When I got into the mortgage industry in 2000 I was fresh from three years working at a technology-focussed consultancy caught up in the dotcom boom.
Back then, I was a firm believer in all things online and naively believed no business could succeed without an on-line model, so my first few weeks in the mortgage world were like travelling back in time. I soon learnt all about paper application forms, faxed decisions in principle and reams of supporting documentation.
But in this world of paper, I came across one company that appeared to represent the future. It was called Ifonline and seemed to have everything sussed.
For those who don’t remember it, Ifonline was an online sourcing system. It updated products throughout the day, its sourcing engine used live data, application forms could be filled in on-screen and cases were submitted securely via email using an encryption key. This was standard stuff in other industries even then, but sadly it proved too visionary for the mortgage world.
Ifonline was swallowed up by a well known sourcing system and became an offline system. This kept us amused at Mortgages PLC as we started referring to the new entity as ‘Ifonline-offline’.
Looking back, the system was too far ahead of its time. And it had the added disadvantage that the market was constantly booming for most of its lifespan. Lenders, packagers and brokers all recognised the need to move towards electronic processes but were too busy filling their boots to give it the attention it deserved.
Today, we find ourselves in a different situation. Lenders have culled previously profitable product ranges and broker and packager revenues have suffered as opportunities to earn healthy fees have vanished.
To say it has been a period of change is an understatement – we’re talking about the destruction of the value chain that has held the specialist broker market together since its inception. Things cannot and will not be the same again.
The sub-prime sector looks set for a slow year and business will be dominated by near-prime. This means lower revenues per case for brokers and packagers.
At the same time, the prime market seems more attractive than in recent years. Prime is having a renaissance after years of loss-leading headline rates and proc fees being dwarfed by their sub-prime counterparts. Margins have been rising, albeit accompanied by some negative PR, but prime lenders still want to lend.
So where does all this leave brokers? In simple terms, brokers and packagers wanting to make money from mortgages will have to deal with more cases, especially if they want to generate revenues comparable with those they’ve grown accustomed to.
The focus is shifting towards efficiency and that goes for lenders, packagers and brokers. We must adapt to trading in this new landscape. The market is becoming a numbers game in the same way the prime market did about a decade ago. There’s a revolution underway and technology is once again set to be the saviour of the industry.
Key weapons in the armoury of brokers in the future will be systems offering single solutions for sourcing and processing mortgages plus automated record-keeping for compliance purposes.
Such technology will provide the efficiency the market needs. I suspect the Ifonline business model would have fared much better in today’s market conditions.
Five top tips for job hunters
After my recent career break I found myself among the thousands of people looking for a job in the mortgage industry.
It’s tough out there and employers are holding all the cards. But I’ve picked up some sound tips in the past couple of months and maybe they will be useful for some readers.
First, know what you want. One question you can guarantee you will be asked is what you are looking for in your next role. If you can give an immediate and enthusiastic response, it will help.
Second, spend a lot of time on your CV and get feedback from senior staff in similar positions to those you are likely to meet in interviews.
Third, form your own board of directors to help you make decisions. It works for companies, so why not for individuals? Get a group of people who know you well and you can trust to be discreet and involve them in any decisions you make. Include your partner, close friends and family members.
Fourth, make friends with a recruitment consultant. By all means send your CV to numerous recruitment companies but try to stay close to one. Invest time in getting to know the individuals there and letting them get to know you. Peter Gwilliam at Virtus Search has been a godsend for me.
And last but not least, focus on the opportunities in front of you and go for them with all your heart.