40% of Lloyds customers on SVR by end of 2011
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Nigel Stockton, the outgoing sales director of mortgages at Lloyds Banking Group says the bank expects between 35-40% of all its mortgage customers to be on the bank’s SVR by the end of 2011.
Speaking at the Mortgage Intelligence annual conference yesterday, he says that with remortgages having fallen off a cliff, the SVR is the go-to rate at the moment.
He says: “Between 35-40% of our book will be on SVR by the end of next year, and our book represents around one in three of every houses in the UK.”
Buy-to-let will dominate the specialist sector and there will be no self-cert and little sub-prime.
Stockton also predicts gross lending of £139bn in 2010, down from the Council of Mortgage Lenders’ original estimate of £143bn.
He says: “We don’t think it will get any better next year and house prices are likely to fall for the next six to nine months.”
But he says the broker market still represents the majority of its business at around 65%.
He adds: “We’ve seen huge consolidation in market place, the top five distributors do 12% of our business, and the top ten introducers do 75% of our business. We’ve got 14 key accounts and 75-85% of our business is done through these accounts.”
He says the changes brought in by the Mortgage Market Review will be costly for lenders and could cost lenders millions to get staff individually authorised.
On the subject of dual-pricing, Stockton says: “Personally I don’t think dual-pricing matters, I think it will continue but don’t think it will get worse.”
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Readers' comments (12)
phil stoney | 24 Sep 2010 10:26 am
of course dual pricing matters, its not the end of the world but it does matter, i ve lost business due to dual pricing!
easy for some chief exec who gets a wage to say it doesnt matter
if someones clued up, they 'll take your advice and check around, go to their own bank, check the internet. great advice but i can get a better deal direct. who can blame them.
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Ancient Wisdom...is a mortgage broker in N3. | 24 Sep 2010 10:45 am
Stockton will increase dual pricing and is looking at a 5-10 year plan to reduce introduced business via brokers by offering better deals direct/
Lloyds HBOS will approve more difficult cases in house and declining more applications from brokers, making brokers only the icing on the cake for further introduced business.
Lloyds HBOS will consolidate brands further in the next 2-5 yrs and bring out market leading products on Q4 for 2011.
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Luke Atkinson | 24 Sep 2010 11:05 am
I think the most encouraging aspect of this statement is the figure regarding clients who are sat on SVRs. This is a huge pot of business for the broker network waiting to mature with an interest rate rise.
Must agree that Stockton's comments regarding dual pricing seem pretty silly.
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Iain Smith | 24 Sep 2010 11:09 am
Phil, I think it's a shame that you can't see the positives within Nigel's comments. I think you miss the point. For forward thinking intermediaries this gives a strong indication of not just what opportunities will exist going forwards but the size of that opportunity. The largest lender in the UK anticipates a third of it's book to be on SVR - when (not if) BOE base rate increases this will be the catalyst for the recovery of the remortgage market - bread & butter for those brokers that plan ahead & have a proper strategy in place for how to take advantage. Also I would safely predict most other lenders will be in a similar position. Ok, so not all customers will be able to remortgage away from their existing lender (due to tightened credit policy, MMR implications & lenders own retention strategies) but come on, surely an opportunity like this is what intermediaries have been waiting for. Even with dual pricing Lloyds expect 65% of their business to come via the intermediary market - I expect that will be the forward thinking one's. The question is are you preparing now - if not why not . . .?
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Anonymous | 24 Sep 2010 11:11 am
Spot On, anon! I can't believe how Nigel had the front to stand up in front of a bunch of brokers saying "Dual pricing doesn't matter" - Clearly it doesn't matter to him, or his company, but it matters to most brokers out here.
Yes, brokers have to come to terms with it, and develop different strategies to cope with it, but this sort of comment does little to endear a massive provider to a large part of it's distribution.
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Anonymous | 24 Sep 2010 11:34 am
Spot on Nigel, dual pricing doesnt matter. Theres nothing me or you can do about it, hence, it doesnt matter, get over it. What matters is how to work around it and adjust your business model to it. If all the brokers spent as much time finding alternative income streams as they do moaning about dual pricing they would be able to afford that nice new Audi A5 with leather seats and coffee cup holder. And im sure if it was that bad, he wouldnt be joining Countrywide......a brokerage???.
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roger travis | 24 Sep 2010 11:40 am
in a market where values are falling, lenders are restricting income multiples, and the name of the game is going to be retention business in reality how many of their clients are going to be able to remortgage even if they want to.
on paper though, the opportunity to remortgage them is great, but in reality will it happen?
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Danny Lovey | 24 Sep 2010 1:20 pm
I respect Nigel's views, but have one question on his thoughts and that is - Buy-to-let will dominate the specialist sector and there will be no self-cert and little sub-prime - What buy to let sector? Lloyds have reduced again the number of BTL properties they will do across the brands from 9 to 3 properties or £2 mil, and to a large extent the BTL is dead as a do-do now and closed almost to anyone wanting to build a portfolio unless of course they go to a specialist lender outside of the mainstream market and they have large deposits of course.
So the question therefore is where are the lenders coming from to rebuild liquidity in the BTL market?
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Anonymous | 24 Sep 2010 3:32 pm
The original intention was for the likes of lenders within the HBOS group to offer BTL mortgages to the amateur landlord, and by definition this would be limited to 2 or 3 properties – if you are getting to 4, 5 or 6 properties you are moving to semi professional / professional landlord status.
Initially I suspect HBOS had difficulty in tracking the number of BTLs per person across the brands but have probably improved this in recent times and this is probably part of the reason for reducing the number that they will lend on.
Certainly for the landlord with the higher number of properties it is a business proposition and should be with the specialist / commercial lenders and with higher deposits being put in or cross charging of existing BTL properties.
As to dual pricing – does it matter if brokers are still securing 65% of the business written with these lenders. Either brokers are recommending direct products or clients are saying they prefer to deal via brokers and accept they will pay a little more for this.
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Grey Haired Underwriter | 27 Sep 2010 12:11 pm
Time to open a can of worms. I am getting fed up with brokers moaning about dual pricing. Dual pricing has been in existence for a long time only it was previously in favour of the broker and referred to as an a broker exclusive product. I don't remember reading any comments bemoaning the fact that brokers were given a serious competitive advantage or that they were making one heck of a good living without having to put in too much effort. Times change and we all have to change with them - So stop this continual whinging about dual pricing and accept that it is part of your business world now. Nothing will change the situation and you have to live with it until funding becomes more plentiful and you can go back to the land of milk and honey.
Personally I think you should be more concerned that the State has made life far too easy for the large banks and has left their main competitors to not only pick up the pieces through the FSCS but also provided a select few with access to cheap wholesale money via the special liquidity scheme. If this country is not careful we will be in a Freddie Mac/ Fannie May position where there only a few lenders holding a monopoly on the market and able to charge what they like.
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