Reducing numbers of products an opportunity
A recent open letter to intermediaries from a few distributors requested them to lay off lenders for making product adjustments at short notice. Although some intermediaries will not have welcomed the public lecture, particularly from those who might have been their business partners, no one can fault the sentiment. We are trading in unprecedented times and lenders do have to alter their funding arrangements at short notice.
The net result of this situation is that we have seen a massive reduction in the number of mortgage products available. Talk to anyone working for a sourcing system company and you will soon learn that the number of mortgage products has reduced by over half. Trigold for example has seen a reduction of over 23,000 mortgage products. Such a fall is unprecedented.
When we last saw such stress in the housing market there was not such a dramatic reduction. There simply were not as many product providers or products available in the first place. Self-certification and sub-prime mortgages were in their infancy and the majority of foreign lenders had already returned to the shores they felt they understood better. The lenders that did exist were predominantly funded by the slower moving retail fund market and were not so affected by daily money market movements.
I understand that brokers might find these times inconvenient, but what a wonderful opportunity for professional mortgage brokers.
Many of the brokers I speak with have, over the last few years, been becoming increasingly concerned at the increasing trend for consumers to source their own mortgages via the Internet. Their ability to get the most appropriate mortgage for themselves was, in reality, difficult enough when there were nearly 50,000 mortgage products. Paradoxically, it has become even more difficult now there is half as many as there were only a few months ago with the products that remain available appearing to change daily!
Your customers need your professional help more than ever tell them so! I would certainly be focusing on those customers for whom I had arranged fixed rate mortgages, which are now ending. The current market is a wonderful business opportunity for those brokers who can keep up with the changing product marketplace. The broker who understand his customers needs and keep close to their clients will be the one able to maintain a profitable business in this market and will probably keep a grateful customer for life.