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Brokers want more affordability-driven products

  • 05/04/2022
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Brokers want more affordability-driven products
Brokers want lenders to take a more affordability-driven approach to product development as the cost of living crisis hits their clients.

There is a clear demand for lenders to make greater use of available affordability data in their product development, according to an independent broker survey by Mortgage Broker Tools (MBT) which it outlined in its Mortgage Affordability Report white paper.

The research has shown that consumers are searching for “how much can I borrow” on Google, and it is often the first question they ask a broker, followed by how much will it cost.

However, it also found that brokers are not confident all lenders will choose to take this approach. Only 19 per cent said they thought that all lenders would take a more affordability-driven approach to product development, while 28 per cent reported that only the savvier lenders would go down this route. The remaining brokers said they would like to see this happen, but had no confidence that it would.

The research confirmed that affordability is a key issue for brokers and their clients. It forms an integral part of the advice process and has a significant bearing on their choice of lender.

Tanya Toumadj, chief executive officer at MBT, told Mortgage Solutions: “Brokers look to balance maximising affordability with price outcomes. Technology has become so important in that aspect because of the number of changes and complexity in affordability at the moment. Clients are finding it tougher and tougher, which is where brokers are using platforms like MBT to get more breadth to place people.”

Affordability is the next competitive landscape, with lenders looking to use data to make them more comfortable with providing higher value loans.

Toumadj said: “In light of the pandemic I think it’s top of lenders’ minds. From the lender perspective; because affordability is becoming so ingrained in how brokers select a lender, it’s becoming ever more important for lenders when they’re considering product design.

“Whereas before it was price driven, like in 2021, lenders are thinking about product design on a more multi-dimensional basis, and at how they can use affordability to differentiate themselves in the market with a true reflection of the reality of the post-Covid market.”

Toumadj noted that Bank of England changes to interest rates would “only act as a catalyst for affordability changes as lenders have to get more creative with their ranges”.

She added: “The white paper reveals what steps brokers are taking to ensure the best affordability results for their clients, what they want lenders to do about it, and what lenders are doing to be more competitive and create data-driven affordability products.”

Toumadj said that MBT was already working with a number of lenders on developing propositions based on millions of data points from real cases processed through MBT Affordability.

MBT will be running two separate webinars – one for brokers and one for lenders – to talk through the results of the research in greater detail, with registration and the white paper available on the MBT website.

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