Laggard lenders will pay the price

There has been more aggression in the mortgage market recently, largely thanks to the entry of a wave of lenders into the specialist market. Claims and counter claims have been registered in the media about the capabilities of new systems and product innovations, and how attractive these are for brokers.

And this aggression is likely to increase as the battle for lending volumes hots up. As the time of year for assessing performance against ambitious lending targets looms, some firms will find they are behind. They will need to react.

As I have said before, the battleground for long-term lending success is in the service provided to brokers. Having a competitive product range is no longer good enough.

It does not take a genius to work out what brokers want. In every survey their answers are consistent. They want lenders that have simple application systems, quick turnaround times, good case-tracking capabilities and products that are easy to explain through the use of Key Fact Illustrations.

Inconsistent underwriting or unreliable service infuriates them and turns them off lenders. Little things such as repeatedly keying in the same information are annoying. And when they have a question about a complicated case, human help should be on hand.

Yet it seems that only the recent fierce competition has focussed lenders’ minds on these needs. After years in which innovation in broker service occurred at a ponderous pace we have seen the market shaken up. It’s not just instant offers but also innovations such as no need to re-key basic data that differentiate lenders.

But some still do not seem to have got the message that service is a key component of a product, or else are incapable of innovation.

In larger and older companies, innovation can be difficult because of poor coordination between departments or outdated systems that are costly to renovate. Others don’t have the technological expertise and are content with the way things are done, rather than searching for innovation.

Whatever their reasons, these firms are in for a rude awakening. They may have been able to get away with a relatively sleepy existence until now but they risk slipping behind quickly. The differences between them and the innovators will become increasingly and painfully obvious to intermediaries.