Stalling access to credit against a backdrop of rising interest rates has sucked a lot of air out of the mortgage market and business models and partnerships are coming under increasing levels of stress.
During these times it is important that commercial enterprises and the relationships that support them are well structured.
In such circumstances, getting the right business partner becomes more important than ever. From start to finish, the mortgage process covers a number of areas with different firms providing different services to commercial partners and the end borrower alike. For firms to be truly successful in this sector, creating a strong link with their trading partners is essential.
Mutual understanding
At the heart of any relationship there must be a mutual understanding of what each party wants. The size, type and quality of mortgage loan have rarely been more important to lenders than at the moment.
If lenders are going to keep loans on their own balance sheet or seek to attract investors through various forms of sale, it is imperative they have a tightly constructed portfolio that lives up to its description.
For those selling through intermediaries, this means both parties must have a clear understanding of what loans are required and be confident they can generate them.
Lenders need to know their distributors can deliver the volume and quality they want and mortgage intermediaries need to know they can work closely enough with their lenders to get the kind of products they can sell.
To do their job as effectively as possible, it is also important for intermediaries to get support from their lenders in terms of marketing, product literature, training and compliance.
The closer lenders work with their distributors, the easier they can make it for them to sell the products and in difficult times both parties really have to pull together and show a willingness to support each other.
Service is obviously a key area once product and support material have been put in place and it is essential that the products being sold can quickly be processed from pre application stage through to completion.
IT has a central role to play in this and lenders and key distributors need to work side by side to integrate with each other’s internal platforms and deliver efficiencies that improve margins for both parties.
Clean IT processes will also help with compliance, improve processing capabilities and add consistency to working relationships. Put together this can make a dramatic difference. However, firms have limits on the financial and staff resources they can use to integrate with partners and so it is important to choose to work with the right firms.
Beneficial relationship
While each and every firm is sensitive about its own commercial strategy, it is important that partners are open with each other and are prepared to share enough information to make a working relationship mutually beneficial. There has to be a willingness to co-operate and unless firms can trust each other, it is going to be difficult to really make the kind of progress required.
At the moment, lenders and distributors should be in close communication about what is required to perform well into the coming year. They need to be realistic about the volumes they will be able to lend, the volumes they will be able to sell and the type of products they will need to design.
Interested parties should be examining how their current relationship works, where it could be improved and assessing the type of time and resource investment required to make it better.
Aspects to be considered might include assessing whether more work needs to be done on IT integration. Who has responsibility for pushing the programme forward? How well are the sales and design teams communicating? What sort of marketing activity will work best in the coming months? Can campaigns be combined and costs shared? Can parties help each other meet forthcoming compliance deadlines and how are each positioned to meet their regulatory obligations?
These are all questions that partners need to be discussing at the moment and once a strategy is put in place then firing it into action with determination and drive will help the partnership perform into the New Year.
Clear business synergies
If partners have not taken the time to work closely with each other over the back end of 2007 then it will mean achieving 2008 objectives will become increasingly challenging? Firms need to create clear business synergies and ensure there is a steadfast relationship that can weather the storm.
Over the coming months the quality of partnerships that mortgage firms have in place will be severely tested and those who have made the right provision will be served well. By closely aligning mutual interests and working to a strategy that is mutually beneficial, good partnerships will help generate the right type of business during 2008 and put firms on an even keel for future growth.
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