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.

After a couple of months of slow down in house price declines we now start to see some positive indicators that the tide has turned (at least temporarily) in favour of sellers. Latest figures from the Royal Institution of Chartered Surveyors (RICS) suggest that there are now roughly 4 buyers for every property on the market and that first time buyers have re-emerged, accepting the need for bigger deposits. The disproportionate amount of buyers is likely to be for two reasons; firstly that many sellers are waiting for an increase in prices before they commit and secondly people that chose to rent whilst house prices dropped now taking advantage of lower prices and mortgage rates below rental costs.

Perhaps more significant is the survey from the building society association that demonstrates that 59% of people surveyed said that they thought now was a good time to buy property as compared to 27% of people in June last year.

The missing piece in the jigsaw is availability of credit and restrictive criteria, no sign yet of the promised injection of funds by the nationalised banks.

The best deals available are still branch direct and the need to face up to this is highlighted by the fact that Trigold has now provided access to direct products on their system. You may have to accept for those high LTV cases that you need to charge the client a fee for research and guidance and provide them with direct options!

HomeLoan is seeing a definite increase in activity from it's member firms and, although it is too soon to claim that we are on the upward curve, it is nice to be paying more brokers, more often.

Apologies for the biblical reference, it seems to adequately describe the Woolwich funds allocation system introduced some months ago. Since then there have been repeated complaints about waiting in a call queue only to be told the funds have gone. On other occasions brokers have rung on their allocated time slot to hear a recorded message that simply says the funds have already been used.

One frustrated letter to Mortgage Strategy in June described the booking line as a 'tactic to muscle brokers out of the market.'

For flexibility, in addition to our own direct panel relationships we provide access to the Woolwich under the L & G mortgage club but this also suffers the same problems. We have made representations at a national accounts level.

We all understand that a lender has to measure the funds that it allocates and that this is Woolwich's attempt to be fair across distribution channels but once there is more choice in the market brokers may exercise their right to vote…with their feet.

If you are suffering the same problems then don't suffer in silence, make sure that they get lots of feedback!

We have just seen the protracted and very public demise of Network Data Ltd, one of the largest mortgage networks in the country, leaving some 500 firms out of pocket and looking for a home. This was a company that declared profits of £1.8 million in their 2007 accounts and that had aggressive expansion plans in new market areas.

Where did it all go wrong? Network Data Ltd was a thriving business but one that operated from expensive premises and with high gearing. The expansion of the group used huge amounts of cash and increased the cost base in advance of any benefit from increased revenues. When the credit crunch hit hard NDL was affected badly, not least of which because they also acted as a packager, losing the thick sub prime margin but having the extra staff costs to support. The consensus of opinion (and what evidence there is) suggests that this resulted in a cash flow crisis which in turn led to an inability to pay firms what they were owed.

Surprisingly, in the middle of these events, NDL concluded the purchase of MBSL, adding more brokers to the group of companies. Maybe NDL saw this as a solution to grow their way out of trouble but it just brought misery to another 150 firms.

Late commission payments, accompanied by unsustainable excuses are a key indicator of a business potentially in distress. Of course, hindsight is a wonderful thing but I would imagine that many NDL brokers would have chosen to exit the business a lot earlier had they not been fearful of the disturbance to their business.

This leads you to conclude that size is not everything, bigger organisations often carry big fixed cost bases which can be supported in the good times but become a millstone when times are tough. Networks often claim to have the security and deep pockets of corporate ownership but those corporate owners will not tolerate a constant drain on their balance sheet, this is well evidenced by the demise of the home service and direct sales companies.

HomeLoan Partnership may be smaller than the bigger networks but we have always placed importance on managing our fixed cost base and running the business prudently. Perhaps this is why we have grown progressively throughout the worst housing market for a decade, maintained our fair charging structure throughout and have yet to miss a single commission run to our firms.

Find out what makes us different by calling us on 08456 44 70 55.

Sales opportunities in a 'distressed' market

The economy has been suffering for longer than we care to remember now. It is some 20 months since the start of the credit crunch and a growing percentage of the population will be affected, either by redundancy, downturn in business or credit arrears.

It is useful to regard yourself as a financial adviser rather than a mortgage broker if you want to engage with clients during these tough times and make sales that are good for them and great for you!

Here are a few ideas which you could use to create opportunities with clients and prospects.

Awareness of the need for unemployment cover has never been greater

The constant barrage of press about business failures and redundancies can only serve to heighten your prospects concerns about their own financial position. It is easier to sell ASU or MPPI when there is a real belief that a claim might be made. Important here for you to explain to prospects about the consequences of a few missed mortgage payments on their credit profile in today's credit restricted market.

Source - labour force survey - UK National Statistics

Redundancy removes valuable benefits

Clients that are made redundant will often see their valuable employment benefits disappear overnight. These may include death in service, PHI, PMI, and pension contributions.

Many of these will establish themselves in new jobs or become self-employed but typically the benefit packages on offer will not match those they have enjoyed in the past.

This should bring an awareness to prospects also that they should not rely solely on employers to provide for their families, after all - here today, gone tomorrow. Take the view that most people deeply care for their dependents and often any shortfall on cover is due to a lack of understanding as to what is available and how cheaply it can be dealt with.

Help your clients to save Money

Don't forget that most prospects you speak to are lethargic about moving their GI insurance at renewal. The average intermediary GI product lasts between 4 and 5 years so it is likely that your clients may have left their insurance with companies that have progressively increased their premiums.

In addition, term assurance premiums have fallen consistently for 10 years, up to 53% according to a survey from MoneyFacts last year. You can either provide a client with more cover for the same premium or decrease their cost for life cover. Needless to say, care must be taken when advising clients to change existing cover to make sure that they are not disadvantaged or left uninsured.

Helping a client to change their utilities supplier can also save them money and this could be the justification for buying the next financial protection product that they need.

Don't abandon clients in financial difficulties

Often when a policy lapses and a clawback is incurred there is an instinctive reaction to abandon the client as a lost cause. A sympathetic attitude and some good advice now will reap rewards when the client is in a position to re-instate.

Income can also be generated by referral to debt management where your client has lost control of their finances. Remember that this generates a referral fee and often a trail income and it is also recognised that proper financial protection is an allowable expense before creditors get paid. There is an opportunity to provide protection products that should be maintained as, if not, surplus income simply has to be distributed to creditors. Life policies can also be sold on a non-indemnity basis to minimise any risk.

So, think carefully through the opportunities that are presented by:

• Clients that are concerned about being made redundant/losing benefits
• Clients that are made redundant and lose their benefits
• Clients that have lost control of their finances and would benefit from counselling and debt management

Lastly, don't forget that a by product of the pain that you are feeling whilst people are quite happy to sit on their SVR is the fact that they have sometimes saved tens, if not hundreds of pounds per month. They now have the available budget to put in place the protection that they should have done when the mortgages was sold!

HomeLoan Partnership provides access to 12 life companies, allowing brokers to arrange their agencies on indemnity or non-indemnity and pays top rates of commissions. We also have an approved panel of debt management options.

Recent press releases by the FSA confirms that they have banned a mortgage broker in Romford and fined him £101,279 for submitting a fraudulent mortgage application and banned a Tooting based broker for falsifying his own application.

Often these bans cite a failure to co-operate with the regulator during their investigation, not a wise thing to do!

Another trend in the marketplace seems to be the removal of broker firms from lender panels after retrospective reviews of the business they have submitted. In Money Marketing (18th June) Michael Bolton, former MD of BM solutions claims that 80% of business conducted by HBOS on the run up to the credit crunch had no proof of income. Brokers that have abused the fast track process may find themselves identified by investigation into arrears and repossession cases.

Good business practice benefits everyone, broker and client alike but in a busy environment it can be tempting to cut corners. This supports the case for belonging to a mortgage network and following a simple sale process that they prescribe.

Our silence for the past couple of months is accounted for by the fact that we were processing an increase in applications for the network along with supporting our existing firms. This continues a very positive trend for 18 months where we have consistently shown net growth and have not lost a single firm to a competitor.

We still have our offer of 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.

We are currently looking at developing our relationship with Towergate general insurance. We already provide access to Towergate re-assurers through our panel with Berkeley Alexander but a direct relationship will extend the product offering.

Our wide panel in General Insurance virtually guarantees that you will find competitive premiums for your clients.

If you want to belong to a network with a great proposition but above all that cares about its members call us for details.