There is no doubt that the mortgage industry has been through a number of revolutionary changes over the past decade or so.
Potential borrowers have benefited from an increasingly consumer-focused attitude on the part of lenders and the burgeoning specialist market has led to a high level of product choice.
This in turn has contributed to the growing importance of professional mortgage advisers, qualified to lead people through the complex maze of criteria, rates and deals on offer.
In the past, mortgage lenders themselves – traditionally banks and building societies – controlled the distribution of their products. Ten years ago, they distributed around 60 per cent of all mortgages. Today, that figure is closer to 35 per cent and mortgage intermediaries have assumed the role of primary distributors for products.
This dramatic change has happened because of a number of factors.
First, although products have become more specialised when it comes to customer segmentation, at the same time, criteria and underwriting processes have become more simple.
This, coupled with improvements in technology (most notably the advent of sourcing software and online services) has allowed intermediaries to easily access and compare products, service and value.
In a fast-moving, competitive market, this can make all the difference to a borrower who is anxious to make a move.
Second, the sheer volume of products on offer and the enormous amount of detail circulating about them has made professional, independent advice all the more valuable.
Product information comes from a variety of sources these days – websites, press advertising, specialist magazines and TV lifestyle programmes, to name just a few.
It is no surprise that busy consumers are willing to let someone else take the time and effort to sift through what is available and isolate the most appropriate mortgages.
Finally, precisely because of the level of information available, consumers are increasingly financially astute and – rightly – demand value for money and the best possible answer to their mortgage needs.
Mortgage advisers are able to provide this as their purchasing power with lenders usually gives them access to good deals and speedy service.
For the market as a whole, a healthy and thriving intermediary distribution network can only benefit all those involved.
Lenders’ efforts to meet the demands of their business partners have resulted in the broadest range of product choice and the most competitive mortgage market in the world.
Product development has necessarily become an interactive and dynamic process – product managers, advisors and end consumers all have a role in shaping mortgages which truly meet borrowers’ needs.
Meeting intermediaries’ requirements has also fuelled technological development for most lenders. Many now offer full online services, including credit-scored decisions in principle, electronic applications and real-time case tracking.
Having access to web-based services is a real benefit for those wanting the best deal coupled with a swift turn-round.
Mortgage lending via intermediaries makes an important contribution to the economy as a whole. The UK has a largely healthy economy, and we are seeing record levels of homeownership. Demograph-ically, there are a number of challenges to meet which will involve the development of advice-led products.
For example, a growing number of people are investing in property as a way to provide for their pension and equity release is becoming more and more popular as a way for people aged 60-plus to fund their retirement.
Regulation set out by the FSA, together with the professional qualifications required to give mortgage advice, mean that intermediaries are held with higher regard and provide vital assistance to borrowers.
It is clear that mortgage advice from a qualified professional will continue to play an important part in borrower recruitment. As deals mature and consumers go through various life stages (starting a family, changing jobs, preparing for retirement), intermediaries are likely to become more and more involved in retention, remortgaging and further borrowing as well as advising on new products.
Some lenders already offer procuration fees for this kind of business and others are bound to follow suit.
The technical side of business submission and processing will undoubtedly carry on developing at speed, making it easier to take out mortgages and to switch between deals.
Canny intermediaries will ensure that they keep up with these developments and other non-face-to-face transactions – via phone and interactive TV, for example, which are likely to become more prevalent in the years to come.
Wise lenders will also work hard at maintaining and enhancing their business relationships. Adapting to intermediary and consumer needs should be an essential part of their strategy – it could make all the difference in a challenging market.