It’s clear that the liquidity crisis is not going to be resolved overnight and this means that lenders won’t be able to sustain their cost bases.
Forward-thinking strategies such as those adopted by edeus indicate the route to survival in a hostile environment.
Edeus has looked at its transferable skills and how they can be used to benefit clients in what can only be described as an emerging market – arrears collection and management.
And this at a time when building societies in particular are having to manage their costs as the Financial Services Authority is poised to fix their liquidity ratio at 20%. They will need flexible trading models to manage arrears without taking on additional fixed costs.
Edeus is also rumoured to be looking at savings accounts, allowing it to continue to work with brokers in developing a pool of funds. This is a good example of lateral thinking by a lender.
Brokers have also taken up the challenge to look at business areas they have previously ignored. Many knew the market would get tougher and have stopped regarding mortgage sales as their only source of income.
For many years, Swiss Re analysis has shown that protection products have been undersold. This has left consumers unprotected or protected by inadequate policies, often bought on an execution-only basis.
Brokers who previously relied on mortgage sales to earn a living are turning to protection sales. This is what they should have been doing in the first place.
Another product in the spotlight is general insurance, for too long dismissed as not worth the effort by brokers. Since launching our GI engine, we have no-ticed that many brokers are starting to take GI seriously.
Now, if they don’t sell GI themselves, they may have trained a team member who can sell GI to new customers as well as review the needs of existing ones. Not only is this fresh income, it’s also sustainable in-come because of renewals.
Moving into the IFA space, using conveyancing engines, looking at equity release, properties abroad and savings accounts are all strategies traditional mortgage brokers must now consider to ensure they can provide their clients with a diverse range of services.
And needless to say, by taking the above measures, brokers can sustain their income in tough times.