The mortgage market is set for greater transparency as UK Finance is preparing to publish product transfer sales data, Mortgage Strategy understands.
At the moment the lack of information about product transfers leads to uncertainty about the size of the mortgage market and the level of intermediation. Lenders do not have to report product transfer figures to the Bank of England or Financial Conduct Authority.
Last month’s economic bulletin from the Association of Mortgage Intermediaries says gross product transfer lending could total £140bn in 2018, 34 per cent of the estimated £410bn total residential mortgage market.
This total would make 2018 the strongest year for the mortgage market since its £362bn peak in 2007. That year, AMI estimated around £30bn of the total mortgage market, or 8 per cent, was product transfers.
But the growth in product transfers means possible risks to a greater number of consumers.
AMI chief executive Robert Sinclair says: “The issue is that there are some lenders who use AVMs to revalue the property and apply an appropriate LTV, while others don’t. Therefore there is a difference in the marketplace. There are some who will take them through an internal advice process, others will be doing it as execution-only.
“There are a large number of people going through an execution-only process where they are not being given the alternative of looking properly across the market to make sure there is a better, more suitable deal elsewhere.”
Sesame & PMS managing director Mark Graves agrees the product transfer process lacks transparency: “The industry doesn’t know the size of the product transfer market, or what the brokers’ share of it is.”
But he questions the extent of consumer harm from the current state of product transfers.
Mortgage Strategy understands that the former Council of Mortgage Lenders has been collecting product transfer information for some time, and UK Finance is set to publish this data.
Mortgage lenders were also asked to provide data on their product transfers to the Financial Conduct Authority as part of its review of mortgage competition.
A UK Finance spokesman says: “UK Finance regularly publishes mortgage statistics on our website including on first-time buyers, movers, remortgagors and buy-to-let. We don’t currently report publicly on any product transfer figures.”
The proportion of product transfers being done through brokers is growing.
AMI thinks around £60bn of the £140bn 2018 product transfer total will be handled by brokers.