Mortgages 

MMR leads to rising intermediary introductions

MMR leads to rising intermediary introductions

Research from technology provider Iress has found that 78 per cent of mortgages were introduced by intermediaries, up from 56 per cent in 2014.

Due to the Mortgage Market Review, almost all mortgage sales have to be advised but for the most basic of contract variations.

Iress’ survey took in 14 lenders, representing over 53 per cent of gross mortgage lending in 2014 and compromising the three largest tier groups as categorised by the Council of Mortgage Lenders.

Growth has been in part driven through lenders such as HSBC and Tesco Bank starting to engage with and lend via intermediaries, having been direct-only for many years.

As a result, 85 per cent of lenders noted an increase in lending via intermediaries over the period, with 69 per cent expecting broker numbers to increase over the next 12 months.

The intermediary channel was most popular with mutuals, which sold an average of 82 per cent of mortgages via intermediaries, whilst banks sold 74 per cent via this channel.

This channel also proved the most effective at progressing offers to completion, with brokers boasting a completion rate of 84 per cent, while the next most effective was telephony (81 per cent), followed by branch (76 per cent) and online (58 per cent).

Iress also suggested that the MMR has impacted efficiency, with on average, 43 per cent of offers being currently issued in less than 14 days. However, this does represent a slight improvement of 1.17 per cent since 2014, with several lenders investing to boost the originations process, enhancing their platforms to straight-through processing and case automation.

The MMR has clearly caused a divide between different sized lenders in terms of efficiency, according to Iress.

Since 2013, the largest lenders have seen a 6 per cent increase in the proportion of cases going to offer within 14 days (59 per cent), while the opposite has occurred across the next tiers down, with the percentage of cases going to offer within 14 days dropping by 46 and 12 per cent respectively, to 39 and 32 per cent.

This can be attributed to their relative ability to invest in process automation technologies, the research noted.

Henry Woodcock, principal mortgage consultant at Iress, said that while many are under the impression that the impacts of the MMR are long gone, this is clearly not the case.

“Even 18 months on, lenders and consumers alike are still coming to terms with the more stringent and rigorous processes required. With the added complexity, intermediaries are playing a more vital role than ever before, helping consumers navigate the mortgage process, and their market share has grown as a result.

He predicted that 2016 will be another year of change, with an increasing use of digital technologies to help boost lenders’ consumer execution-only sales, augmenting their direct to consumer business.

“On top of this, challenger banks entering the market without the constraints of legacy systems, will bring higher levels of efficiency and automation.”

peter.walker@ft.com

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