This is an area which represents a significant proportion of the market – the Association of Mortgage Intermediaries estimates the retention market to be worth between £80bn and £100bn.
As we digest the influx of lenders falling in line with such fees, we can reflect on how this shift has affected the market and the opportunities available to intermediaries.
Market analysis suggests from the start of April to the end of July more than £50bn worth of residential mortgages and almost £7bn of buy-to-let deals are coming to the end of their terms.
These are staggering figures and really underline the importance, and value, of implementing a robust retention strategy.
Increasing numbers of lenders are recognising the work that goes into the retention process from an intermediary perspective. Many have also implemented procedure and policy changes to better support their intermediary partners.
Streamlined underwriting, exclusive reward rates for switching or future borrowing, the pre-booking of new rates plus quicker, simpler processing are just some of the available features on offer.
Of course each lender will have their own systems and policies, meaning that intermediaries need to get acquainted with how these are applicable to them and their clients.
As a lender who has paid a retention fee on rate switch cases since 2004 our policy has been clear but we’re also constantly evolving our offering to complement market conditions and meet ever-changing client and intermediary demands.
This is a market which requires greater clarity and understanding.
Lenders have to be open and upfront about their retention guidelines and strategies. Intermediaries still need to fully review the financial requirements of their client, compare other lenders’ offerings and criteria, detail their findings and make informed recommendations.
This demands time and effort, both of which deserve remuneration when implemented correctly.
For this to work efficiently and effectively there has to be a joined-up approach from all parties in the chain, and it’s vital that transparency is evident throughout this whole process.
Retention is an area which can benefit all areas of the mortgage journey – lenders, distributors, intermediaries, and the end consumer.
The deeper this can be ingrained into everyday working practices, the more it can translate into an important revenue stream for business of all shapes and sizes.