Looking forward to what a new year might offer mortgage advisers, there may be some who feel a slight sense of déjà vu.
A case of new year, same issues, but there’s no doubting that the market feels a million miles away from what it was offering back in October, and since then we have marched – albeit slowly and steadily – back to a point where the sector resembles much more its pre-Mini Budget normality.
Those retracing of steps however is certainly not complete, and there’s also plenty to indicate that the road travelled has been changed and altered by those Autumnal events.
One positive to have come out of that period however was (and is) the dominance of the adviser community in terms of mortgage product distribution.
Just before Christmas, IMLA issued its ‘The new normal – prospects for 2023 and 2024’ document and you couldn’t help but be struck by the levels of business and market share it believes advisers have taken, and what can be achieved in the future.
There will be many reading this, who are long enough in the advisory tooth, to remember a mortgage market where distribution tended to be split 50/50 between direct and intermediated.
Where, if we are being honest, advisers were likely to be on the wrong end of that market share coin, with many, many lenders continuing to pour most of their effort and resources into their branches/direct-only ‘advisers’, adamant this was the future of their mortgage product sales.
That has, for the most part, been a strategy consigned to the scrapheap by most lenders. IMLA figures suggest advisers were responsible for 84% of all mortgage distribution in 2022, up from 80% in the year previously, and according to the trade body, destined to improve even further to 90% by 2024.
To anyone reading this 10/15/20 years ago, such a market share figure for advisers would have seemed inconceivable, and yet here we are, with all the signals of why consumers trust advisers and why lenders now fully accept the many efficiencies of intermediary distribution, burning brightly in our sector’s favour.
Last Autumn provided ample evidence of why advisers are so vital in the mortgage market. ‘If you can keep your head when all about you are losing theirs…’ springs to mind as a suitable quotation for those times, albeit without the end part of ‘…and blaming it on you’.
Because consumers were certainly not blaming their situation on advisers; instead, they were completely reliant on them in order to extricate them from a situation not of their making, or indeed to stop them making rash decisions which would ultimately end up costing them more than they thought they were saving.
We all have a feeling that lending activity will be down on 2022, which ended up producing – over the full 12 months – a very strong market for us. However, what we need to keep in mind is this is a market we are expected to take an 85 to 90% share of, and that is a sizeable amount of business to be written in anyone’s language, especially if you can make sure you cover off all other ancillary wants and needs, not just the mortgage.
With remortgaging likely to be the bedrock of our 2023 market, the opportunities to explore with existing clients current needs in what is likely to be a different economic situation and environment from the last time they remortgaged, should be self-evident, and there should be a greater level of engagement from those clients especially in light of what happened during last year.
Product numbers are on the up, rates should continue to trend downwards based on lender ambition and market competitiveness, and advisers should be able to position themselves number one in the queue as the go-to source for the vast majority of consumers when it comes to sorting out their mortgage finance needs.
This can be a very positive year for the sector if we keep pressing home the advantages for both consumers and lenders in making the most of the high-quality intermediary community that we know we have. Here’s to a very productive year in which market share continues to flow down the river to advisers.
Bob Hunt is chief executive of Paradigm Mortgage Services
