Beating lenders to the punch on product transfers

Indeed, anecdotally we are hearing from agents – particularly in the South East – that the number of properties being put up for sale has seen a noticeable jump since the start of the year, and there undoubtedly appears to be a stronger level of confidence about what 2018 might bring, compared to the over-riding feeling at the end of 2017.

Time will tell of course but I’ve also heard lenders talking about strong activity levels over the course of January and February, with many individuals deciding to make their moves/secure new deals post-new year, and there has also been talk that many more are putting Brexit-esque fears aside, or at least attempting to make major purchases/decisions before the UK officially leaves the EU in March next year.

For advisers of course, market share figures have moved in their favour since the introduction of the MMR, and it will be intriguing to see the latest distribution split in terms of written business. Many now suggest that advisers are writing well in advance of 75% of all mortgage businesses, and judging by the mood music there is also a concerted effort taking place to secure some of the product transfer work that lenders have historically tended to keep for themselves.

In that sense, it was interesting to read that UK Finance is likely to publish lender’s product transfer data at some point during 2018. The level of activity – and the amount of gross lending it is responsible for – has been somewhat shrouded in mystery. While AMI believe it is in the £100bn territory, some official statistics would be most welcome as it provides a figure that advisers are likely to want to up their share of.

The increasing number of lenders willing to pay retention/product transfer procuration fees is also an incentive to ensure advisers not just retain clients, but also keep those who may be better off staying with their existing lender. We all know that many lenders are using all the tech at their disposal to product transfer clients across without necessarily sending them back to their original (or any) adviser but again there seems to be a groundswell of support building to ensure lenders’ practices in this area are well known, and that they (at the very least) tell existing consumers about advice in any communications.

Product transfer activity added to the traditional remortgage market is obviously going to be a key sector for all advisers over the course of the year. While purchase activity has undoubtedly improved, it’s estimated that half a million mortgages will mature during 2018, and the remortgaging consumer’s need for mortgage advice is likely to be strong, to say the least.

Most advisers have very effective client contact processes but, in a world where lenders are contacting their clients anything up to six months prior to the end of a special deal and where they’re willing to waive ERCs and provide incentives to product transfer without advice, it’s absolutely imperative that advisers beat them to the punch. Let’s remember what you’re dealing with here – a lender using tech to provide, for example, three product options which the customer can tick with the greatest of ease. And even if they think they’ve received advice, we know they haven’t, we know their circumstances will probably have changed, we know there is a range of other product options potentially more suitable out there for them, and we know they have just given up all the protections that independent, professional advice affords them.

And advisers will also know only too well that with a tick of a box, they’ve not just lost the client’s mortgage business but (in all likelihood) every other piece of business that could have been written – be that protection, GI, conveyancing, legal services, you name it. That shows just what’s at stake for advisers in allowing a client to make this type of decision, which means client communications and marketing has to be regular, targeted and effective. Your client should be in no doubt about what they could be losing out on by choosing such a product transfer option; this is not scaremongering but ensuring they have the best advice, and they get it from you.