View more on these topics

Mortgage View: Word on the street

Christmas on the high street appears to have set some interesting trends and I wondered whether there are lessons which we can pick up from the mortgage market. Last year saw disappointing volumes on the high street and in the mortgage market so the parallels may well start there. Three or four trends were noticeable on the high street over Christmas and I will pick these up individually and see what they may mean for our market.

Probably the dominant factor in the press has been the growth over Christmas of online shopping. What is particularly interesting is that a number of our well known high-street brands have seen an unprecedented switch to internet retailing. More interesting, this does not meet the primary thought that shopping online is cheaper but rather that it is more convenient. Retail space is increas-ingly being used as a shop window, with an unprecedented number of people walking into shops, assessing their prices and product quality and then transacting online.

A parallel challenge for our industry, where it is already recognised that shopping or price reviews happen online, is to give a really cogent internet-based fulfilment experience. Online mortgage promises and acceptances in principle need to be replaced by binding offers online. These must be linked to valuation databases to enable customers to get a real commitment within minutes.

The second dominant factor in the high street has undoubtedly been the earlier than ever onset of sales. After a disappointing year last year, few lenders have really equipped themselves to take advantage of the January rush. Most commentators believe that Janu-ary will be a busy month for mortgages, with new real pricing reality being established.

This trend is most evident at the high end of the market, where investment bank bonuses are making many estate agents salivate over the prospects for the first quarter of the year and yet lenders’ marketing has not reflected this. I see no evidence of products specifically meeting this demand or more retail-oriented price offers appearing in the market.

One interesting supporting trend has been the propensity of high-street retailers to give something away for nothing. Walk into most hi-fi retailers and you will find that the impetus on retailing is to give an additional electronic goody away with a major purchase.

In premium brands, this is most recognised where a specification upgrade is frequently being used as a sales incentive. A number of lenders have announced their intention to enter the offset market as a part of their intrinsic plans for next year and this is likely to lead to a situation where an offset becomes a free additional optional extra.

One of the big trends I think we will see next year is the elimination of premium pricing on offset products as they become accepted across the entire market. It has been true in our marketplace for years that inno-vations supporting additional margin sought as the holy grail by most lenders quickly gets eroded to commodity prices as new players feature the product attributes.

The real message for the new year is that we must learn to follow other consumer markets more closely. Mortgages are at the complex end of financial services delivery and yet the precedent elsewhere in financial services and in the retail sector is a lesson that the mortgage industry should learn from.

With that thought, I wish you all a Prosperous New Year and look forward to a challenging market.


Which? slams equity release

Equity-release schemes have been criticised by Which? as expensive and inflexible. It says Norwich Union is running irresponsible advertising and people should downsize or borrow from family instead.

Advisers hoping for fewer claims as endowment letters turn green

Advisers hope that a rise in the proportion of green endowment mortgage letters sent out to consumers will signal a fall in claims against them. Prudential says 51 per cent of letters sent out in 2005 were green, indicating that the fund is on target to pay off the loan at the end of the […]

Loan brokers still confused by promotion rules

The FSA says mortgage brokers are still confused about prom-otion rules over a year after their introduction. In its round-up of the first year of mortgage regulation, the FSA says there have been mixed responses to the new rules from brokers. Feedback from brokers shows that there may be some confusion over when a risk […]

Law Soc gets power to order 15K redress

The Law Society now has the powers to order a solicitor to pay up to 15,000 compensation to consumers, three times the previous limit of 5000.


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm