Danny Belton, head of lender relationships at Legal and General Mortgage Club, presented at the London Institute of Banking and Finance (LIBF) mortgage conference on Wednesday and said while brokers account for more than 85 per cent of all purchase and acquisition mortgage business, intermediaries should not be concerned about “disappearing” clients.
He added: “Let’s deal with the volume that we’re actually being asked to do. Because it’s a substantial segment of the market.”
Belton said if the market did contract by 10 per cent as predicted, it would not be a problem as many could not cope with the volumes of business seen last year.
However, he noted that despite holding a large share of purchase and acquisition business, brokers had “nowhere near” the same grasp on the product transfer sector.
Belton said there was a lot of talk of a disruptor introducing an Amazon-style proposition, but said that was yet to happen.
He added: “Let’s not get complacent about it. There’s lot of talk about lenders coming into the market and stealing our clients by contacting them early before products mature.
“They have to – by regulation – write to your customer when they get to the end of a deal. The fact they’ve brought it forward from three to four months to six is to bring it in line with remortgage activity, because they want to keep your customer on their books. But most lenders still send a note saying, ‘please seek advice’.
“What are consumers meant to do? They see the bad news, they see rates flying around, the cost of living going up… but who’s there to reassure them and say, ‘it’s okay’?”
“Our biggest threat, for me, is ourselves. Us as mortgage brokers. Are we being complacent? Are we making sure we stay in touch with every single customer… and letting them know you are there for them?”
Belton said most people were able to name their doctor, or their dentist but could not “roll off their tongue who their financial adviser was”.
“If they can’t, it tells us we’re not doing a good enough job to keep in communication with customers and let them know we’re here to help,” he added.
Customers will always need advice
Belton said the buy-to-let market would drop off this year but insisted it was just returning to normal levels.
“We saw a huge spike last year but it’s just going to return to where it was,” he said.
He added: “Everyone likes a bit of doom and gloom, but what we don’t know yet is what consumers are actually going to do.
“There is some positive news. The fact that customers need refinance.”
He said brokers needed to consider which kind of refinance would be appropriate in light of rising rates and squeezed affordability.
“Is it the fact that we can remortgage or do we have a larger product transfer market? And the answer at the moment is, it’s a bigger product transfer market,” Belton said.
He said customers would still need advice in these circumstances.
He said the new-build market could pose a threat to the sector as builders were expected to reduce their building activity. Belton said tightened affordability could be a problem as well, but added that lenders were “trying really hard” to make their products affordable.
He said new ideas could address some of the demand, pointing to Own New and Deposit Unlock. He also said there would be a rise in shared ownership.
Belton added: “I know Lloyds are very involved with the government to look at shared ownership as a whole to ensure ‘it is good for purpose’, and that ‘we are doing the right thing’. And that’s a really welcome innovation.”
