Lenders dominated this sector and, I suspect, were quite happy to have this topic of discussion off the radar particularly given the cost-savings for them in transacting mortgage business in this way.
Fast-forward to the last couple of years and when it comes to intermediaries, the product transfer sector could be the number one potential growth area when it comes to carrying out more mortgage transactions.
The reason for that is simple – it’s been adjudged to be worth in the region of £100bn in terms of gross lending, and therefore the prize is considerable.
Lenders upped their game
It’s no wonder that lenders appear to have upped their game in retaining existing customers through the product transfer channel, and advisers now have to compete with some rather slick technology when it comes to ensuring a borrower stays with that same lender.
However, it’s been positive to see intermediaries securing more of this business.
This has had to be recognised by many lenders who, for the most part, are now paying procuration fees for product transfer business, although I appreciate this is still less than is paid for normal remortgaging.
No official data
Lenders may still dominate this part of the market – we don’t know the official statistics as they’re not collected, although UK Finance is due to publish the first batch sometime this year.
But brokers are, according to recent statistics from the Association of Mortgage Intermediaries (AMI), going to have an even bigger piece of the pie to target over the course of this year.
In its most recent economic bulletin, AMI suggests the sector could be as big as £140bn in 2018 – a 40% increase on previous estimates.
This would make it worth 34% of the total UK gross lending mortgage market, which the trade body estimates could be in the region of £410bn.
That’s a significant shift upwards over the last decade, and tells a much more positive mortgage story than perhaps we were all anticipating.
The big challenge of course is securing a part of that potential business, because given the slim margins many lenders are accepting when it comes to mainstream borrowers you can see how important product transfers are to them.
Any lender not putting significant energy and resource into keeping customers is probably not in the right game.
So, the competition is fierce but of course advisers have a natural advantage here.
That is as long as they can keep the communication channels open with existing customers, they understand what they’re up against, and when those clients might be at their most vulnerable to lender overtures.
It’s vitally important that advisers make the case for continued professional advice and the protections it affords, plus that in the majority of cases it means access to product transfers alongside the whole of market options you can access which might be better for the client.
It’s simple, effective messaging but can help in the fight to get clients the best advice every time, not just leaving them to the lenders to secure over and over again.