In this respect, product transfers and digital advances represent two of the key factors they should be focused on in the next five year time.
So, this week Mortgage Solutions asked lenders to reveal their future projections on the broker market.
We anticipate the mortgage market will steadily grow in gross lending terms for 2019. There is a slightly wider bandwidth to our expectations this year given macro-economic uncertainties facing the UK.
Additionally, product transfers remain an important area for brokers to add value to customers and we see no reason why the broker share of this market won’t continue to gain traction.
With some good value longer-term deals available across the market, perhaps representing the right advice for some customers, the frequency of customers looking for refinancing options will move out a little.
Importantly, the need to maintain a regular dialogue with customers remains vital. The economic position is one of stable but gradual growth and, aside from Brexit, a relatively benign picture.
The mortgage market represents one of steady growth in gross lending terms. Technology continues to move on at pace and this should continue to make it easier for customers to interact with their financial services providers.
Typically we should see much a much improved ability to utilise customer data in a way that saves them time, helps manage their finances, reduces paper work and speeds up decisions through the journey.
Connectivity from broker point of sale and advice systems through to lender platforms is beginning to emerge in the mortgage sector through the use of application programming interfaces (APIs) and bank, fintech and broker collaboration. I suspect this is just the starting point for further such integration across the wider journey over the next five years.
The broker market is becoming more and more influential, as customers choose to turn to trusted advisers, who can give them a huge amount of variety.
As a lender, we want to help brokers make informed choices on behalf of their clients, and make it easy for them to do business. A key part of this is using digital innovation.
We’ve introduced our secure upload facility which is speeding up the application process, and brokers tell us that they love it. Innovation is inevitable, and necessary, and we need to not just keep up, but help lead the way.
It’s something that we’re constantly focused on, and we’re looking at all the areas it can be used to help customers and brokers. For example, advances in Blockchain technology have the ability to make the conveyancing process less painful and it will be interesting to see the part that APIs play within the intermediary sector.
It is clear that comparison sites are looking to enter the product transfer market as evidenced by Nationwide working with Money Supermarket. Brokers therefore need to ensure that they maintain the strong relationships they have with their customers so that they return to them for advice.
Our number one priority needs to be on being the lender who supports brokers in this changing market, and we’re always looking at new ways of doing that.
There should be a sense of optimism among brokers; 70-80 per cent of residential transactions are currently through an intermediary, up from 50 per cent ten years ago, showing their guidance has never been more important as borrowers’ circumstances diversify and processes remain complicated.
We’d expect market size to remain relatively unchanged over the next few years. But we may see renewed home mover confidence as Brexit uncertainty settles and an increasing portion of baby boomers retire and look to unlock wealth in their homes through the wider choice and access to flexible credit, with some seeking to downsize.
First-time buyers should grow too as product choice increases and rates remain low, with many seeing the benefit of Help to Buy before it ends in 2023.
Digitisation also adds exciting possibilities in optimising the application process through enhancements in sourcing while API enablement promises to speed up execution and improve service. As comparison tools become more reliable, straightforward borrowers may increasingly go direct to lenders.
There is an increasing proportion of complex incomes and the self-employed among the next homeowner generation, alongside increased landlord paperwork and the rise of later life lending, which will require expert broker advice.
Regulatory change may have muted buy-to-let activity but there are still opportunities, especially as nearly 90 per cent of lending is currently via brokers.
We expect movements in refinancing the late-2015/early 2016 activity surge, assisting landlords as many diversify their needs away from a growth strategy and guiding the shift toward professionalisation.
Lenders that can ease the increasingly complicated mortgage process by providing streamlined instruments, such as pre-prepared business plans and portfolio documents, alongside smooth, quick lending facilities via brokers, will be the big winners over the next five years.