Yet, our research shows that the vast majority of intermediaries still feel many lenders don’t fully understand their needs and are not highly committed to the intermediary distribution channel.
As optimism gradually returns to the intermediary market, fuelled by a relaxation in lending criteria and a boost in the remortgage market, this is an ideal time for lenders to demonstrate commitment to the sector and really get to grips with intermediary needs and motivations.
It’s time for lenders to get closer.
Intermediary proximity has many benefits. Intermediaries benefit because their needs become better served, which means they in turn are able to be more efficient and can provide a better service to their clients.
Through really understanding intermediary needs, lenders are better able to prioritise resource and potentially save themselves time and money, which will ultimately hit the bottom line and can be used to invest in advances.
So, intermediary proximity is vital and has benefits for all.
Without proximity, lenders are relying on assumptions and guess work. It’s easy to fall into the trap of thinking a competitive rate and procuration fee is all that is required.
Such assumptions can lead to waste – wasted expense, unnecessarily giving away margin and failing to capitalise on new market opportunities. Guesswork, assumptions and stereotyping need to be eliminated and replaced by a deep and objective understanding of intermediaries.
Getting closer to intermediaries and really listening objectively to their needs and what they in turn are trying to achieve with their clients demonstrates market commitment and promotes a partnership approach.
The market is changing constantly; what was true just six months ago could no longer be relevant, so it’s vital to stay close and be in constant dialog with intermediaries.
Intermediaries have to adapt to a changing landscape and keep up to date with the constant changes in lending criteria. While gradual relaxation in lending criteria have clearly been welcomed it does mean that now, more than ever, intermediaries need to be kept up to date and lenders need to be fully transparent about their lending criteria.
Intermediaries need to be fully up to date with what a lender’s criteria are, so they don’t waste time introducing cases which are going to be rejected.
If the intermediary time is wasted, so is their client’s. If their client’s time is wasted, there is a chance he or she may choose to find a mortgage from an alternate source.
Similarly if intermediaries are not clear on lenders underwriting criteria they may refrain from introducing cases that a lender now has the appetite to write.
In today’s market, the key drivers for intermediaries focus around end-to-end mortgage processing speed and underwriting.
Efficiency of case processing is vital. This does not mean intermediaries are unreasonably requesting super-quick processing, but it does mean that lenders should not over-promise and under deliver here and they must ensure excellent updates are provided.
Knowing what is important to an intermediary will help lenders and their staff understand where to focus their budgets, their time, their efforts and which areas need to be enhanced. It is possible for a lender to be over delivering in certain areas where a maintenance strategy would suffice.
If underwriting and processing are really important, does this mean that products have become less important? The answer is not at all.
The product must still be competitive, but it does not have to be the cheapest. Intermediaries will remain nervous of recommending certain products if they remain uncertain that their client will receive an “accept”. And they will remain nervous of recommending the best rate if the lenders’ processing is not up to scratch.
Knowing what is important is one thing. Having an understanding of how a lender performs against the factors most important to advisers relative to the competition provides an opportunity to achieve a real competitive edge in meeting the needs of brokers and winning market share in a smaller industry.
Currently, intermediaries place business with a repertoire of around eight different lenders.
There are plenty of new entrants, re-entrants and established players who would really like to get on the intermediary radar. This will only happen if they get closer to the intermediary, remove subjectivity and guess work and really understand their needs
Not only will those lenders be winners, intermediaries, their clients and the market as a whole will also win.
The market has changed and so have intermediaries and their clients, so it’s imperative to keep abreast of these changes.
Julie Irwin is director of Charterhouse Research
