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MMR laid foundation for intermediary channel success – SMP

by: Lee Travis, head of professional development, Society of Mortgage Professionals
  • 11/01/2016
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MMR laid foundation for intermediary channel success – SMP
The Mortgage Market Review (MMR) has proved an incredible catalyst for the intermediary sector, with a 22% jump in business since its introduction. Lee Travis of the Society of Mortgage Professionals discusses the success of the broker market since the MMR.

According to technology provider, Iress, 78% of mortgages are now being introduced by intermediaries, compared to 56% in 2014.

They say that 85% of lenders had reported an increase in lending via intermediaries, with almost 70% saying they expect broker numbers to increase in line with demand during the next 12 months.

Iress found that the growth was chiefly driven through lenders such as HSBC and Tesco Bank starting to engage with intermediaries, having been direct-only for many years.

The intermediary channel proved most popular with mutuals, who sold 82% of their mortgages via the sector, compared to a lesser – but still impressive – 74% by the banks.

Direct-to-consumer operations had been attracting criticism prior to MMR, when the default position was in favour of consumers going direct to lenders. Since the MMR, that notion has been turned on its head.

This hasn’t happened by accident and although MMR undoubtedly acted as a catalyst, brokers had been making commendable strides for some time prior its introduction. Our sector has worked hard to polish up its act and since the new regulation it offers a better-qualified, more professional and more knowledgeable service to consumers.

Brokers generally have a wider knowledge about the range of products out there in the market and among many other benefits, can offer a faster turnaround than direct-to-consumer offerings. That’s a distinct advantage, as consumers are growing increasingly frustrated by having to sometimes wait as long as four weeks to even get their first mortgage discussion appointment with lenders.

The Iress report went on to point out that although intermediaries are dominant right now, it is expected that lenders will start to invest in the self-service channel (robo-advice) for direct execution-only sales.

Currently only a couple of lenders have a consumer internet proposition and progress in that area could well affect the balance in future, especially as the public at large have a preference for doing most things online nowadays. But although technology is evolving and consumers are becoming more savvy, the personal touch provided by face-to-face advice can never truly be replicated.

Eighteen months on from the MMR, intermediaries are playing a more vital role than ever before. However, we must guard against any complacency.

Right now it’s a tale of rapid expansion and it will be interesting to see how far this current surge can go. But we must be mindful of the fact that the sector’s progress will have been enviously noted.

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