Mortgage lending for Halifax rose from £60.6bn in 2005 to £73.6bn last year and, based on its sales so far this year, it is on course to write an extra £7.2bn, which could push HBOS’s market share from 21 per cent to 23 per cent.
Following the success of its high-profile retention scheme launched last August, Halifax Intermediaries managing director Jack Saxton says it has more money to invest in building the next generation of e-trading.
The firm says its retention scheme is on course to generate a massive £7.2bn of additional business this year to cement its position as the UK’s biggest lender.
The HBOS brand completed £1.2bn of business in the first two months of the year compared with £1bn in the first five months of the initiative last year.
Saxton says its retention scheme was a huge investment, taking two years to build.
“It has taken off, especially since the nat-ional rollout to all intermediaries, but that is no surprise to us. I do not mean that in a bullish way but because it was build hand in hand with intermediaries.”
Saxton says 80 per cent of HBOS’s lending comes from intermediaries. “Intermediary business is very high profile in HBOS because of the percentage of lending. It is our life-blood,” he says.
Saxton believes that retention is the biggest challenge facing all lenders.
“The challenge for us as the biggest lender is to hang onto customers, drive new business and to make sure that net lending increases. The product transfer operation is a big help for us there.”
Despite the success of Halifax’s retention scheme, Saxton is surprised that a lot of lenders still do not remunerate intermediaries. Only a few lenders, including Woolwich, First Active, Accord and BM Solutions, currently have a similar scheme.
Saxton says: “There are a lot of lenders who have retention strategies that exclude the intermediary. How can an intermediary afford to use a lender that is going to steal that customer from them? We thought that was a strange place for some lenders to start because if we rely on mortgage intermediary business, one would think that other lenders do, too.”
He says that, for Halifax, remunerating intermediaries was a no-brainer.
“The intermediary is regulated so it is going to trawl the market for the best product for its client. Whether they pass it back to us or not depends on how we compare with other lenders so why wouldn’t we want to pay them a normal fee?”
Retention strategies is not the only area that Halifax has chosen to invest in significantly. Saxton says it is looking at launching instant mortgage offers early next year. He says it will bring offers to the intermediary’s point of sale using automated valuation models.
Halifax will be the first high-street lender to use the technology which specialist lenders Edeus, GMAC and BM Solutions already use although Alliance & Leicester has also signalled plans to introduce AVMs.
Saxton says: “We have got more money to invest, signed off and our business cases are going through now to invest in building to the next generation of e-trading. “With AVMs, the fact that we do not need a valuation might be completely irrelevant to most customers. They may want a valuation and a survey but all we are saying is that we can get that offer to you quicker because we do not need it.”
A full rollout is planned in the first quarter next year but the firm may look to introduce the service in earlier stages.
Saxton says: “We are planning to roll this out in Q3, Q4 and Q1 next year but the real interesting question is what will the technology environment look like in a few years’ time? Our brief is that we do not know but we had better go out and find out so that we can build it for the intermediary.”
He says this is the area he really enjoys because you cannot afford to build something wrong. “It needs to be built right so that is why we go through all the workshops and consultations with intermediaries. We go to them to find out exactly what they want.”
Saxton says Halifax is considering new opportunities but products for first-time buyers is high on the agenda.
He says: “The big opportunity is to construct affordable housing schemes and mortgage products to assist first-time buyers. I know that Phil Jenks (Halifax head of mainstream mortgages) is specifically looking at that for Halifax right now.”
Saxton says Jenks’ team may also look at equ-ity release but this remains a sensitive issue.
He believes this year has been an important one for Halifax Intermediaries.
He says: “HI is not a brand in its own right, it is a distribution channel of Halifax but I think that we have managed to put it in the market as its own brand. This year, we will continue to open our doors and make ourselves even more visible.”