Iress said that it was aiming to introduce a green mortgage filter by the end of year, while Twenty7Tec said that it should be ready to rollout in the fourth quarter.
Mortgage Brain said that in the latest version of its online system, Sourcing Brain, released in the summer brokers could filter for green mortgages in its advanced filters section.
Green mortgages have begun to be more widely offered, with several lenders bringing out the products over the past year.
According to Moneyfacts data, as of the start of October there were 157 green branded residential mortgage products in the UK from lenders including Natwest, Virgin Money, Danske Bank, Royal Bank of Scotland and Leeds Building Society.
Residential green incentive products, which offer rewards for improving energy efficiency and so on, numbered 350 products with major lenders including Nationwide and Halifax.
Buy-to-let green branded products came to 95 with lenders including Landbay, Kensington, Keystone Property Finance and Foundation Home Loans.
Some brokers said that the lack of a green mortgage filter in sourcing systems could make it more challenging to find and recommend such products to clients in the first instance, which could impact their take-up.
Drivers for introduction
Iress and Twenty7Tec said that the introduction of the filter would make it easier to identify products and was partially in response to lenders releasing more green mortgage products into the market.
Nathan Reilly, head of lender relationships at Twenty7Tec, said that by using the filter, brokers would be able to easily identify available green mortgage products to benefit customers. He said brokers could offer financial savings or incentivise customers to make “necessary improvements” to properties during the advice process.
He added that lenders participating in the green mortgage space would be more “visible” and “potentially have a competitive advantage over those that aren’t”.
He said: “It is encouraging to see the industry and particularly lenders responding to a global challenge, and product availability is much higher than 12 months ago, but there’s a long way to go to improve existing properties that need to be modernised to be more environmentally friendly. Currently a lot of the green mortgage benefit sits with those buying new builds, which is only a fraction of mortgage stock.”
An Iress spokesperson said that it had decided to introduce the filter based on client conversation, who said in turn that their clients would find “helpful”.
The spokesperson added: “We have seen that lenders are putting out more and more products for this incentive, the filter will allow brokers to either not have these products in the search results if they are only for green mortgages, or filter so that they just see these products.”
A spokesperson from Mortgage Brain said that it had been working with lenders and industry bodies to ensure it was in a position to ensure brokers and lenders have a platform that gives “accurate and relevant information that allows everyone to make the right recommendations for the best possible customer outcomes”.
They added: “For us, ensuring that we have the relevant solutions to enable this is critical and we will continue to evolve our proposition to reflect changes in our market constantly, we are sure that there will be more we can do to further enhance how green mortgages are researched and recommended across all forms of research.”
According to the latest research from mortgage technology firm IRESS, around 90 per cent of mortgages went through intermediaries last year, up substantially from the 77.5 per cent registered the year before.
And advisers have suggested there is potential for intermediaries to enjoy an even greater market share in the years ahead.
No direct route
Lee Flavin, co-founder of Accelerate My Mortgage, suggested that the increase in mortgages going through an intermediary may also have been down to the attitude of lenders towards selling their mortgage directly.
He explained: “I’ve heard of many instances where a potential borrower had to wait weeks for a telephone appointment to go through the application process with a lender directly, at the height of the stamp duty holiday. If that’s happening at telephone level, what are the branch waiting times? The direct approach wasn’t there for many borrowers when they needed the funding urgently ‒ speed is so important ‒ so they may have tried a broker instead.”
Complicated times
Dominik Lipnicki, director of Your Mortgage Decisions, argued that lenders employing more complicated criteria had made the process of applying for a mortgage more daunting, which boosted the appeal of independent advice, adding: “More independent access to the whole market is attractive to savvy customers who do their research”.
James McGregor, director at Mesa Financial, agreed that the move towards stricter criteria, with lenders adopting more manual underwriting, had been a factor.
“Criteria were changing daily at one point, which meant it needed that level of experience a broker brings to navigate these complexities.”
McGregor noted that it wasn’t just lender criteria that was becoming more complicated though; the pandemic impacted the financial situations of so many would-be borrowers, which pushed more of them to make use of advice rather than attempt to go it alone when securing a mortgage.
How do I choose?
Lipnicki also pointed to the significant numbers of mortgage products available as a driver for borrowers seeking advice. According to data released by Moneyfacts last week, there are now 4,812 mortgage products available to borrowers, almost double the number on offer a year ago.
He continued: “With thousands of products to choose from, advice-fuelled decisions make sense to more and more people. Gone are the days when clients are happy to switch from one product to another without looking at other lenders first. As with some other financial services such as insurance, brand loyalty to lenders is not important to many clients.”
Can brokers do more?
McGregor argued there was cause for confidence that the broker market share would increase further in the coming years, suggesting that as lenders try to reduce their headcount and automate their processes, they will likely lean on brokers to increase distribution.
He continued: “It does not make sense for lenders and banks to try and take business directly due to the huge cost this brings due to employing back office staff and advisers. Also from a regulatory perspective, the FCA should not allow regulated products to be advised on when there are no alternatives, this is not giving advice.
“For example, a bank mortgage adviser advising a client and not giving advice about what else is available ‒ this is not advice and surely opens them up to future complaints.”
Spreading the word
Flavin argued that finding a new way to reach customers improved his firm’s reach. The Accelerate My Mortgage proposition ‒ where customers earn cashback when shopping online which is then used to fund overpayments on their mortgages ‒ benefited from the pandemic, according to Flavin.
The closure of the high street meant people had no option but to shop online, which meant there was a large userbase of potential customers for his brokerage to discuss switching deals with.
Flavin also noted that his firm had received a grant from Creative Wales to develop an Accelerate My Mortgage iOS app, which had helped him reach more people with the concept, and by extension increased the number of people open to receiving mortgage advice.
McGregor suggested that the best marketing for brokers was a combination of sharing expertise, customer reviews and real case studies.
He added: “Our industry is about trusted relationships rather than faceless transactions. Whereas brand loyalty to lenders is not prevalent, brand loyalty to advisers is very common.”
The number of mortgage applications via intermediaries rose from 77.5 per cent to 90 per cent over the last year.
Driven by the restrictions placed on the industry throughout the pandemic, lenders have focused on system modernisation, process efficiency and digitisation.
The survey, now in its 10th year, also found significant variation in application to offer timescales, with averages ranging from 14 days to 32 days across the lenders surveyed.
Iress’ head of business development, Steve Carruthers (pictured) said: “Since the last survey, few of us would have imagined the industry would go on to experience record lending volumes in 2021. A continued low interest rate environment, changing preferences amongst UK house buyers, the extended stamp duty holiday and the government’s 95 per cent LTV guarantee scheme did much to restore confidence in mortgage lending and borrowing.
“It brought much change and new challenges for lenders – but the need to process business efficiently has not changed; whether because of the volatile volumes, the evolving requirements of borrowers, the risk appetites of lenders, or how applications need to be processed. Our report shows true evolution across all parts of the industry at a time when efficiency and agility is more critical than ever.”
The survey also revealed that open banking is dropping down the priority list for many lenders and retention rates are stronger among the high street lenders and building society sector than for challenger banks and specialist lenders.
Mortgage technology and sourcing firm Twenty7Tec’s August report also noted the market had returned to relative stability after 18 months of upheaval.
It revealed that 1 in 29 of all mortgage searches are now for properties valued at over £1m, with one in 12 of all completed mortgage searches on £1m plus properties from first-time-buyers.
Statistics from equity release brokers Key Retirement show that in H1 2021 the largest proportion of equity released by over 55s was spent on mortgage repayment at 45 per cent and gifting at 22 per cent. In comparison, only one per cent was spent on holidays, suggesting that parents have been releasing equity in higher numbers than ever before to help first-time-buyers to get on the property ladder.
The Twenty7Tec data also showed five per cent growth in self-build mortgage searches in August 2021 versus July 2021 and first-time-buyers (FTB) accounted for five per cent of all searches.
The percentage of searches in the £150k- £250k valuation bracket is at its lowest for 10 months at seven per cent, despite the ongoing stamp duty relief in this price range.
James Tucker (pictured) CEO of Twenty7Tec, said: “August 2021, aside from the slight market side effects of the bank holiday, was broadly the same as July 2021. However, the fact that one in 12 first-time-buyer searches are now for properties over £1m is indicative of both a housing market that remains exceptionally buoyant, and potentially the size of deposits that FTB’s have been able to save during the pandemic.
I believe we could yet see a significant uplift in remortgage business, as consumers assess their finances after what will no doubt have been a hectic summer – especially as rates are so low at present.”
The latest report developed on the Koodoo analytics platform, in partnership with Iress showed the popularity of five-year fixed rate products continues to increase amongst consumers, with residential remortgage five-year fixed products now representing 34.3 per cent of all searches. These products have been demonstrating a consistent upwards trend over the last 10 months.
The supply and competitiveness of 10 year residential fixed rates continues to improve, with this month seeing an increase as Habito launches new products in this space.
Over the last 10 months, the gap between the proportion of searches for fixed and variable rates has increased steadily, with fixed rate searches now representing 94.5 per cent of all searches.
At the same time, the company has allowed private equity house EQT to run the rule over the business as a whole. EQT, a Sweden-based investor, tabled a bid for Iress which valued it at A$3.2bn (£1.7bn) on 11 August, updating an earlier offer.
Confirmation that Iress was separately considering a sale of its UK arm was included in the first-half 2021 performance update.
John Harris, chief financial officer at Iress, said on the earnings call today: “I’ll call out mortgages. As we have said, we are reviewing our strategic options here, including divestments. Encouragingly, we saw a good improvement in revenues in the first half. The growth was largely driven by the full-period impact of two clients that went live in the second half of last year, and another successful deployment in this half.”
The mortgages segment generated operating revenue of A$13.6m (£7.1m) in H1 2021, up 15 per cent on H1 2020. The contribution to group profit was A$9.3m (£4.8m), up 34 per cent.
The statement said the mortgages segment continued to grow recurring subscription license revenue, which contributed 58 per cent of mortgages’ revenue in the first-half, up from 46 per cent in H1 2020.
Iress has signed numerous deals with lenders and technology firms in the UK mortgage market during the past two years.
In April, it partnered with Mortgage Broker Tools. Last year, there were tie ups with Knowledge Bank and Smartr365.
The technology provider has also signed up lenders including Darlington Building Society, Leeds Building Society and TSB Bank.
It has also partnered with One Mortgage System.
Carruthers has been principal consultant at Iress for two years, and previously worked in senior roles at Newcastle Building Society, Aldermore and RBS Group
He will be responsible for helping more clients achieve efficiency and automation through the implementation of Iress’ Mortgage Sales and Origination platform (MSO). He will report to Iress’ executive general manager for lending, Andrew Simon.
Carruthers, (pictured) said: “It’s an exciting time in the mortgage industry with change happening at pace. Last year’s Mortgage Efficiency Survey showed that lenders are refocusing their technology efforts to give them a better balance between human interaction and process automation. The recent reliance on remote working has meant that digital efficiency and customer experience is now of paramount importance and I relish the opportunity to help more lenders realise this journey.”
Andrew Simon said: “Over the last two years, Steve has played an essential role in demonstrating the value of MSO with a broad range of future-focused lenders. He brings a deep understanding of the client experience and has an unrivalled ability to connect lenders with the right technology to achieve their goals. We’re waiting keenly to see the positive impact he’ll have with clients in this leadership role.”
KFIs will be produced using data originally entered on Iress as part of the adviser’s initial product search.
This follows on from More 2 Life’s adoption of Iress’ technology in July last year.
The latest function has been developed by fintech firm DPR’s distribution hub. This is the same company which provides the origination and servicing technology that enables More 2 Life’s fastpath portal.
Dave Miller, executive general manager at Iress, said: “With consumers increasingly investigating equity release as a way of boosting their retirement funds the need for advisers to be able to access accurate, real-time data is more important than ever.
“Iress is committed to expanding and enhancing its equity release offering, and this latest integration with More 2 Life is compelling evidence of this.”
Dave Harris, CEO at More 2 Life, added: “This launch is the next step in our collaboration with Iress as part of our commitment to providing market leading support for our advisers.
“Following on from the launch of quotes and KFI retrieval in 2020, this move will see advisers move seamlessly from their sourcing session on Iress to an application via More 2 Life’s fastpath system.”
The integration will be launched later this month.
MBT said the combination would enable brokers to source by affordability, rate, criteria and even current service levels depending on their client’s priority.
According to its website MBT has 65 lenders available through its residential and buy-to-let affordability sourcing, including four of the big six.
In February MBT added a free text criteria search function to its affordability offering, taking criteria details directly from more than 100 lenders’ online guides.
Meet client priorities
MBT CEO Tanya Toumadj said: “This partnership with Iress gives brokers greater control over the way they research and source the best product for their clients.
“So, for example, if borrowing as much as they can afford is the main priority for a client, followed by controlling monthly payments, a broker can research affordability first and then filter the results based on the rate and monthly payment.
“Having everything in one place is going to make the process so much easier.”
Also in February, Iress announced a partnership with Knowledge Bank that integrated its criteria search facility into the Iress Xplan platform.
Dave Miller, executive general manager of commercial at Iress, said: “Access to comprehensive yet timely research is an important part of the mortgage process, with brokers required to consider a wide range of factors when making recommendations.
“This is where technology can help make life easier and partnerships such as this with Mortgage Broker Tools are great news for brokers, as they provide a way for providers to work together to improve speed and efficiency.”
The lender, which is part of Yorkshire Building Society, also revealed details of its integrations with mortgage technology providers to improve application submissions processes for brokers.
Accord has developed application programming interfaces (API) to work with the Iress, Mortgage Brain and Twenty7Tec sourcing and CRM systems allowing brokers to pre-populate client details into its MSO platform.
It launched with L&C Mortgages and is conducting a further pilot with Quilter on the Iress Xplan Mortgage system.
Initially the functionality will be rolled out to the Iress Lender Connect system followed more widely with all three major sourcing systems – the Iress Trigold and Xplan Mortgage, Mortgage Brain and Twenty7Tec – during the first half of this year.
Jeremy Duncombe, managing director at Accord Mortgages, said: “Broker and lender integration has been topical for some time, but the last 12 months have brought this into even more focus.
“We’re always looking for ways to improve our systems and processes to make things easier for brokers and are confident investing in this new technology will help them connect with us more effectively than ever before.
“Our MSO platform together with API connectivity means placing cases with us will be much more efficient, and speeding up the time taken to apply for a decision in principle means brokers will have more time to spend with their clients.”
BTL product update
The BTL changes include a range of products at 65 per cent loan to value (LTV) for purchase and remortgage.
These include a pair of deals with a £1,995 fee – the two-year fix is at 1.64 per cent and has £250 cashback, while the five-year option is at 1.96 per cent and has £500 cashback.
New three-year fixed rates for house purchase and remortgage are also being launched, available up to 75 per cent LTV with rates starting from 1.89 per cent.
Rates have also been trimmed on selected products across the range while cashback has been increased to £500 from £250 in some products.
