Of course, applications are one thing (and reflect healthy consumer demand), but completed business is quite another, particularly in the market environment that is prevalent at the moment; one where we have seen multiple rate and product changes shifting the mortgage landscape, with the potential to create a significant amount of extra work and multiple applications per client as a result. 

It’s why business activity figures for the early months of 2024 probably won’t tell the whole story about what the rest of the year might bring.

It’s why networks like Stonebridge, and all advisory firms, need to be cognisant of the inherent and ongoing risks that are to be avoided, and from which positive business opportunities might be grasped. 

 

A mortgage broker’s labour 

I’ve highlighted before the additional work created by multiple applications due to rate changes, but it’s worth reiterating what the risk is, because it doesn’t just have the potential to impact mortgage advice income, but also across other ancillary sales. 

Sponsored

Shaping the mortgage market around today’s first-time buyer

Sponsored by Newcastle for Intermediaries

The obvious starting point is to understand why advisers are involved in multiple duplicate applications for the same client. That comes, to a great extent, from much earlier client contact procedures, in part down to the Mortgage Charter and the commitment lenders must make to provide “well-timed information to help customers plan ahead should their current rate be due to end”. 

If this is six months ahead, then clients could have options for a product transfer (PT) at that point, which we would hope they then bring to their adviser to ascertain if it’s right for them. 

The point being, of course, that six months is a long time to run before the mortgage deal ends, with the potential for constant change, and constant work with the requirement for multiple applications on just one case.

We’ve certainly seen this in our data.

Application numbers being strong, however we know that brokers across the industry can be involved in two, three, four, even six, applications for one client between original advice and completion, and only one is going to generate income.

Clearly, this ‘duplicate’ work is still highly important for the client. Six months ago, for instance, the lending landscape and product options available were very different, and much more expensive than they have been in recent weeks, certainly through the early weeks of the year.

Advisers may well have been able to save their clients thousands of pounds on their overall mortgage costs by continuing to keep up to date on product changes, shift them to new rates and carry out the work necessary to get them the cheaper product. 

 

Don’t neglect the protection conversation 

However, this has meant they have been incredibly busy, and obviously, they only get paid for one completion, not all the multiple applications they have to get involved in.

Add in this extra work for mortgage advice, and you can see why advisers might not have had the time or resource to give to their ancillary work, particularly protection, which is such an important provision for the consumer. 

To be included among this, of course, is the recent dominance of PT business, and the fact the procuration fee tends to be less when compared to remortgage – although we hope the recent rate changes make remortgaging more attractive this year.

There will also be other risks to income, not least the ‘cost of business living’, and the fact last year saw much lower market volumes, which will not have helped any advisory firm. 

These risks do not sit in isolation in any mortgage advice firm, instead they coalesce and combine and present a variety of challenges that cannot be ignored, because they impact individual adviser productivity and the income achievable.

Identifying these risks and others is of ongoing importance, and all practitioners should continue to do this, even if the market looks like it is likely to be more prosperous than the early 2024 forecasts suggested.