Understandably, product transfer activity remains strong – indeed, if you add up the last four quarters of mortgage debt being financed internally by lenders it equates to over £165bn of additional lending, which is not typically factored into the overall gross mortgage lending figures each year.
By anyone’s standards, that’s a significant amount of new business and a very positive aspect of this, is that advisers are taking an increased share of it.
The latest statistics for quarter two this year reveal that, of the £41.4bn of product transfer business, which was up 16.3 per cent year-on-year, £24.4bn was advised while £17bn was on an execution-only basis.
That’s close to 60 per cent of all product transfer business going through advisers, slightly up on the previous quarter, and is indicative of the increased focus on this sector by the intermediary community.
Step change towards advice
Looking back historically, you would anticipate lenders themselves would take the lion’s share of product transfers via execution-only channels.
But there has clearly been a step change over the last few years, particularly as the size of this part of the market has become known and advisers have a great opportunity to pursue.
As a mortgage network, we put a great deal of focus and resources into helping our appointed representative (AR) firms not just hone their alertness to market opportunities, such as product transfer lending, but actually increase business levels, and there is a lot of work done around maintaining ongoing and regular client contact.
That should mean the adviser is at the forefront of the client’s mind when they are coming up to renewal, and when inevitably the lender contacts them with a range of product transfer options and retention tactics.
Further inroads for advisers
Checking what’s on offer from the existing lender against the current, wider market opportunities is vital.
What we do not want is the client simply ticking a box, missing out on advice, and potentially choosing a product which is not suitable for them, and which means they miss out on the reassurance and protection which comes with impartial advice.
In that sense, keeping in close contact is vital, and you only have to look at the execution-only product transfer figures to see there is still a significant amount of business to go at.
Again, in the last year, it amounts to £71.7bn of lending, and while over that one-year period the advised share is going up, there are further inroads that should be made, as it’s to the customer’s advantage.
After all, approximately 70-75 per cent of all mortgage business comes through the intermediary channel, so advised product transfers could arguably look the same. It’s entirely good news for consumer outcomes and for mortgage advisers.