2020 is presenting us with plenty of major events to navigate, from economic risks to whether or not the UK leaves the EU by the next deadline. It’s a tough market to predict, which is why we’ve brought together industry experts to pool their collective wisdom into what to expect in the coming year.
Supporting clients through uncertainty will be key to retention
Taj Kang, Compliance Director at CMME Mortgages
‘2020 is promising to be both an interesting and a challenging year for brokers. A pre-Christmas election and Brexit uncertainty could bring inertia for the housing market, with a resulting effect on mortgage demand. Amidst all of the uncertainty, brokers need to ensure their business models are resilient. My advice would be to stay close to existing clients, give some thought on how to keep them engaged. There’s considerable threat from existing lenders who pay brokers a pittance for retention business whilst contacting existing borrowers earlier around product expiry. Our bread and butter is our existing clients, so cherish them and be on your guard!’
Listen to Taj here: How brokers can find their niche
Brokers will need a strong digital presence to meet client expectations
Jon Pittham, Director of ClientsFirst
‘From a marketing perspective, 2020 will see an increase in digital marketing activities on both sides of the fence. Increasing numbers of mortgage advisers will be using online marketing to attract more clients and customers are increasingly taking their research and decision-making online; brokers need to be able to address these digital needs through a compelling online presence.
‘Across the sector, we'll see new disrupters enter the market offering entirely digital only services across the value chain. Advisers will use social media more to engage with their audience and video will play a bigger part in their online marketing activity. All of this will be focussed on making everything simpler, personalised and more relevant for consumers... and that can only be a good thing. Bring on 2020!’
Listen to Jon here: How to generate a constant flow of new enquiries
Proactive brokers will see growth through upcoming challenges
Greg Cunnington, Director of Lender Relationships and New Homes at Alexander Hall
‘Like every year before 2020 will present a new set of challenges for intermediaries. And those who are proactive in their approach will continue to find growth in the opportunity.
‘2019 saw the ‘big six’ lenders controlling a large percentage of mortgage lending, and this trend is set to continue, keeping mortgage rates low into next year. This is great for clients but it will also mean margins for lenders will remain low which is a challenge for less capitalised lenders. For intermediaries, it means there is opportunity here in maintaining strong partnerships with our lender partners as we can assist each other by highlighting areas of the market that are underserved and would be beneficial for these lenders.
‘As an industry, we have also seen an increase in product transfers, with this expected to continue into 2020. This includes a notable element of execution-only product transfers, where clients who originally took the mortgage out via an intermediary have then transacted back with the lender directly. Intermediaries need to ensure that their clients see us as their adviser for all mortgage related matters, and understand the value of this advice. We also need to ensure there is a culture of ongoing client contact, and that the value we add for clients is reinforced in all that we do.’
Listen to Greg here: The importance of getting your client onboarding experience right
Political and economic clarity will boost the homemover market
David Hollingworth, Associate Director of Communications at L&C
‘Making predictions when the political and economic backdrop remains so uncertain is even harder than normal. More clarity on that front could give a boost to the homemover market but I think we should hope for more but expect more of the same.
‘That will keep the spotlight firmly on the remortgage market with fierce competition continuing to drive extremely low mortgage rates. In such a competitive market, advisers will need to work hard at keeping in touch and nurturing their existing customers as well as looking to attract new ones.’
Listen to David here: How brokers can use PR to increase their reach
Brokers will have to adapt to Help to Buy changes
Adrian MacDiarmid, Head of Mortgage Lender Relations at Barratt plc
‘Later this year will see housebuilders selling in an environment where Help to Buy (for post-March 2021 completions) will be restricted to First Time Buyers and by regional price caps.
‘Brokers specialising in New Build will have to make sure that all their advisers have the skills and knowledge to make the transition.’
Listen to Adrian here: Brokers and the new build market
Specialist brokers will continue supporting the market
Tom Horton, Managing Director at the Insurance Surgery
‘My prediction for 2020 is a continued focus on access to insurance. I think we are going to continue to see providers experiment with new products for certain customer segments, which comes off the back of the incredibly successful trial we did in 2019 with Royal London on a specific mental health product. From a broker perspective, I think we are going to see more of them realise that there are specialist brokers out there that can help customers they currently can't place and hopefully we will see more brokers get on board with signposting to specialists like us and ultimately give an option to those families who can't get cover through the traditional routes.’
Listen to Tom here: Financial protection for higher risk clients
True growth will come from levelling up across the whole customer journey
Jason Butler, Head of Financial Education at Salary Finance
‘Delivering tangible and lasting value for money is essential to not just survive, but to thrive in business, particularly when consumers are under financial pressure and the lending market is so complex.
‘Turning mortgage advice and arrangement from a one off transaction to an ongoing relationship-based service - one which reflects the true lifecycle of mortgages - is the ultimate place that mortgage intermediaries want to be.
‘Positioning yourself as having the borrower’s back, and looking out for their best interests, involves building trust, rapport and understanding with clients so they see you as indispensable. This involves ongoing communication into things that will improve clients’ housing choices and affordability.
‘Ideas of things to include in an ongoing communication strategy are:
- How to improve and maintain one’s credit score
- How to control day to day spending to maximise future lender choice
- Ways to improve LTVs to lower interest rates
- Ideas for lowering living costs to enable quicker mortgage repayment
- Education on the possibility of self-building a home
- Awareness of the role of income protection for borrowers
- Ways to increase the value of a property with minimal spending
‘Being a good mortgage broker won’t enable you to reach your potential in 2020. You and the firm that you work in must be exceptional in everything you do, and that starts with exceptional communication well after you’ve arranged the mortgage.’
Listen to Jason here: Financial well-being: what it means for brokers
SMCR and customer outcomes will take front and centre
Simon Lovell, Field Compliance Manager at The Mortgage Alliance
‘Where Business Owners / Senior Managers are responsible for Mortgage Advisers, they must understand the requirements of the new Certification Regime and the deadline to deem them as “fit and proper” by 9 December 2020. They must submit details of these individuals on the new DIRECTORY via the CONNECT platform by the same date.
‘There also needs to be a focus on doing a “proper job” with the customer in terms of protection! If you don’t have the time or expertise then refer to somebody that does and don’t leave the customer at risk! Don’t put your business at risk either by not doing this.’
Listen to Simon here: SMCR is coming: What brokers need to know
Socially responsible businesses will attract consumers
Alison Hutchinson CBE, CEO of Pennies
‘2020 will see the voice of the ethical consumer continue to rise in volume and number – and challenge all industries to respond. The mortgage industry is no different – and it’s time to act. I encourage you to do your bit and consider your impact on the environment, explore what you can do to give back to your communities, and look at how you can support charities that you care about, while making it simple for your customers and colleagues to join in.
‘Don’t forget to share this with your community – your customers value this and it provides you another reason to keep in touch - if you aren’t, your customers may actively choose financial service providers who are.’
Listen to Alison here: Corporate Social Responsibility
Brokers who build relationships with clients will thrive
Jeremy Duncombe, Director of intermediary distribution at Accord Mortgages
‘The move within the market from two to five year fixed-rates means brokers may need to reconsider their business model. With longer fixed rate periods and more opportunities to self-serve, if the only communication a client has had from you during the term is a call three months before the term runs out, you can’t really blame them if they’ve moved on or forgotten about you. So advisers need to implement a customer retention strategy which ensures the client feels supported and valued throughout the length of their term.
‘Creating a more holistic approach where you review your clients’ circumstances on a regular basis, allows you to offer additional products like protection. In addition, by showing clients you value them with regular newsletters, industry updates and birthday and Christmas cards, you stay front of mind and encourage them to recommend you to friends and family.
‘Price comparison websites, ‘robo-advice’, a push for execution-only and new fintech products launching every week allowing customers to serve themselves, are all ever-present threats in the world of financial advice.
‘2020 will be a busy year. There will be fallout from the election, decisions (we hope) on Brexit and a period of instability as the nation adjusts. But let’s not forget that being in a position to offer face to face advice when things are uncertain is a great opportunity for brokers to differentiate and really demonstrate the value of their service. Think about what you can do to stand apart and combine that with utilising technology to generate leads through social media and online reviews; this will mean that more people will come to you for the human contact they require when making such important financial decisions.
‘Intermediaries should ensure they offer the best advice and support and by remaining open to change, keeping abreast of industry changes and knowing who your customer is, will result in a very successful year.’
Listen to Jeremy hosting most of our podcasts!
Data intelligence will support business growth
Gary Das, Managing director at Active Mortgage
‘I believe brokers need to focus on digital and collecting data from clients, but not just a name and email. Understanding your clients from a demographic and psychographic point of view is extremely important from a marketing and business growth perspective.
‘Data is going to be absolutely key in attracting the right clients, marketing more effectively and maintaining longer relationships with clients to offer products and services that are relevant to them and where they are in their lives today. Collect and analyse your data more effectively.’
Listen to Gary Here: How to turn your brokerage into an award winning business
Remortgaging in the buy to let market will be a big focus
Chris Maggs, Senior Commercial Manager for Accord Buy To Let
‘In the absence of a strong purchase market, the buy-to-let market has been heavily focused on remortgage activity in recent times. However, with more five-year remortgage products being taken, the opportunities to write more business is decreasing, so it’s likely gross annual lending will remain static, at best circa £34 billion.
‘As lenders continue to review affordability, it is likely ‘top slicing’, the use of surplus earned income in affordability calculations, will become more commonplace. Likewise, with Limited Company buy-to-let considered a more tax efficient way to purchase property, this is going to be an area of focus for many lenders. However, until more mainstream lenders enter this space, the higher interest rates charged for this type of lending start to outweigh the tax benefits.
‘Landlords have had a number of challenges to deal with in recent years. So, in 2020, it’s up to lenders to look at how they can be more innovative around affordability modelling or proposition development to provide much needed support to the sector and drive up market share.’
Listen to Chris here: Buy to Let in 2020, what's in it for brokers?
Whatever happens in 2020, it’s looking like a dynamic year full of opportunity. One thing is certain: we’ll be here to update you on the latest intermediary market news and insights!