October 2019 | Market

Stuart Miller: We all need to do more for our intermediaries

Stuart Miller is customer director at Newcastle Building Society

Earlier this month we welcomed John Truswell as our new head of intermediary mortgages.

John has more than 30 years’ experience in the mortgage intermediary market, with previous roles at Virgin Money, CHL, and more recently Together, where he was head of national accounts. He’s now heading up a team of seven BDM and key account managers that support our broker partners across the country.

At Newcastle, we’ve long been committed to the broker market. We understand that intermediaries are key when it comes to helping us grow our business.

That commitment has rewarded us, with our half year results showing that we saw a massive 88% increase in mortgage applications over the previous 12 months. We want to say thank you to our broker partners – without you, we couldn’t have done it.

But while we’re enormously pleased with the success we’ve enjoyed over the past year, there’s a lot more work to be done.

Especially, because the mortgage market is going through a lot of rapid change at the moment.

There is regulation and the prospect of wider access to the execution-only route still on the table, and coupled with the development of technology systems that are increasingly competent at sourcing deals based on pre-qualified affordability using lender criteria (in the buy-to-let market at least) we’re only going to see more need for intermediaries to support customers.

Slicker online services for those choosing to remortgage through the product transfer route are contributing to a noticeable shift in distribution channels already.

The latest data from UK Finance, showed there were 20,760 new remortgages with additional borrowing in July 2019, 7.1% fewer than in the same month in 2018.

For these remortgages, the average additional amount borrowed in July was £55,500. There were 20,380 new pound-for-pound remortgages (with no additional borrowing) in July 2019, 12.9% fewer than in July 2018.

UK Finance said this has been driven in part by a fall in the number of fixed-rate mortgages coming to an end and the growing popularity of product transfers.

While choice for borrowers is always a good thing, the mortgage landscape is getting harder for them to navigate effectively.

Practical tools are being developed that reduce friction in the remortgage process, and for many borrowers there is a strong case that a full fact find and advised sale at this stage is totally unnecessary.

However, there’s always the danger of unintended consequences.

It’s perhaps unfortunate that the ease of customer experience offered by online applications is becoming more dominant at a time when individuals’ finances are becoming more complex.

The shape of the workforce is changing – more people are working flexibly, part-time, on contracts, freelance and earning multiple and fluctuating incomes.

People are working longer and later into life. They’re also living longer and at the same time we have a state pension that is increasingly insufficient to support retired lives.

Retirement incomes are under a triple whammy of pressures thanks to low interest rates, feeding into poor state pension rises, uncompetitive annuity rates and savings rates that struggle to beat inflation.

Brokers don’t need to be told how these trends are affecting the mortgage market. They see it every day. They know, as do we, that this part of the market is just going to get bigger and bigger.

Servicing it meanwhile remains a niche, filled largely by the smaller challenger banks and us, the building societies.

At Newcastle, we’re fully committed to remaining a go-to lender for the self-employed, for those with slightly complex mortgage needs, those who need a leg up onto the property ladder in the first place and more advice and support than the veteran homeowners who have almost repaid their mortgage, who we’re also happy to deal with!

It’s an interesting time to be a broker at the moment, with all this talk of open banking and online money management.

Of APIs and pre-application affordability assessments. There are those in the market who would have you believe that the rise of technology spells the end of the intermediary market, but I disagree.

Buying a home is a huge financial decision, it’s exciting but also overwhelming for most people, certainly the first time you do it. Brokers fulfil a hugely important social function in helping to overcome the fear and confusion that many borrowers experience when applying for a mortgage.

We intend to continue to support them in that purpose for a long time to come.