The Mortgage Market Review has been live for just two months but feedback I have been getting from advisers is that some lenders are already struggling with new processes, IT glitches and overwhelming demand for mortgages.
This has led inevitably to delays, plus extended offer and completion times. And that is for advisers.
As a retail customer, imagine having to wait four weeks just to get an appointment at a local branch to sit through several hours of a now more intrusive sales process for a limited product range recommendation. Then more delays as the underwriting process kicks in. Is this a good consumer outcome? I don’t think so.
Modern consumers who run their lives on mobile phone apps will increasingly regard the branch-based mortgage sales process as out of touch and too slow. While the demand for mortgages continues apace – thanks to continued Government support through the Help to Buy scheme and the supply of cheap loans through Funding for Lending – things will not get better any time soon.
One of the by-products of the MMR is an almost universal acceptance that mortgages will be advised either through an intermediary or through a bank – whether that is in a physical branch or through a call centre.
There is nothing new here. For banks, the supply of advisers is relatively fixed given the new post-MMR demands they face in running a fully authorised mortgage salesforce. It is not that easy to quickly scale up fully competent, fully qualified adviser numbers in a tight labour market.
Intermediaries have been doing this for years and although they generally offer whole-of-market choice, broad protection and general insurance panels for their clients, even they are finding recruitment difficult.
And in two years’ time, fully qualified good bank mortgage advisers will be able to seek employment in the intermediary market where earnings potential is higher and control of their own destiny is greater.
Intermediaries have a more flexible approach to working hours and can expand or contract capacity as the market moves. So it is no surprise that the main lenders tell us we are taking a bigger share of the market.
Lender mortgage salesforces are stuck between a rock and a hard place. It is difficult and expensive to expand quickly, there is limited choice for clients and working hours are rigid. Telephone sales offer a halfway house to expand but face-to-face still dominates the sector for this most important financial transaction.
Maybe some lenders will give up the ghost and outsource the in-house process to intermediaries in time.
Perhaps cleverer technology and more execution-only sales may offer some future light.
But with the “human interaction” rule rendering advised sales the predominant route, I foresee a bright future for mortgage intermediaries post-MMR.
John Cupis is managing director of mortgages at Sesame Bankhall Group and deputy chairman of the Association of Mortgage Intermediaries