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Retention set to dominate mortgage market

Retention set to dominate mortgage market

Retention is likely to be the 'dominant channel' in the mortgage market over the next 12 months, according to a panel of mortgage experts.

Describing the current mortgage market, Esther Dijkstra, director of strategic partnership at Lloyds Banking Group, said: "Retention, retention, retention – for lenders, brokers and customers. The retention market has overtaken the acquisition market."

Chris Pearson, head of intermediary mortgages at HSBC, agreed and said that the bank was looking at its own retention strategy, but suggested that it would not want to be an "outlier" in terms of setting a retention fee.

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When discussing the recent quarterly statistic on product transfer business, Ian Andrews, managing director at Nationwide Building Society, said: "Product transfers are clearly a massive opportunity for intermediaries.

"It is also inevitable that more lenders are going to enter this space, and more intermediaries will also get involved. In 12 months' time, retention will be the dominant channel."

However, Peter Brodnicki, chief executive of Mortgage Advice Bureau, questioned whether the sector was "on top of this in terms of what we advise a client regarding re-mortgaging or product switching."

He suggested that there could be some unintended consequences of focusing so heavily in this space in terms of the impact on fee-charging, protection and the like.

The FSE London Expert Panel also said that protection could suffer if mortgage activity continues to grow.

The panel argued that advisers should be raising the protection needs of their clients and ascertaining what protection levels they currently have in place.

But, a broker who attended the event pointed out that it was very difficult to get details on a client's protection coverage, suggesting that it was more likely to be "found in their loft."

Robert Sinclair, chief executive of Association of Mortgage Intermediaries, suggested that the protection providers had to get better at sharing this information and provide a technology solution that would allow advisers to see current protection levels.