bad for most brokers. The CML's figures showed that lending was 63% down for the month year on year.

There were just over 42,000 loans for house purchase in the month and just under a third of the lending was to first time buyers, on average with an 84% loan to value and a 3.18 times income multiple.

Remortgaging accounted for 74,000 loans, down 20% on last year but still healthy and we believe that September's figures will be growing again. Fixed rates accounted for the majority of loans as usual but tracker rates were up, demonstrating the value of advice perhaps.

Comments have been made recently about 'pent up' demand for remortgaging, calculated at some 380,000 transactions. The busier submitted figures over the past few weeks seem to bear this out as brokers back track over clients they deferred earlier in the year.

So, investment in the banks, guarantees on interbank lending and the prospect of falling LIBOR rates, together with pent up demand look like some kind of light at the end of the tunnel to us - ever the optimists.

The only other pearls of wisdom we can offer is that business tends to go to those that are out and about looking for it. Don't allow yourself to be convinced that the market is worse than it is; we have pro-active firms writing strong levels of business despite any indicators to the contrary.

The quarterly figures for network membership were released in Mortgage Strategy recently but these are quite high level and we decided to have a more in depth look at the story behind them.

You would expect firms with deep pockets and more resource to recruit in bigger numbers and this is generally the case but what about the brokers exiting along the way. This is probably a better indication of the level of service provided and certainly of the satisfaction of the broker with the proposition.

So, who has lost the most firms (relative to their start of year numbers)?

Ignoring the very small firms where the figures can be distorted by just a few losses, GHL tops the list for poor retention with the equivalent of 28% of the number of firms with them at the start of the year leaving and the network showing a net loss of firms year to date of 7.7%.

Next we have MBSL and Mortgage Times (Vision) each with 24%, fairly significant when you consider that for Mortgage Times this accounts for a whopping 107 firms in just 9 months.

Mortgage Intelligence and Home of Choice have both lost 23% of their start of year members and again with HOC this is more significant as it accounts for 70 firms.

Other significant networks were Personal Touch who have lost 113 firms to date, Sesame (129 firms) and Network Data (77 firms). HOC, Sesame and Network Data also show a net loss of firms for the quarter and for the year to date.

What does this demonstrate? Some of these broker firms will have exited the business altogether but we believe that retention is linked to the support that the network provides, the proposition and the whether the charging structure is deemed as fair.

HomeLoan Partnership has the best retention of any Mortgage Network in the UK, having lost just 3 firms in the current year. We welcome conversations from firms currently with other networks that would like to find out what makes us different.

We think it is self evident from the products available that the Buy to Let market is struggling and confidence has reduced in the ability of smaller landlords to make this pay for them.

There is a price now being paid by private investors that joined the market late, hoping to make a killing on equity increases.

Landlords reaching the review of a fixed or capped deal may find that the increase in mortgage payments exceeds rental income whilst property values have fallen, making remortgage difficult.

Not all are in the same predicament. A recent survey by the Association of Residential Lettings Agents showed that landlords were geared on average between 51% and 75%, a cushion against dropping house values but suggesting that many should remortgage whilst they can.

75% of those questioned said that they would not sell their properties because of dropping prices and the average length of ownership of a portfolio was 16 years.

What is comforting is that rental demand is rising significantly as mortgages have become more difficult to obtain and there are some cracking deals to be had for landlords with equity to spend.

The market is alive and kicking but probably for the professional investor. The key message is - buy wisely and finance into deals that give you some certainty of payments for the forthcoming future.

Join the 20% of advisers receiving 80% of General Insurance Commissions

Pareto's principle suggests that 80% of effects come from 20% of causes.

Apply this to income and 80% of the country's income is earned by 20% of the population and apply it to sales and 80% of sales are made by 20% of salesmen.

This is particularly true in General Insurance sales where many brokers seem to have an absolute aversion to pitching for a product that any sensible homeowner buys and that many simply take from their mortgage lender.

If you have not in the past sold any volumes of general insurance then a change of behaviour is required before any change of results will occur. To change behaviours we need to be motivated and I would suggest income is a great motivator for us all.

Brokers often dismiss the work involved with a general insurance sale as derisory when compared to the commission it generates. They also regard that the product has be sold as opposed to bought (as the mortgage is) and simply don't build it in as a natural part of the sale.

Let's look at those statements and change some behaviours.

General Insurance involves a lot of work

Most General Insurance through Intermediaries is sold from an on or off-line quotations system that will generate a quote in under 1 minute. Submission of the case can be paperless and without signatures and the system will generate a demands and needs letter automatically.

This is then re-enforced by the insurers own communications.

General Insurance does not generate much income

True in that the commission involved is smaller than for life sales but what most brokers ignore is that this is repeated annually for little or no effort. If we take an average property in the UK I would suggest that a typical premium for B & C would be:

• £25.00 per month, £300 per annum - commission generated (up to) £97.50*
• Average policy retention is 4+ years so lifetime commission is £390
• This equates to an Abbey proc fee on a mortgage of £111,000
• The mortgage takes weeks to progress, the GI takes minutes.

General Insurance needs to be sold heavily

So why do some brokers have a 'hit rate' of 1 for 1 with GI sales? It is a case of building the idea of the product into the original sales process and selling the benefit to the client that it is all dealt with in one transaction.

If you have a client that is going to scour the internet for cheaper premiums then they are going to do this anyway, most will not.

Also, one of the most popular providers of GI is Paymentshield and they were innovative in the development of the free periods on their products, cheekily naming their software Intertia as over 90% of sales remained in place.

If you feel you need an edge in the sales process then this is probably a good place to start, essentially offering a 16% discount on the annual premiums for each new client.

*HomeLoan Partnership has a broad panel for general insurance including Paymentshield and we pay the highest commission in the broker market at 32.5%.

Lastly, you will reflect on the decision to sell General Insurance in years to come as those monthly statements arrive with hundreds, if not thousands of pounds of renewal commission.

Be Pareto's 20%!

There are many good reasons to keep in regular contact with your customer base, not least of which the fact that doing business with an existing customer is far cheaper than finding a new one.

If we are honest I think we would admit that the average mortgage broker firm does not have the capital and sometimes the resource to invest in consistent printed marketing.

One solution is to get into the electronic age, send the same message and material but do it at a fraction of the cost and effort. It may involve a little skills training on your part and setting up of a suitable template or purchasing a PDF version of a client newsletter but it will pay dividends in the long-run.

You can also subscribe to an email marketing system on a fixed fee or pay as you go basis - find these on Google!

This all starts with collecting valid email addresses from your clients along with permission to send to them. Few people object to receiving information from a firm that they have an established relationship with.

Regular communication helps to maintain your brand and allows you to put new products and services to people whilst implicitly reminding them that you are thinking about them.

HomeLoan Partnership provides access to professional marketing services that can help a broker to establish a programme of E Communication.

We have just implemented a set of reduced charges for new joiners that can demonstrate their experience in the business.

The purpose is to help these firms through the worst of the remainder of the credit crunch until money and guarantees made available from the government works it's way down to mortgage products.

We believe that we are the only network to make reductions to our rates (which are already regarded as competitive).

To see what a difference this could make to your business give us a call.