When UK Finance published the first ever product transfer lending figures this summer, the size of the market was revealed to be larger than previously estimated. The level of mortgage debt refinanced internally is huge – £38.7bn in the third quarter of 2018, £36.0bn in the second and £38.8bn in the first quarter. This is a market that will comfortably top £100bn annually and yet some intermediaries still believe recommending a product transfer is not worth their time.
But the sector has changed so much in recent years that perhaps it’s time to look again, because recommending your client sticks with their existing lender can be good advice for them and a smart business move for you.
In the third quarter of 2018 291,900 homeowners switched product with their existing provider, said UK Finance, which is over twice as many as those who remortgaged*.
To meet this consumer demand, you need to be operating in the sector. It makes sense to adjust your fact find and sourcing process so you check what deals your client can access through their existing lender as well as the wider market. That’s the only way you both get the full picture.
Parity on procuration fees
At Halifax Intermediaries we believe in and trust intermediaries. If you recommend that a client stays with us we know there has been significant work on your part to reach that decision. From a new fact find, to sourcing remortgages as well as product transfer options and advising your client, it’s the same front-end process
whether you advise them to switch lender or stay put. That’s why we pay you exactly the same procuration fee for product transfers as we do for new business.
Many lenders have started to pay a procuration fee on product transfers, although we understand it can be frustrating when that fee is lower than a remortgage procuration fee.
Once you have been through a thorough process to conclude a product transfer is best for your client, we believe the application to offer process should be made as easy as possible. And with Halifax Intermediaries it is.
We already have the client’s details so there should be minimal rekeying. And provided they are not in financial difficulties, don’t want to borrow more and have no significant changes we can prepopulate most of the application, produce an illustration and make the offer immediately.
We’ve invested in the technology we offer intermediaries so that, when you put in the upfront work with your client, the back-end process is as easy and as smooth as possible.
As other lenders begin to invest in their technology on product transfers, the process will hopefully improve across the market so your client gets the best of both worlds – professional independent intermediary advice tailored to their needs, followed by a straightforward, hassle-free process.
What clients want
The sheer size of the product transfer market shows how many clients will switch with their lender if the product is right. Perhaps they feel that remortgaging elsewhere would take too much time, or they don’t want to prove their affordability again to a new lender.
Whatever the reason, it’s only by offering a product transfer choice alongside possible remortgages that you can provide them with all their options, and potentially boost your business.
*Source: UK Finance, table ML1