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Brokers will be ‘out of a job if they focus on purchase market’ – Legal and General Mortgage Club conference

  • 27/09/2018
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Brokers will be ‘out of a job if they focus on purchase market’ – Legal and General Mortgage Club conference
Mortgage advisers who focus entirely on the purchase market will be out of a job in future, Mike Jones, managing director of intermediaries at Lloyds warned at the Legal and General mortgage club autumn conference today.


Product transfers currently make up around half of mainstream lending and together with remortgages, account for around 70% of the market, according to Jones.

He also outlined the declining number of home mover transactions taking place in the market, as barriers such as stamp duty put people off, while technology advances have reduced the need for people to move for jobs.

In a market update at the conference, he told advisers: “If you’re not helping your customers with their refinancing needs, you’re not doing your job, and worryingly you won’t have a job if you’re focused entirely on the purchase market.”

There will be around £200bn in product transfers in 2018, Jones estimated.

And the broker share of the market is around 40% – suggesting advisers could take a bigger slice of income.


Pressure on fees


However, Jones also warned of pressure on lenders’ proc fee budgets, as bank margins are squeezed by competition, as well as brokers’ larger share of the product transfer market.

He estimated proc fees paid for acquisitions – not including product transfers – from all lenders to brokers in 2015 was about £600m, fast-forward to 2018 and the figure reached around £750m.

At the same time, banks are earning significantly less on lending in 2018 compared to 2015, as a result of smaller margins, Jones suggested.

As a result, some lenders are likely seeking alternative routes to market, such as going direct.

Jones said: “Think about your income stream and particularly the fees you charge your clients to make sure your future is secure too.”

Brokers should put together a five-year plan looking at their business and target market to work out if it’s sustainable, he recommended.

Jones added: “Don’t rely on easy income from customers that simply ticks through quickly, but work out where you can really add value to your clients and build your business around that…

“Manage your customer relationship as if your future depends on it, because it does.”


Put customers at heart of strategies

Jackie Bennett, director of mortgages at UK Finance, told the conference brokers should use technology to enhance business strategies and their future business plans.

She said: “It’s about developing strategies and journeys based on your own customer segments, not everybody can be in every market.”

Brokers must make sure customer satisfaction is at the heart of what they’re doing going forward, Bennett added.

She said: “Ensure customers are central to your thinking.”

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