Teachers Building Society began distributing its mortgages through the broker market in May 2011. Head of sales and marketing Alan Gravett explains why.
There are several reasons for our decision, perhaps the most significant being that we are in a strong financial position and are able to lend more.
We also know that many people among our target audiences of teachers and Dorset residents value the face-to-face advice that brokers provide. Add to this the large market share that intermediaries currently enjoy and it was clear that we were restricting our opportunities for growth by limiting our mortgage service to a direct-only operation from our head office.
We have an ambitious strategy to increase our market share in education and our local area, despite the downturn in the mortgage market and wider economy, and with no branch network to help sell our products.
Increasing our sources of business not only helps us to achieve our goals but provides the flexibility to raise the profile of products that can be harder to sell direct to the customer, such as buy to let.
The lead-up to the broker launch certainly involved some homework for our team, not least in deciding the best approach for us to take. Partnering with two or three networks that share our values of personal, professional service made the most sense, as we had to consider the impact on our brand.
Our business model had to be reviewed to accommodate introduced business alongside direct and the procedure for dealing with brokers and their clients established.
In addition, we had to consider the risks associated with taking a step back from our customers and potentially having less knowledge about applicants by the time the underwriting team gets to work.
Despite setting conservative targets for the initial phase of broker business, we have been very pleased with the significant interest in our products from intermediaries. At the same time, our market knowledge has been enhanced through the feedback we receive from both brokers and the networks we work with.
The quality of cases received has also surpassed our expectations and there seems to be some synergy between the turnover of introduced business and the frequency of our mortgage product reviews.
We have made a number of improvements across the business as a result of the broker launch, not least enhancing our risk assessment and controls.
With sales now reaching the required run rate to meet our targets, the decision to sell mortgages through intermediaries has proved to be the right one for Teachers Building Society.
In contrast, Loughborough Building Society has chosen to go direct for all its mortgage customers and cut its ties with the intermediary sector. Chief executive Gary Brebner explains why…
Loughborough Building Society has chosen to go direct for all its mortgage customers and cut its ties with the intermediary sector. Chief executive Gary Brebner explains why…
Until the credit crunch of 2008, the Loughborough Building Society traded through a dual strategy of direct contact with customers and through intermediaries.
However, following a re-structuring of the business, the society took a strategic decision to focus on developing direct relationships with members and generating increased non-interest income opportunities.
Although many of the society’s products are available throughout England and Wales, products are released from time to time solely for existing members and new members living in the Derbyshire, Nottinghamshire and Leicestershire postcode areas. This is particularly true of the Loughborough’s mortgage portfolio.
In customer surveys, the importance of the local branch network and having named contacts to speak to has always been prominent. People develop relationships with our staff over many years – the member for life is very much a feature of the way we operate and anything but a cliché.
From the society’s viewpoint, it is important to maintain and build upon that vital link offering the highest quality of personal service and direct interaction with the member. This helps with retention and in providing good intelligence for product design.
This is overwhelmingly positive for people who choose to buy products this way and who prefer to deal with a lender directly.
We recognise, of course, that this approach does not suit everyone and that many prefer to use an intermediary to arrange their mortgages and other financial products. For more complex arrangements, the society generates leads for selected intermediaries.
The society also trades through schemes with selected business partners where investment and mortgage referrals are generated and passed on.
We continue to review our best route to market and, if a suitable opportunity to re-enter the intermediary market arises, we will take a decision then.
It would be foolish to say never when the future for the economy as a whole is far from certain.
