For those that have been around the mortgage market for a long time there will, understandably, always be a slight degree of pessimism about what the future might bring. To say we have been through ups and downs as advisers in the past couple of decades would be something of an understatement and, even at points like today when the intermediary market appears to be in a strong place, we should be under no illusion that change can happen, and happen fast.
There’s no denying that, at the moment and with the introduction of the Mortgage Market Review (MMR), the momentum has clearly shifted in the intermediary’s favour. MMR was undoubtedly a (short-term) game-changer for those lenders who had/have significant direct to consumer mortgage operations and were bringing in large levels of business from this channel.
The new rules forced them onto the back foot in terms of training, compliance, their ability to see enough customers direct, and it became a natural movement to fill the drop-off in direct business with a move towards intermediary distribution.
As we speak, this is still very much the case and the recent iteration of the Halifax Intermediaries broker confidence tracker shows how this market shift has emboldened advisers and increased confidence in their own businesses. The tracker revealed that 99% of advisers had a confident outlook for their own firm, up 2% on the final quarter of last year; interestingly, the highest level ever-recorded came in the quarter immediately pre-MMR, and we are now just below this.
However, nothing lasts forever, and without wanting to put a dampener on this greater confidence, there appear to be moves afoot already in order to rebalance the mortgage market. At the moment, you would be hard-pressed to find anyone who thinks intermediary distribution will take less than a 70% share of total business in 2015. But, how will this level sit with those lenders who have branch networks and have the need to satisfy their D2C operations?
Again, I have a slight inkling that they would probably prefer to get the distribution share down to more historic levels. The problem for lenders is how they go about doing this, and one area where they appear to be focusing on is D2C technology, especially given we are moving to a world where far more financial transactions and purchases happen online.
Now, there is a moot point here and it’s based on whether consumers will feel entirely comfortable sorting out their mortgage direct with a lender whether via advanced technology or not. Some savvier individuals will, but my feeling is that most will still want to use the services of an adviser which means a crucial advantage exists, but advisers are going to need to work hard to keep it. So while advisers remain the dominant force at present there is likely to be significant pressure in the future.
The big question is whether advisers will be in the strongest position at this point to be able to resist such methods. This is all about constantly re-establishing the worth and benefits of the advice you provide, it is about marketing yourself effectively to reach those who might consider going direct somewhere down the line, it is about not just focusing on the mortgage but all the ancillary products you can deliver, it is about delivering a first-class service now that means they have no need to look elsewhere and always come to you first, it’s about utilising technology to ensure you offer clients all the ways they want to deal with you.
It’s easier said than done but if our industry can achieve this now, then we can maintain a pre-eminent position within the mortgage market for many years to come.