Those headed towards the specialist arena can compete over borrower type, credit profile and property construction but for newcomers to the mainstream market it’s harder to stand apart from a crowd squeezed together, shoulder-to-shoulder, on rate.
Digital bank Atom has announced it will begin its phased roll out of mortgages through intermediaries in the summer and HSBC has just revealed the latest three brokers to join its panel as it widens its reach across the broker market. Both are entering the mainstream mortgage sector which has already made room for and accepted Metro and TSB into its fold; how will the market react to yet more competition?
This week our intermediary-only panel of experts explains what lenders must do, in a low-rate environment, to impress them enough to take a leap of faith to a new mortgage provider.
Simon Collins, product technical manager at John Charcol, talks about the importance of speed to offer the ability to get cases prioritised.
Mark Dyason, director of Edinburgh Mortgage Advice, wants to see right-first-time document lists and the speedy payment of procuration fees.
John Phillips, group operations director for Spicer Haart and Just Mortgages, discusses the pitfalls of over-promising and undelivering.
For any new mainstream lender, price is always going to be a major factor when deciding who to place a case with. However, when a new lender launches we look beyond their pricing and examine their criteria to see if they have any USP or niches, before running some scenarios through their affordability calculator to see how they compare to the competition.
Once we’ve done that we’ll have a clear idea how they fare against their more established peers, and can help guide our consultants on where it may be best to use them.
With mainstream lenders all competing hard on price, service does become a factor, along with the relationships that we have with individual lenders. The ability to get a case prioritised and dealt with quickly can be crucial, especially with the pressure that comes with most purchases. It’s no good having market leading rates if it takes, say 12 weeks to issue a mortgage offer, as the property you wanted will be long gone by then. It’s the same with remortgages, many may be time sensitive and a laborious drawn out service experience, is not going to get you repeat business.
Certainty of the deal is absolutely vital to our clients, and there may be some nervousness about dealing with a brand new lender to the market, or one that has previously only dealt direct. I would say that the proposition needs to be based on smooth service as much as rate, and also quality BDMs who can resolve issues that crop up, to back this up.
With Atom and HSBC joining an increasingly congested mainstream market, lenders are running very close to each other on rate and fee.
As brokers we are service providers, so we want lenders to help us enhance our service to our clients. In the same way as lenders expect accurate applications and well packaged deals, we expect timely assessments and a right-first-time document shopping list. Speed to offer is king, it reflects well on both of us and leaves more headroom for further business.
Every quality BDM says ‘if you think there might be an issue call me’, so when the case is with the lender and hits a bump in the road – we want to be able to call them and speak to a decision maker – the days of underwriters in ivory towers should be long past.
Lenders’ service is delivered on so many fronts; systems, BDMs, website quality, telephony and underwriting. I know a couple of lenders that are addressing areas where they can improve, any lender not looking to push on with this is going to get left behind.
Service also doesn’t finish at completion. I am running a business, the lender that settles the procuration fee the week after completion can only look better than the one that can’t settle till the latter half of the following month.
Any new lenders coming into the intermediary market is great news, but they will need to do something different to stand out and win business, especially if the brand is unknown to the consumer.
The key thing that brokers will be looking for is service. Competitive rates will of course be vital, but whether a broker uses a lender long term depends on their service standards. This includes delivering on what they say they will and really understanding how much business they can handle.
Too many lenders enter the market promising all sorts of things only to then decide that they can’t actually deliver on certain criteria, or turn things around in the times promised. The more successful lenders then can fall into the trap of taking more volume than they can handle. So they start off well, but need to know when to pull the plug if they become too popular.
What would really make us use a new lender however is if they bring in something different. Metro Bank for example has decided not to credit score a mortgage applicant, but instead will judge every case on its own merits which really differentiates them from the mainstream lenders. In addition, they are providing brokers with direct access to underwriters.
Things like this make a new lender stand out. Direct access to speak with an underwriter is always a big win, but also more relaxed criteria or a different view on things definitely helps to encourage us to use a lender that we may not have used before.