Mortgage lenders are increasingly looking to diversify their service offering to brokers as an alternative to interest rate cuts as market competition heats up.
While rates and product fees continue to fall as banks and building societies vie for a share of the market, some lenders are offering welcome hampers, vouchers and other incentives as part of a drive to attract and retain customers.
Accord, the intermediary-only arm of the Yorkshire Building Society, is one of the lenders that has introduced welcome hampers for new homeowners.
David Robinson, national intermediary sales manager at Accord, told Financial Adviser: “When you move into a house we arrange a delivery of a welcome hamper. Some of the other lenders do that, but with us the card that goes with it signed as if it is with the mortgage broker. It comes from the broker, but we pay for it.
“It has had a massive impact. The feedback we get from brokers is tremendous.
“We have got to make sure we can diversify in some way. Referrals from customers drive business growth - not enough lenders realise that.”
Accord is not alone in looking to diversify. Along with free valuations and a remortgage transfer service, Coventry Building Society is offering £500 IKEA vouchers, which are sent to the borrower’s home on completion of its First Time Buyer Members mortgage.
Clydesdale and Yorkshire Banks offer first-time buyers £250 cash back to help with the cost of moving in, as well as a discount on home and contents insurance and no arrangement fee, while £100-worth of Love2shop vouchers are given out for referrals.
Borrowers who take out a mortgage with Virgin Money gain access to Virgin Money Lounges and are able to take advantage of various discounts within the Virgin Group.
The lender has made a number of improvements to its service, offering customers £100 if it fails to complete a mortgage in 10 days, introducing up-front underwriting and making improvements to its case-tracking system.
A spokesperson for Virgin Money commented: “In recent years, Virgin Money has been working hard to enhance our service, making sure we are listening to both our intermediary partners and our customers.
“We have spent a lot of time really understanding what is needed - and then working to deliver it. For example, both customers and intermediaries want the mortgage process to be robust, but relatively easy and straightforward.
“Great service and consistency of decisions are far more important today than just best rate or an incentive.”
Daniel Bailey, principal at Derbyshire-based Middleton Finance, commented: “It is not just about rates. Up-front costs are a big one, and free valuations can make a big difference for a first-time-buyer on a budget.
“Even cash back, which can help go towards conveyance fees, is helpful. We are getting to a point where lenders are thinking, ‘how much lower can we take the rates’?
“A hamper is a nice add on to receive, but ultimately if you were to ask a client they would much rather have a free valuation or lower fees. For first-time-buyers, it is about getting that initial money together. Anything that lenders can do is appreciated.”
simon.allin@ft.com
