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Lenders praised but urged to improve product transfer process for additional borrowing – analysis

  • 24/05/2019
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Lenders praised but urged to improve product transfer process for additional borrowing – analysis
Brokers have welcomed the additional focus and investment lenders have put into their product transfer systems, but called on them to improve the way cases are handled if additional borrowing is required.


The call to improve the capital raising process came as UK Finance revealed the number of homeowners completing product transfers in the first three months of 2019 dipped slightly to 290,000.

However the advised share of this market grew by 8.6 per cent to account for 161,100 transactions worth £22.7bn.

And earlier this week Accord revealed it had seen a big increase in online product transfers from advisers, up by 53 per cent between April 2018 and March 2019.

So with advice dominating the product transfer space, brokers have been keen to help lenders focus on their propositions.


Losing customers through the back door

David Hollingworth, director of L&C, noted that the improvements in the protect transfer space had “happened quite rapidly”, pointing out that lenders have realised that they need to put increased effort into retaining existing customers and brokers can help them do that.

“Lenders want to keep hold of those borrowers, they can’t afford to lose too many through the back door when it’s getting harder to attract them through the front,” he added.

Hollingworth argued that Halifax deserved credit for leading the way on paying brokers proc fees for product transfers.

He said: “Halifax does offer existing borrowers a different range, and they get criticised for that, but they were the front runner as a big lender doing this before most others got on board.


Delivering a slicker journey

Greg Cunnington (pictured), director of lender relationships and new homes at Alexander Hall, said the product transfer market looks a lot better today than a couple of years ago, with investment in systems and processes from lenders resulting in “a much slicker journey”.

He said: “In particular some systems will show the automated valuation of the property and the available rate options at the early stages. This makes it straightforward to advise a client of their options and to have the information to then compare with the other options for the client in the market.”

Cunnington noted that Nationwide, Santander and NatWest all have easy to use systems which has won them praise from the broker team.

Andy Wilson, director of Andy Wilson Financial Services, agreed that Nationwide has an excellent system for existing borrowers. He added: “Nationwide offers the same products for switching as they do to new customers so they are very fair. Their products are usually very competitive in the wider market too.”


Additional borrowing

Cunnington noted that many clients are looking to release equity for home improvements or debt consolidation, so it would be good to see functionality for additional borrowing added to lender systems so that it could be processed simultaneously with a product transfer.

“Some lenders such as Barclays and Halifax already allow this which is great to see, and it would be good if this was the norm across the industry,” he continued.

Hollingworth agreed, noting that on cases where it is not a like-for-like switch “making those processes more seamless would be welcome”.

Hollingworth also argued that the development of the product transfer market was a sign that brokers need to concentrate on becoming a one-stop-shop for their borrowers.

He explained: “Brokers need to get the message out there that they can flip the borrower onto the new rate if that’s the right thing to do, but will check that deal out and take into account the whole of the market.

“For customers to understand they are getting all of that checked in one go, that should have some appeal. It’s quite an important message.”


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