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.

The past few weeks have seen yet more government intervention with the banks but this has resulted in some commitments to additional lending for 2009 and beyond.

Firstly, Northern Rock reported that it had repaid £18 billion of the government investment to date and Northern Rock agreed to increase lending by an additional £5 billion in 2009 and additional lending of between £3 billion and £9 billion in 2010, according to demand. It is reported that this government loan to Northern Rock allows lending to up to 90% loan to value.

On the 26^th February, RBS announced it's intention to participate in the governments Asset Protection Scheme (the so called 'toxic fund'). As a condition of this, it agreed to increase it's lending to businesses by £16 billion in 2009. In addition a figure of £9 billion of new lending will be made available to mortgage lending and a further £25 billion in 2010 is targeted.

Lloyds Group then followed suit, on the back of huge losses from their merger with Halifax, donating £260 billion to the Asset Protection Scheme with a pledge to lend at least £28 billion over the next two years, with the government taking a 65% stake in Lloyds Group.

The deadline for joining the Asset Protection Scheme is 31^st March and the more banks that join, the more capital is freed up for lending. As at the time of writing Barclays had just indicated that they were also likely to join the scheme.

One of the issues with these pledges is that the banks still have a responsibility to shareholders and must demonstrate that they are not exposing themselves to undue risk simply to reach targets.

Overall though, this is good news for homebuyers suffering from heavily restricted lending and in particular low loan to values. It is hoped that this will increase the competition between other lenders to meet what targets they have and that lending criteria will loosen as a result.

This has to be one of those million dollar questions and if we were entirely confident with the answer we would be charging for the advice!! Staying informed will help you with your conversations with clients wondering whether they should move or stay where they are.

What we can do is point to some of the contributory factors and some of the conclusions drawn by others and let you take your best guess.

According to the Halifax Price Index prices have fallen in February by 2.3% and year on year by 17.7%, taking an average house price from £194,953 to £160,327. Halifax predict that prices could fall by a further 15% in 2009.

Nationwide House Price Index recorded a fall for the month of February which was lower than Halifax but they also place the year on year drop at 17.6%.

Housepricecrash.co.uk contains an extensive summary of house price crash predictions of many different organisations, ranging from a neutral outlook for 2009 to more average predictions for 2008 and 2009 combined between -25% and - 35%.

Reports in many of the national newspapers seem to support the view that the market may fall 30-35% over the two years from it's peak, stabilising in 2010 and then moderately increasing.

We also have reports from Asset Management Companies that property sales are improving gradually demonstrating a return of demand in the marketplace. This is encouraging as repossessions are still predicted to rise throughout the year.

RICS have a very balanced view of the prospects with the 2009 Housing Forecast, stating that we may be 'bouncing along the bottom' but that house sales should improve by 10%. Their latest survey shows potential house buyers increasing month on month but sales static, presumably a lag between activity and sales.

Much of the problems with house price falls are connected with the lack of mortgage funding and restricted criteria compounded with a rising uncertainly about the security of employment as the recession deepens. The Trigold product index has just reported that more than 90% of mortgage products have been lost in just one year.

Once prices start to fall then more households enter negative equity, there was a 1.2 million negative equity total in January 2009 according to the Telegraph with a further 200,000 affected each month. This traps those that might have moved, given the deposit to do so, regardless of their income.

So where does this get us with any logical conclusion?

Any halt to declines in house prices is likely to happen as credit filters back into the market and LTV criteria softens, first time buyers find properties that are affordable and those that have delayed decisions to move pluck up the courage to do so. The whole issue then hinges around the criteria adopted by the lenders.

Identifying 'Life Events' in your client bank

Many brokers would admit to being guilty of believing that they have a 'special' relationship with clients which would result in further business in the future. This may be true at the point when you deal with the client but time erodes loyalty and it is up to you to look for reasons to re-kindle this relationship.

“I always call before their fixed rate ends”

There are many more reasons that a client may need to talk to you in the meantime! A very useful exercise to complete is to think of all of the potential life events that may give rise to an opportunity to help the client. Complete this yourself:

Ask yourself, in any average 100 clients, in the next 12 months how many of them will:

• Decide that they want to move house?
• Extend / improve their property?
• Add a new child to the family?
• Change their B & C policy?
• Be made redundant?
• Be promoted/ move to a better paid job?
• Have a death in the close family?
• Make a will?
• Think about switching utilities?
• Need to save money for the future?

Total these up, how many do you have?

Now that you have identified the potential life events, this should give a very good reason for you to either; sell a new policy, increase existing cover, provide supportive advice or refer to a specialist.

Put a notional value against these and you will see that the effort is worthwhile.

How do you find out which clients these are affecting?

You can make your clients aware of all of the things that you can help with by sending regular communication to them, perhaps highlighting one or two particular areas at any time (as this newsletter does).

But don't expect your phone to ring off the hook, over time you will improve your interaction with clients but it falls to you to be proactive and call them every now and then to see what has changed. General insurance renewals are a particularly good reason to do this, as are birthdays and an agreed future review date.

It will obviously help if you prime this in your initial fact find with the client and identify your next contact date. The last thing you have to do is actually pick up the phone and ring - there is always other 'stuff' that gets in the way!

The Office of Fair Trading has just issued orders to 13 companies instructing them to close a total of 27 websites, all offering assistance with debt management posing as reputable debt charities. The OFT stated that the websites commonly suggested affiliations with charities such as Citizens Advice and National Debtline when these did not exist.

In our opinion, this clearly shows the potential for abuse of trust with consumers when they are at their most vulnerable and seeking unbiased advice. The consequences of poor advice are severe, leading at worst to repossession of homes and bankruptcy.

If you are going to be involved with debt management, unenforceable credit actions, PPI mis-selling claims etc then we would suggest that you conduct a level of due diligence on the companies that you align yourself to.

HomeLoan Partnership has put together a panel of 3 debt management companies which have demonstrated their professionalism and fair terms for customers.

A statement was published by industry group to challenge FSA fee increase during February in response to the FSA's outline of their proposed fee charging structure for 2009. This would see the fees for the smallest firms frozen whilst larger intermediary companies would see their fees increase disproportionately.

This seems strange logic when the FSA see an advantage with small broker firms becoming a member of a network and therefore benefiting from their support and yet are making the trading environment more difficult for these firms.

Any firm that inadvertently trades through the 31^st March deadline will be liable for the full fee charge for 2009/10 when fees become due in July.

What can you do about your fees relative to your falling income?

You have the option to become an Appointed Representative and benefit from the support that this should provide, allowing you to focus on finding new customers and selling products. A good proposition (like our own) will allow you almost all of the freedoms you enjoy and reduce your overall administration and risk of sanction.

As HomeLoan Partnership operates with no fixed network fees (effectively pay as you go), the charging structure is always relative to your business levels.

So, if you have any doubts as to whether DA status is right for you for 2009, make sure that you check the alternative by enquiring to become an Appointed Representative - don't simply run out of time and trade through 31^st March!

February & March has seen a record for applications to join HomeLoan Partnership from a variety of different backgrounds. The network has had steady growth for over 16 months adding strength to the proposition.

We have also extended special terms for experienced brokers joining HomeLoan from either a network or a directly authorised background. You will benefit from a 12 month reduction in fees, designed to help you establish yourself with us and get through the worst of the remainder of the credit crunch.

A new panel of debt management companies have been released to the network. There is no requirement to use these but there is a benefit in the respect that we have undertaken due diligence, will manage an ongoing relationship and fees generated count towards a brokers retention bandings.

HomeLoan Partnership have also announced a special incentive in conjunction with Legal & General that sees life commissions increased to 196% for business submitted until June 2009.

Commenting on the increase, Chris Tanner - Director responsible for Life Protection commented: “We are very pleased to pass this benefit on to our brokers at a time where Life Protection is accounting for a higher percentage of income. L & G are one of our biggest providers and this is another demonstration of the intention of the network to continually better the terms that we can achieve for our firms.”