First published in Financial Reporter
For an advisory profession that naturally, and brilliantly, focuses on trying to ensure clients have the best mortgage deal available to them, the fact that large numbers of borrowers are still substantially overpaying is never going to sit particularly comfortably.
Quantifying just how many borrowers are in such a position, yet don’t need to be, is not easy especially in a world of ‘mortgage prisoners’ where acquired back books and non-lending institutions combine to often result in no alternative product being available, regardless of whether the borrower would be better off elsewhere.
Putting aside what is an ongoing issue for all mortgage market stakeholders, there’s no doubting that, despite a clear message of ‘switching to save’ where possible, large numbers of borrowers are still ignoring that advice and the advantages of remortgaging.
Recent statistics issued by one of the major price comparison sites argued that 12% of all mortgage borrowers (1.3 million people) are currently on SVRs and, as a result, they are collectively overpaying to the tune of £175 million a month. Not just each year – but every month.
That’s a staggering sum and to be able to move even half of these borrowers would result in real consumer benefit not to mention a large income upside for the mortgage advice sector.
It’s perhaps why we’ve seen a number of advice-based technology firms in recent years attempting to get their auto-mandated remortgage propositions off the ground, with (I think it’s fair to say) limited success.
Marrying up the use of tech with the overwhelming demand for, and appreciation of, human advice therefore seems to be the strongest possible play in this space. In that sense, certainly our aim as a network, is to support our AR firms in order to help them achieve what is seen as the ‘bread and butter’ part of an adviser’s service offering.
Whether it’s making sure that no forthcoming remortgage opportunity is missed, or targeting existing borrowers via the right marketing intervention, what we clearly all want to do is avoid letting that 12% figure rise further, and prevent clients paying more than they need to.
We want our firms to utilise the tech they have at their fingertips, for instance, our Revolution system automatically prompts advisers in advance of the mortgage deal coming to an end, as all good CRM systems do. Historically, that might have been a three-month prompt, but with lenders more active in terms of when they contact their existing borrowers, this could be six months or indeed any timescale of an adviser’s choosing.
Clearly, deploying technology to make a broker’s life easier isn’t new and is not rocket science. Larger firms might not need this automation, as they can run a query every month via Revolution to collate all those existing clients with up-and-coming deals finishing, so they can then control that workflow and allocate it to the right adviser.
Marketing materials are also crucial here, and our in-built tool within Revolution, Touchpoint, allows firms to create all types of marketing using the templates available for emails/letters/flyers etc, which can be targeted at certain borrower types, such as those most likely to want/need to remortgage via an integrated mail merge. Again, not rocket science, but all focused on increasing mortgage adviser productivity, especially in a busy market
It would be wishful thinking to believe that we can help every single client escape SVR onto a more cost-effective option where appropriate – after all, some borrowers are always going to simply sit with their existing mortgage lender for the entire term duration regardless of what is presented to them, due to an often misplaced loyalty or apathy.
However, what we can certainly do as an industry is ensure our own existing clients have every chance of remortgaging and getting a keener rate, consolidating or reducing outgoings, and that we are targeting every single SVR borrower to let them know of the potential options available to them.
Our aim is to ensure our technology enables firms to do this efficiently and successfully – it’s an absolutely core part of the job, one that will never go out of fashion and will always be appreciated by your client base.
Rob Clifford is Chief Executive of Stonebridge