Speaking at the recent Mortgage Outlook Summit by Financial Reporter, a number of industry experts explored how the mortgage product market would change in 2024, including the impact of Consumer Duty on product innovation; how brokers can diversify their offering; and the outlook for the buy-to-let market.
The panel, chaired by Square 1 Media’s Alex Hammond, consisted of Hampshire Trust Bank’s Chris Daly, Mercantile Trust’s Maeve Ward, Andy Dean of Nationwide & The Mortgage Works, Sara Palmer of The Mortgage Lender and David Tweedy of StrideUp.
The first question posed by Hammond, referring to the Pepper Money Specialist Lending Study showing that the majority of consumers do not know the difference between product transfers and remortgages, was whether or not product transfers should come with a risk warning for consumers.
All the experts agreed that product transfers did not necessarily need a risk warning.
Chris Daly said: “it comes down to the relationship between the customer, broker, and lender. It’s about leveraging that relationship, speaking to those customers and explaining the differences. From our perspective, the product transfer is less risky for a customer – we recheck affordability, we sort of ‘re-underwrite’ – so there’s a real benefit to the customer that we’ve seen this year.”
Palmer agreed, suggesting she was surprised by the research: “I wonder, are those the customers who didn’t have a conversation about the difference when the first deal was placed? […] As advisers, I think that’s key.”
She noted that on the whole, brokers had ‘done a really good job of embracing product transfers’ but that the conversation about options for maturity should be had holisticty at the beginning of the advice journey. Ward agreed, calling the fact that surveyed consumers were unsure about the difference ‘worrying’
Nationwide’s Andy Dean noted that the value of advice in product transfers had increased in the recent market volatility, with the proportion of PTs coming to the lender via broker increasing, but that not every customer would require the same level of advice.
Broadly, the panel agreed that placing a blanket requirement for risk warnings on product transfers was unhelpful, and that it was important both lenders and advisers took each borrower’s circumstances into consideration.
Alex Hammond of Square 1 Media, who were partners of the event, said:
“Client retention and how brokers and lenders communicate with borrowers continues to be a hotly debated subject. With recent figures from UK Finance indicating a subdued lending market in 2024, retaining more borrowers for brokers and lenders alike will be paramount to protect revenue and gross lending respectively.”
