Bob Hunt is chief executive of Paradigm Mortgage Services
2014 is a big year for the lender and provider community not least because there are some notable (and exciting) market developments that are taking shape and, for lenders at least, there are the not insubstantial issues of how they will cope with (in all probability) rising business levels and the introduction of the Mortgage Market Review (MMR) at the tail-end of April.
Tackling the anticipated rise in business levels, accompanied by an increase in targets, might seem like a ‘nice’ problem to have for the lending community however one might also point out that to do this requires some considerable investment and resource.
As does the MMR actually, but we’ll come to that later. Suggesting to the market that you have an increased appetite to lend and then making those pronouncements a reality are two very different sides of the same coin and, unless there has been a significant amount of preparation and planning put in place then the quest for greater business could fall flat on its face before you’ve even started.
Some might think that ‘raking in’ lending business is simply a case of issuing products with ‘best buy’ pricing, standing back and watching the cases flood through the doors.
This might work momentarily however if recommending (and selling) mortgages was as simple as ‘this rate is the best’ then those at the top of the ‘best buy’ charts would hoover up all the business, wouldn’t they?
It’s certainly not as simple as that, and lenders will know only too well that if their underwriting/servicing/back-office functions are not ready for the extra volumes then it’s unlikely advisers will be so quick to recommend their future clients go down the same route.
Pricing can go some of the way to gaining market share but ultimately it will be service excellence that takes you much further. History is littered with the reputations of lenders who thought pricing was enough and yet found their ‘top products’ were not in such demand when they came with weeks and weeks of delays for the client.
Therefore, as we move through the year ahead and (hopefully) we see larger volumes of business coming to market it will be those lenders who are on top of the game from a service excellence point of view that are likely to be the big winners.
To our mind, it seems important to track the ups and downs of lenders throughout the year and one way we’re able to do this is by asking our Partner members to rate the lenders they are using in a variety of categories – from residential to buy-to-let, specialist to equity release and then overall.
By doing this on a monthly basis and asking advisers to rate their top three in each category it should be possible to track who is at the top of their game at any given time. Who might be making a considerable impact early in the year but, after a good start, is unable to maintain their service levels? Who appears to be keeping something of a low profile in quarter one but post-MMR implementation begins to flourish?
Tracking those movers and shakers as the year progresses should give us an insight into where lenders are service-wise at any one time and we will reward those that hit the service highs both monthly and at the end of the year.
Of course, it will be MMR that looms particularly largely for lenders given that we are now less than three months away from the big day, April 26th.
To my eyes it seems obvious that many lenders have started 2014 as they left last and there has been a strong focus on pricing in order to secure business levels, plus indeed for some a re-engagement with the adviser community in order to gain market share.
What will be interesting is how that changes (or doesn’t) as we move into March and April – will we see lenders pull back slightly from the market as they seek MMR compliance rather than business? Will those who are ahead of the curve MMR-wise reap the rewards in the Spring and early Summer?
There are many questions to be asked and answered but by delving into the minds of our own adviser members for their views on both lenders and life providers we are hoping to get a view of how the market is functioning.
And I would suspect that by the year’s end we will also be adding a few new, and perhaps returning, lender entrants to our judging list given the likelihood of increasing demand and therefore a growing marketplace. 2014 promises to be a very interesting year and potentially a very prosperous one for those that get their service right.