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Difficult for mortgage tools to simplify product choices – UK Finance

  • 06/11/2018
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Difficult for mortgage tools to simplify product choices – UK Finance
Mortgage customers in today's market have ever more complex circumstances, making it more difficult for technology to narrow down choice, according to Jackie Bennett, director of mortgages at UK Finance.

She used her welcome speech at the UK Finance Annual Mortgage Conference to address the Financial Conduct Authority’s (FCA) mortgages market study.

In the interim report, the regulator said it should be easier for customers to understand the products they may be eligible for earlier in the process.

This is a laudable aim, Bennett said.

But added: “As customers have ever more complex circumstances – multiple incomes, self-employment, contracting to name but a few – it is more difficult for any tool to narrow down the products available for a particular customer.

“Based on our conversations with lenders it would take several hundred questions to ensure that all bases were covered.”

Bennett also sounded the alarm over “a conflation of multiple, uncoordinated and un-sequenced regulatory and legislative proposals” which increase operational risks in the financial services sector.

She added: “The mortgage industry has benefited from a period of relative regulatory stability and we are seeing innovation and developments that serve customers better from lenders.

“This is welcome and I’m sure neither we, nor the regulator or government, would want innovation, creativity, competition and judicious risk-taking being stifled because of any uncertainties and opportunity costs caused by the absence of a longer-term strategic approach to legislation and regulation.”

Bennett stressed this was not a call for deregulation, but instead asking for “appropriate ‘air traffic control’ to ensure that interventions are well considered, sequenced and orchestrated to minimise disruption and operational risks in implementation”.


Product transfer market caught many by surprise

Product transfers could account for an extra £200bn of activity this year, as more lenders contact customers before their term ends, Bennett told the conference.

She said: “I think the number that has caught many by surprise this year is the amount of product transfers that are being done by lenders.”

She added: “Lenders are being proactive in contacting customers before the end of term and offering a variety of ways for them to transact – online, by post, over the telephone, in person or by going to a broker.”

More than half of product transfers are carried out with advice, which shows many customers take the opportunity to review their situation fully before deciding what to do, Bennett said.


Buy to let to undershoot forecasts

As product transfers boom, buy to let has suffered.

UK Finance’s forecast for 2018 was around £12bn for buy-to-let purchase, but the market looks like it will “considerably undershoot this, coming in more around £9bn”.

Bennett added: “This is undoubtedly the impact of the various tax, regulatory and legislative changes that have happened to landlords in the buy-to-let sector.

“And with the 2018 tax bills dropping through landlords’ letterboxes, or more likely in their inboxes these days, we are yet to see what further impact this may have on the market.”

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