The mortgage product transfer market is estimated to be worth around £100bn per year according to the Association of Mortgage Intermediaries (AMI) and with lenders putting a renewed emphasis on retaining clients it is expected to grow further this year.
However, brokers have noted that clients will still need to go through the advice process to ensure they are getting the best deal for their situation.
Price and service critical
Greg Sturrock (pictured), an independent mortgage adviser at Thomas Heald, told Mortgage Solutions that he had spoken with other brokers who also expected product transfer business to grow.
“If the client is not changing the term or amount borrowed then it’s much easier for them to do a product transfer,” he said.
“If it’s only one or two pounds a month more to remain with their existing lender then people are usually very happy to do that as it saves all the expense and time of dealing with conveyancing and other administration.”
Sturrock also added that he was seeing lenders contact his clients earlier about product switching, but that all his clients were contacting him in response.
“I’ve started trying to call my clients three months before their mortgage is due for renewal, where it used to be about two months earlier,” Sturrock continued.
London and Country associate director communications David Hollingworth agreed that lenders need to offer an all-round service to retain clients.
“Lenders are aware that if they don’t price correctly then having a retention policy doesn’t mean they will automatically retain that business – they have to be competitive as well,” he said.
“So the lender will need to be pricing their retention products appropriately because there will come a point where people are voting with their feet.
“They also have to look at service standards and how that’s been improved by many lenders too – as advisers will want to know they are not throwing clients into a pit of administrative hell,” he added.
Still the right plan
Your Mortgage Decisions director Dominik Lipnicki was more circumspect however.
“We had a huge increase in existing client remortgages last year so we’re not noticing that product transfers are increasing, we’re noticing the opposite,” he said.
“Clients are wanting to sit down and have a full review of the market place and we want to make sure the plan we put in place for them two, three, or five years ago is still right for them.
“But I have very little faith that most lenders will do much for client retention just by sending out a letter four months before maturity, many of our clients want a lot more,” he added.
Lipnicki also urged brokers to do a better job retaining and reviewing client requirements.
“As an industry we need to get better at this – we need to do protection reviews, spending reviews,” he continued.
“Some just take a lazy way out for £300-400 commission to put them on a fixed rate, but clients deserve more. Very often they have other needs we can help address.
“Even if our recommendation is to stay with the retention product and we don’t get paid a proc fee, that’s still good for us because it means we’ve done our job and maintained our reputation.”