Phil Whitehouse: Don’t forget remortgage clients


If you neglect your former clients in favour of new business, you risk another intermediary swooping in and taking them

According to September figures from LMS, the number of people remortgaging their property increased by 12 per cent from August, with 28,686 loans advanced. This figure is also up 4 per cent on the same month last year.

It is not a huge rise, granted, but it is still a good sign for the market. Indeed, it is a market that has found itself languishing in the doldrums of late, so any upward trajectory is bound to be warmly welcomed.

But why has this area of the market failed to reach its potential in recent months? What is it that has been putting off consumers from looking for a new deal? Or are brokers at fault?

There has certainly been some apathy on the part of consumers. While speculation about interest rate rises has been rife for much of the year, it is only in the past couple of months that talk of a potential hike from our friends across the pond has led some commentators to call one here a real possibility. Perhaps borrowers are now seriously considering the implications of a base rate increase and are starting to do something about it.

Some may have found themselves trapped in negative equity until now and therefore unable to remortgage.

House prices have continued to increase steadily this year, up by 6.1 per cent in the 12 months to September, according to figures from the Office for National Statistics. Those borrowers who previously had found themselves stuck as mortgage prisoners may now have a bit more flexibility in terms of affordability.

One could also apportion responsibility to brokers, who have not been proactive in getting former clients to consider remortgaging. When new-mortgage business levels fall, there is a much more pressing need to find business elsewhere. At times like that, it is not uncommon to see spikes in remortgages or general insurance sales as intermediaries do their best to secure an income stream. At present, however, brokers are being kept pretty busy with new business – not least because there are not enough intermediaries in the sector to meet consumer demand.

Indeed, there is a recruitment issue at present. We lost a lot of good brokers during the economic downturn, many of whom left the market for good, and we have not seen much of a drive to attract new blood. Brokers can only do as much as time allows.

Banks may be facing the same issue. With training a priority before the EU Mortgage Credit Directive comes into play in March, lenders could be battling with staffing levels and not have the resources in branches to get customers to buy in to remortgages.

The issue of product transfers may also have played a part. With some lenders paying brokers full proc fees, product transfers are becoming more popular. Perhaps this is masking the true number of remortgage cases being completed. It may be that a separate class of statistics is needed to show the true picture.

Finally, there is the role technology can play. If it is not utilised correctly, brokers could be missing out on following up potential remortgage leads. It can be difficult to keep track of when clients are approaching the end of their mortgage term or what deals they are currently on.

Using technology can help you to do this easily and efficiently. The right systems will even contact the clients automatically and arrange appointments, taking out much of the hard work that creating remortgage business can involve.

If you are neglecting your former clients in favour of new business, you run the risk of another intermediary swooping in and taking them. I have no doubt brokers are busy with new-client demand but by using the tools and support on offer they can make sure they are able to service both old and new, and boost their income stream while they are at it.

Phil Whitehouse is managing director of MCI Mortgage Club