Halifax’s overhaul of its retention strategy has been described by some brokers as the most exciting news of the year because of its vast reach in the mortgage market.The UK’s biggest lender announced last week that it will offer full procuration fees on retained business while making the same mortgages available to new and existing customers. Since then, fellow HBOS brand BM Solutions has revealed that it is extending its pilot offer of full proc fees on self-cert and credit-repair business to its entire range. One of the questions now being asked is whether further lenders will follow Halifax’s move. HBOS intermediaries managing director Nigel Stockton says the offers could be extended to its three other brands, The Mortgage Business, Bank of Scotland and Intelligent Finance, once the success of the Halifax scheme has been fully assessed. If that happens, around 49bn of intermediary business could be protected, based on the company’s 2005 gross lending figures. Stockton insists the move has nothing to do with the entry of new lenders such as Close Mortgages and DB Mortgages to the market but it is nevertheless timely given the expected frenzy of activity when the new entrants are up and running. London & Country head of communications David Hollingworth says: “This kind of approach has been talked about a lot and it is good to see Halifax partnering with brokers and recognising the work the broker plays. “A lot of lenders will be looking at how the Halifax scheme works to see if it is successful and, if it is, then I am sure others will follow. While some lenders have already revealed plans for retention incentives, this is the big one as Halifax is the biggest lender.” Halifax has also pledged to speed up broker processing through its website. Stockton says: “We are going to simplify the Halifax range and make it easier and quicker to process mortgages. We want it to be as easy to retain a client as to remortgage them elsewhere and avoid paying extra fees.” Accord Mortgages and Woolwich offer retention incentives while Abbey, Alliance & Leicester, Cheltenham & Gloucester and Nationwide say they are considering similar moves to protect their business. Nationwide was the first lender to offer the same deals to new and existing customers and its head of intermediary markets Tim Hughes says Halifax’s move to copy his company’s strategy is positive, although he stresses that the full details of its product range have yet to be announced. Nationwide has built much of its award-winning advertising campaigns of the last two years around the promise that its mortgages are not just for new customers only. It remains to be seen what Halifax will do to promote the change. Hughes says: “Intermediaries want a simplified range and it is a big step forward if Halifax is doing this. It is not inevitable that others will follow but Halifax has a big presence so people will be keeping an eye on developments and we are one of the lenders that will do so. Offering the same products to all customers is a way forward.” Another potential implication of the Halifax move is highlighted by Accord managing director Linda Will, who predicts that the difference in rates between introductory offers and those for existing customers will narrow. She says: “It will not be acquisition at the expense of the existing customer.” But she points out that there will always be lenders with deeper pockets which will try to undercut rivals. Hollingworth also stresses that lenders will always come up with short-term offers to boost volumes and that any convergence of rates will not happen overnight. One of the reasons brokers are so pleased with Halifax’s move is that the work they carry out for clients who remain with the same lender at the end of their deal will be rewarded with the same income as if they had remortgaged to another lender. Mortgage Intelligence managing director Sally Laker says: “It is a big step forward as even when a broker sticks with the existing lender, he or she will still have to research the market. So the intermediary is still having to do the full job but they would not have got the reward for that in the past.” She insists that there are no conflict of interest issues in retention strategies, despite recent research from the FSA indicating that this could be a problem in future, as long as the broker researches the whole of the market at their disposal. Laker says: “It will only mean brokers going with Halifax if all other factors are equal.” Hamptons International Mortgages director Jonathan Cornell says: “While the likes of Woolwich have retention strategies, they do not do anywhere near as much business as Halifax. It will shake the market and it is probably the most exciting lender event of the year for brokers. It does not make sense for brokers to be playing musical chairs with lenders. “I do not believe this has come in place because Halifax will be faced with stiff competition from new lenders. It was being talked about way before Michael Bolton quit last October. Someone like Bolton may get a lot of PR because of his profile but Halifax makes so much money that this is much bigger news.”
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