Bob's Blog

Bob Hunt, CEO of Paradigm Mortgage Services, has actively championed the DA community since the launch of Paradigm in 2007. Both publically, and behind the scenes, Bob works hard to use his experience and influence to ensure appropriate recognition and fair treatment for intermediaries in a range of areas, from Proc fees and quality metrics to product access and dual pricing. Paradigm has proved that despite tough market conditions it is possible to not only compete against other larger scale more established Distributors, but in creating a new model of distributor – a partnership model – to reward firms for the consistency, quality and loyalty of their business support.

Bob’s latest article is available below, and there is an extensive Blog Archive including all past articles.

29 Mar 2019

Deeper product transfer data would show lenders’ market shifts

It’s been interesting to read a lot about lenders‘ margin pressure and to also hear from the Association of Mortgage Intermediaries (AMI) with regard to product transfer activity and commission levels.

This is particularly regarding whether lenders – who traditionally pay advisers less for such business – might potentially be creating a bias towards such products by offering ultra-competitive rates which they can achieve by paying advisers lower commission.

Or, indeed, nothing at all if they can secure the business direct from existing customers.

This is an interesting area to delve into and a rather complex one, especially if – as most lenders are – you are securing the vast majority of your business through the intermediary channel.

Can you truly operate a two-prong approach to transfers?

In the first case, being open to advisers handling this business and referencing advice in client letters.

And alternatively, actively targeting clients months out from the end of deals, and utilising technology in order to facilitate a quick decision on behalf of the borrower, which does not include either the original adviser or any advice element.

Track lenders moving PT market

In that sense, it’s perhaps no wonder that AMI wants UK Finance to publish intermediated, advised and execution-only product transfer lending data.

This would mean we could all track whether lenders are attempting to move the market in a more direct-only direction.

Having said that, the greater transparency around the whole product transfer sector has opened-up a new avenue for advisers.

But I suspect, for some lenders, it has opened up a veritable can of worms which they might have preferred to have left untouched.

While we might all have known product transfers were a significant part of the market, we might not have known just how big it was.

When you’re talking about hundreds of billions of pounds of lending, it’s no wonder that advisers want to actively target this sector, and that lenders would be looking at ways to keep hold of that business and keep their acquisition cost down.

If they are doing this via highly competitive prices on product transfers, as compared to traditional remortgage rates, and if they feel they can do this by paying less (or nothing) to advisers, then there might be a case for the FCA to review whether this is within the spirit of the Mortgage Market Review (MMR).

New world emerging

Overall, however, I wonder if we’re in danger of missing the new mortgage world which is likely to emerge over the months and years ahead.

A technology-driven, all-encompassing process with advisers utilising systems like Dashly to keep on top of an ever-changing mortgage product situation and to develop a process which keeps them and their client informed at all times.

This joined-up approach could well suit all stakeholders and, as it evolves, probably needs to be embraced by intermediary firms to ensure they are on the right side of history.

It makes for a very interesting future for mortgage advice.

Don’t get me wrong, there is absolutely a need for mortgage advisers within this new world, but it does mean embracing the changes and providing a service which dovetails with the technology to ensure no product stone is left unturned.

The future is here on that one.

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