Brokers attending today’s FSE London have heard that product transfers and retention business is likely to be the ‘dominant channel’ in the mortgage market in 12 months’ time and presents a ‘massive opportunity’ for advisers.
Talking about the recent quarterly statistics on product transfer business from UK Finance – which revealed a three-month level of £53.7 billion – Ian Andrew of Nationwide Building Society, said: “Product transfers are clearly a massive opportunity for intermediaries. It’s also inevitable that more lenders are going to enter this space, and more intermediaries will also get involved. In 12 months’ time, retention will be the dominant channel.”
Esther Djkstra of Lloyds Banking Group summed up the last 12 months in the mortgage market as, “Retention, retention, retention – for lenders, brokers and customers. The retention market has overtaken the acquisition business.”
Chris Pearson of HSBC agreed and said that the Bank – which is coming up to a two-year period dealing with intermediaries – was looking at its own retention strategy, suggesting it would not want to be an “outlier” in terms of setting a retention/switching procuration fee.
He added that the product transfer market did “create a lot of opportunities for everyone in the room” but it was important that “we get the right customer outcomes”.
However, Peter Brodnicki of MAB questioned whether the sector was “on top of this in terms of what we advise a client regarding remortgaging or product switching” suggesting there could be some unintended consequences of focusing so heavily in this space in terms of the impact on fee-charging, protection and the like.
While pointing out that there had been major progress made by intermediaries in this space, he warned that new lender entrants might compete for mortgage switchers because “it’s an easy market to target”. He warned advisers to watch activity in this area and not underestimate it.