Mortgage industry unmoved by the vast scale of the product transfer market

Ryan Bembridge

July 26, 2018

UK mortgage professionals are unsurprised at the size of the product transfer market after UK Finance published data on the sector for the first time today.

The trade body revealed that in the first quarter of the year there was £53.7bn worth of product transfers, with £29.5bn being advised and £24.2bn execution-only.

That means that if business continued on its current trajectory for the whole of 2018 the market would be worth well over £200bn.

Sally Laker, managing director of network and club Mortgage Intelligence, said: “It’s not a surprise, the numbers. We have seen a large amount of product transfer business and I know we’re not alone in that.

“As of last year when lenders opened their doors to brokers dealing with product transfers it has brought out the remortgage boom that’s been long awaited.”

She added: “With product transfers technology is a real driver – once brokers have completed the advice the speed of the transaction is attractive.

“I would like to see the same in the remortgage process, but there’s a lot more that needs to be in place like the solicitors’ side.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, also barely blinked an eye despite the numbers involved.

He said: “It is no real surprise that product transfers are such a significant part of the mortgage market as switching to another deal with the same lender is easier than remortgaging to another provider and going through the whole application process again.”

Paul Broadhead, head of mortgage policy at the Building Societies Association, said that product transfer data wasn’t something that the BSA collected, although the majority of the sector was included in the figures.

He added: “I think they [the figures] are pretty encouraging, particularly when you consider that more than half of them are advised.”

And Kevin Duffy, managing director of Mortgageforce and a long-term advocate of the publication of the data, agreed the results are “very positive”.

But he pointed out: “If some lenders are paying 30 basis points for the pretty modest levels of work involved, why can’t others?”

Ishaan Malhi, chief executive ‘online’ mortgage broker Trussle, was pleased the data is now available but seemed to have mixed feelings about the results.

He said: “We shouldn’t forget that there’s still a lot of switching inertia among mortgage borrowers, with at least two million languishing on standard variable rates and as a result, overpaying on interest by billions of pounds every year.

“More than half of those who are switching are staying with their current lender, which raises questions about whether these borrowers are getting the best possible deal.”

Martin Stewart, director of London Money, was wary of brokers becoming too reliant on product transfers, saying “there is a risk that brokers will become lazy”.

Meanwhile James McGregor, director of MESA Financial Consultants, said: “Lenders have realised it’s easier to keep existing customers than seek new customers.”

UK Finance said this is the first time it has had sufficient market coverage to publish data about product transfers.

It started working with lenders to collect data after the Financial Conduct Authority’s Interim Mortgage Market Study found that most borrowers choose to remain with their current lender when moving to another product.

The trade body said shedding light on product transfers is intended to “improve transparency around switching behaviours”.

The data will be published on a quarterly basis from now on, although UK Finance said this is the full extent of the numbers that it will be providing: It will not be able to go back further in history or break down the number of product switches carried out by brokers and providers separately.

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