Most mortgage customers still use brokers, which means that successful contact strategies are the key to the future, says Countrywide managing director, financial services Peter Curran
Welcome to my first column for Mortgage Strategy since taking over from my illustrious predecessor, Nigel Stockton. I thought I would start by taking a look at the market from the perspective of lender-turned-broker.
As we enter the final few months of 2015 it is increasingly evident it has been another very good year for the intermediary community. One of the things that has struck me most since moving to the intermediary side is that there is a desire not only to provide customers with great service and advice but also to do so with a combination of speed and convenience that lenders struggle to match. This is, of course, partly why the intermediary market share is now north of 70 per cent.
Brokers are willing and able to discuss more customer needs because they have access to a wider range of lenders where, slowly but surely, competition is giving rise to criteria changes (albeit not quickly enough) alongside the rate wars seen in recent years. It is a great time to be a customer – provided, of course, you are one that qualifies. With this in mind, a goal for 2016 is for lenders to look at ways to increase the size of the ‘customers that qualify’ pool, especially in the lending-past-retirement-age sector.
Since joining Countrywide, I have been asked many times what I see as the greatest areas of opportunity. The answer remains simple enough on the surface: look after existing customers. Lenders are trying, rightly, to find ways to interact with customers online and to create loyalty in a number of ways. However, most customers still use brokers, so the real opportunity for intermediaries is to create the system and discipline to stay connected to all customers over many years, not just ones who have a purchase deadline looming.
We are now at 78 months and counting of no change in the Bank base rate. Customers generally will not remortgage by themselves, so the objective is simple: we must do more to advise and guide them on their lender’s standard variable rate. Effective contact strategies are the key to success. Customers want to be looked after and brokers are in pole position, provided they stay in touch and are ready to look after their clients’ changing needs.
Of equal significance – and indeed an area where lenders may have an edge in some cases – is data and, more importantly, knowing how to use it to create a competitive advantage. The winners of the future will be those who can appeal to client needs in ways that perhaps do not exist today and that customers do not yet know they want.
For most borrowers in the residential space, a mortgage, especially when connected to a purchase, is something they do not buy very often. In fact, all the data suggests people are likely to have fewer house purchases across their lifetime now than at any point in the past century. This is a result of the rapid house price inflation we have seen in the past 30 years with all kinds of knock-on consequences for transaction volumes.
What this means, however, is that mortgage advice is important today and will remain so. The question becomes one of how brokers and lenders will use technology to attract, retain and, most important of all, provide service to customers. The ones who do it best will win.
On both sides, mortgages remain a vital component in UK society: the link for many people that helps them get on the property ladder. Much has been written about the change in demographics and there is no doubt people are renting for longer while younger. However, most people still aspire to own their home and we play a fundamental part in making that happen.
One thing that lenders and brokers agree on is the need for the industry as a whole to address the supply of properties coming to the market. That will require time, innovation and some deep thinking.
As we reach the end of 2015, customers’ need for advice remains paramount.