As execution-only services become more prominent in the market, lenders approach clients to transfer their products and consumers opt for longer term fixes more often, the traditional ‘broker churn’ which had provided brokers with remortgage business every two years has been dampened.
Conor Murphy, founder of broker firm Capricorn and tech platform Smartr365, said: “The market has been solidly protected and sheltered from competition in recent years.
“Intermediaries dominated the market, both because they do a great job and also because there has not been an obvious alternative.
“But aggregators and comparison sites are growing threats to the role of brokers, and focus from lenders on encouraging borrowers to complete product transfers rather than shop around is also increasingly going to impact on intermediary business.”
Joanna Leyden, director at Monument Financial, agreed there was more competition in the market than before and stressed brokers needed to keep up contact with their clients throughout their mortgage term.
She said: “Brokers can send out newsletters and updates on property to engage with consumers, and diary when the fixed rate is due to come to an end so they can be in touch before this happens.
“Little things like sending a bottle of champagne once the client moves in can do so much for the business.
“They also need to make consumers aware that brokers really do add value — getting a better rate or solving problems when the client's been declined.”
Alan Lakey, director at Highclere Financial, also thought it was more important than ever to maintain client relationships as more people were using online services to search and filter through mortgage options.
He said: “There’s a bigger threat to brokers now than before. Brokers must keep in contact because if they don’t, someone else will.”
Mr Lakey added that speaking to customers throughout often lead to further opportunities for brokers.
For example, a simple chat about a mortgage could lead to the client revealing they had had a child in the interim and therefore the broker could sell more protection, Mr Lakey said.
A number of comparison to completion platforms have been brought to market over the past year, namely Moneysupermarket’s remortgage journey — which currently Nationwide and Santander have joined forces with — and ClearScore and Koodoo’s five-minute switch journey.
Such platforms aim to allow consumers to remortgage or transfer to a different product online in one swift process and although customers can opt for advice from linked broker firms, execution-only options are available.
Longer-term fixed products in the market have also risen in popularity over the past year as the difference between two- and five-year fixed rates has narrowed.
In the past, consumers typically took out two-year fixed rates — primarily because they were the cheapest deal by a substantial margin — and therefore needed to remortgage their property every two years and providing mortgage advisers with a continuous stream of business.
However, the current state of the market coupled with a narrowing of the price gap between the average rates of two-year and longer term products have lead to more consumers choosing longer term deals.
Unlike investment advisers mortgage brokers are allowed to earn ongoing commission on their sales but the shift to longer fixed terms has nevertheless led some mortgage brokers to raise concerns that revenue for them is declining.
Mr Murphy thought brokers could embrace technology to help them keep up a continuous and engaged relationship with their clients.
He said platforms such as Smartr365 could keep brokers and clients connected throughout the mortgage process and allow the broker more time to actually advise, rather than deal with admin.
Mr Murphy also thought brokers needed to interact with their clients in whatever way they wanted and provide an 'omni-channel' service be it providing phone calls, emails or face-to-face options.
Mark Lofthouse, chief executive of Mortgage Brain, agreed. He said: “In an increasingly competitive and complex market, mortgage advisers must adapt to the expectations of the customer.
“The right blend of self-service and advice is important and technology plays a key role in helping to achieve this for both parties," he said.
Mr Lofthouse added that fulfilling consumer expectations on this front served the adviser well as it "enhanced the customer's view of the adviser’s ability to provide good, solid advice.”
imogen.tew@ft.com
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