The latest product transfer data, released this month by UK Finance, as always makes for interesting reading – especially, lest we forget, given this is a relatively new addition to the regularly-published mortgage data and one which creates a more holistic picture of the overall market than we used to have.
Understandably, product transfer activity remains strong – indeed, if you add up the last four quarters of mortgage debt being financed internally by lenders it equates to over £165 billion of additional lending, which is not typically factored into the overall gross mortgage lending figures each year.
By anyone’s standards, that’s a significant amount of new business and a very positive aspect of this, is that advisers are taking an increased share of it.
The latest statistics for quarter two this year reveal that, of the £41.4 billion of product transfer business (up 16.3% year-on-year), £24.4 billion was advised while £17 billion was on an execution-only basis. That’s close to 60% of all product transfer business going through advisers, slightly up on the previous quarter, and is indicative of the increased focus on this sector by the intermediary community.
Looking back historically, you would anticipate that lenders themselves would take the lion’s share of product transfers via execution-only channels, but there has clearly been a step change over the last few years, particularly as the size of this part of the market has become known and advisers have a great opportunity to pursue.
As a mortgage network, we put a great deal of focus and resources into helping our AR firms not just hone their alertness to market opportunities, such as product transfer lending, but actually increase business levels, and there is a lot of work done around utilising our Revolution system and maintaining ongoing and regular client contact.
That should mean that the adviser is at the forefront of the client’s mind when they are coming up to renewal, and when (inevitably) the lender contacts them with a range of product transfer options and retention tactics. Checking what’s on offer from the existing lender against the current, wider market opportunities is vital, and what we don’t want is the client simply ticking a box, missing out on advice, and potentially choosing a product which isn’t suitable for them, and which means they miss out on the reassurance and protection which comes with impartial advice.
In that sense, keeping in close contact is vital, and you only have to look at the execution-only product transfer figures to see there is still a significant amount of business to ‘go at’. Again, in the last year, it amounts to £71.7 billion of lending, and while over that one-year period the advised share is going up, there are further inroads that should be made, as it’s to the customer’s advantage.
After all, approximately 70-75% of all mortgage business comes through the intermediary channel, so advised product transfers could arguably look the same. It’s entirely good news for consumer outcomes and for mortgage advisers.