Whilst we are operating in a difficult environment where the mortgage market continues to be flat, house prices are generally static and first-time buyers are few and far between, the intermediary mortgage market is, in fact, alive and well. And there’s a lot more to play for.
Although a lot of commentators are predicting lower gross lending in 2012, there is the obvious point that the number of brokers active in the sector has greatly reduced in comparison to when the market was at its peak.
While their share of lending has reduced slightly recently, this is counterbalanced by the fact that brokers are now marketing a wider range of services and products. In addition, the growth in buy-to-let lending is likely to continue and will benefit the intermediary channel in particular.
In 2012, we are likely to see continued emphasis on service, wider product ranges and professionalism, which will benefit customers and the sector as a whole.
However, collectively, I believe we need to do more to explain and promote the benefits of independent advice.
Never has there been a better time for a ‘market standard’ to be created, clearly setting out what advice customers can expect from intermediaries.
Mortgages are seen as complex and borrowers want help with understanding both product choices and the mortgage process. Our research has shown that, whilst some borrowers have a natural preference to buying direct and others through an intermediary, these preferences are quite weak and many customers could easily change the channel that they use.
The reasons for channel preferences are also quite varied and down to much more than just product. Service, speed, convenience and “less hassle” are also important. The question is: how can we, as a sector, get better at promoting the advantages of using an intermediary?
Our research points to the fact that, irrespective of which channel they choose, borrowers are looking for improved customer experience during the mortgage process – especially in terms of being kept updated, having transparency over fees and costs and benefiting from greater emotional engagement during the purchase process.
To get this right, lenders need to be actively supporting intermediaries and acting as reliable service partners.
A lot of customers rely on the internet for preliminary searches and successful brokers are likely to invest more time in the future to ensure that they have effective e-marketing in place, including increasing use of social media.
Buy-to-let lending will represent an increasing opportunity for intermediaries in 2012.
Growth is clearly being buoyed by the shortage of first-time buyers, but there are also more systemic factors driving this. More people in further education, student debt and the need for job mobility are all important factors.
On the other hand, there are risks to the sector if either interest rates go up or first-time buyers return.
More lenders are beginning to recognise the opportunities in buy to let and more are entering the market. However, I believe that brokers will benefit by developing relationships with lenders that have long-term experience and expertise in this market.
Successful brokers will continue to be those that manage their client database and relationships effectively, provide a broad and professional service and keep in touch with customers throughout the process and afterwards.
It is still a people business and communication and trust are key. Referrals are worth more than lead buying. Customer experience really counts and lenders need to support brokers in providing the best service possible.
Brokers are also vital to product development and innovation, and we need to maintain and encourage close dialogue between brokers and lenders. Lenders that do not fully recognise this are missing a trick. At Platform, we have created at least five products in the last year based on broker feedback and are keen to continue this trend in 2012.
Business quality will continue to be important to lenders and brokers will increasingly benefit in 2012 from demonstrating tight quality controls and from presenting cases as professionally as possible.
I won’t pretend that 2012 will be all plain sailing, but by conducting our business professionally and collectively working together brokers and lenders will ride the waves that come our way.
The New Year will be successful, if it is approached positively and dynamically.
