HSBC’s mortgage lending appetite and growth plans are renowned, despite the lender only being at 80% of broker market distribution, but there’s plenty more to come promises Pearson.
The bank, which launched into the broker market two years ago, said growing its distribution is one of its key focuses.
“We’re up to 55 broker firms now live, with access to 80% of the market, and around 12,000 brokers. But by early 2019 we’ll be at 100 key broker partners and will continue to grow,” Pearson said.
“We would like to deal with all brokers. We have the appetite to do that but we want to serve the market really well and get to those brokers in the fullness of time.”
He said the time taken to onboard broker firms has probably halved to anything from four to six weeks now, depending on the quality of the upfront information.
But why is the process taking so long, given the impatience of some DA brokers to do business with HSBC?
“We want to understand the people we do business with. We have a considered growth journey,” said Pearson.
UK Finance figures out last week put HSBC among the biggest three hitters in the market in terms of growth appetite as it grew lending volumes by £2.6bn in 2017 to £18.2bn. Far more seasoned intermediary lenders Lloyds and Barclays saw similar sized gains of £2.7bn and £2.5bn respectively.
HSBC is the UK’s sixth biggest mortgage lender growing market share by 0.8% in 2017, to sit just behind Barclays with 7.1% of UK lending, but there is plenty more to come as its broker distribution firepower gathers pace.
“We’re looking for growth through mortgages, it’s one of our key strategic initiatives,” Pearson continued.
“We’ll do that through all our channels, brokers, telephony, video, and branch is also a key channel for us – but intermediaries will be the key growth engine for us in the mortgage sector.”
HSBC plans to achieve this with strong product rates and investment in its proposition, continually developing its platform after launch at the back end of last year.
Keeping the service where it needs to be for brokers is critical Pearson said, which is why HSBC gives every broker a key case contact.
And the lender has always tried to recruit as many ex-underwriters as it can to deal with inbound calls “so people with the right attitude, aptitude and experience are answering criteria-based questions”.
The lender will continue to invest in telephony and its ongoing platform development with Capita has allowed it to leapfrog others with speed of decision making helped by upfront valuations, Pearson added.
HSBC plans a buy to let launch next year and is currently piloting its service and proposition with Countrywide through the Buy to Let Business, and London and Country.
Pearson did not give much away on product details such as top-slicing or limited companies, except to say: “We’ll look across the spectrum. I think there are some lenders who work in niches brilliantly well – we’ll keep our eyes open.”
He added that the “returning customer journey” and a full product transfer proposition, including a procuration fee, is another focus and one of the things the bank wants to build on to the platform.
“We have probably about 100 things we want to develop. I can’t give you a timescale or a proc fee at the moment but we’re very aware of market conditions and we’re working on that as we speak.”
New build is another area of real focus for the lender and although Pearson would not be drawn on his expectations for the next phase of Help to Buy, the bank is waiting to hear how the government plans to support the sector first.
The digital look
Pearson suggested that the prospect for change presented by Open Banking through PSD2 was potentially one of the biggest disruptors for years.
“Brokers need to be alive to that as well,” he said.
It will be baby steps over the next 12 months but the real fundamental change to the market will come in the next three to five years, he believes.
“Our major discussions centre on how the application process can be enhanced through Application Programming Interfaces (APIs) and we’re talking to brokers already about what that might look like for them.”
Will there be room for everyone or can we expect a market shakedown with big technology winners and losers?
“We’ll be guided by what brokers want in terms of simplicity. Through APIs you could link into as many networks as you want. You could argue there might be three or four technology players who may consolidate. We will talk to all of them,” he said.
Pearson noted that the bank continues to discuss all possibilities with all sourcing systems and technology suppliers and will be keeping an eye on how each proposition takes shape.
“It’s simply too early to say,” he added.
Blue sky thinking
On the direction of Base Rates in August, Pearson wrapped up with this.
“We have been told for a while that the Bank of England’s view on Base Rate is that it will be rising.
“While they appear to be taking a ‘no surprises’ approach by reflecting on it publicly, exactly when and by how much is the subject of much, but expected, speculation – there always is…”
He added: “It’s like how we love talking about the weather. We will find out more in early August, with many in the market expecting a rise at that point. It may be that there is clear blue sky between that and any future rises.”