At Mortgage Broker Tools (MBT), we produce a vast amount of data from enquiries that brokers put through our affordability-first research platform, but we also think it’s important to gauge the opinions of brokers to help us continue to evolve our proposition and to educate the market.
With this in mind, and following on from our Mortgage Affordability Report in 2022, we conduct an annual survey amongst brokers to better understand the challenges they’re currently facing, the steps they are taking to overcome those challenges and their views on how they are being supported by lenders.
Our research found that 94% of brokers say affordability has become even more complex in the past 12 months. This is up from the 86% of brokers who said affordability was more complex than ever last year.
Consequently, nearly nine in 10 brokers (89%) say they have to work harder than this time last year to secure the loan size their clients want as a result of the cost-of-living crisis and rate rises.
However, many more brokers are realising the benefits of technology helping to take the strain carrying out the research required to find a suitable affordable option for a client. Our research found that 87% of brokers now use an affordability system for at least two thirds of their cases, which is up from 70% last year.
This greater use of technology is leading to brokers working with lenders they may not have previously consider and has resulted in brokers using a wider range of lenders for their clients.
It’s not always possible to find an affordable solution for borrowers to secure the size of loan they want and 95% of brokers say they have had to turn clients away because they’ve been unable to find a lender to provide the loan requested. This is despite the fact that more than three quarters of brokers (76%) say they have clients they believe should be able to get a mortgage, but whom they cannot currently place with any lender.
This is perhaps one of the reasons why brokers are losing confidence in lender product development. Nearly a fifth (19%) of brokers say that very few lender proposition updates in the last year have enabled them to help more of their clients, according to the research. And more than half of brokers (54%) say they only expect smarter lenders to become more creative in developing more bespoke products, criteria and underwriting based on affordability. This has increased from 30% last year.
Many of the product developments of the last year have reflected a contracting risk appetite amongst lenders rather than a desire to be more expansive, but with inflation expected to fall later this year and growing confidence, there is opportunity for lenders to use technology to empower smarter product development. One example of this is the MBT Sandbox, which provides lenders with a ground-breaking data-driven approach to product development, enabling them to create and refine products with specific customer segments in mind.
With the introduction of Consumer Duty regulations just around the corner, there will be greater onus on customers taking a mortgage that best suits their circumstances and technology can help both lenders and brokers to achieve this. Our hope is that this will result in fewer clients failing to achieve the loan size they want and more opportunity for brokers to help deliver renewed growth and optimism in the market.
Tanya Toumadj is CEO at Mortgage Broker Tools
