Service benefits of more competition

21 June 2010

With a trickle of new lenders entering the market and the return to origination by some existing players there is much talk of competition making a comeback and the benefits of this for brokers and consumers.

Of course, the reality is that we are still way off the sort of competition we all wish to see, particularly at higher LTVs. It’s great to have new lenders but if they are only competing on products up to 80% LTV and with limited capital, the effect is minimal.

The fact remains that funding is limited and even with the new entrants we’re only going to see a small rise in mortgage lending in the coming months.

But one competitive benefit new lenders could deliver is to raise the quality of service they bring to the intermediary table.

When there are only a handful of lenders it is possible that service suffers simply because it becomes accepted as a natural element of the marketplace.

But for brokers, service quality is a key differentiator when considering which provider to use.

Where competition in certain product categories is limited brokers often find themselves with little option but to try to work with lenders that fall short of expectations, especially when placing higher LTV business.

Competition puts the emphasis back on service and it’s to be hoped that lenders use service standards as a sustainable way of achieving a competitive advantage.

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