Why face-to-face advice will always have its place
The role of the mortgage intermediary has rarely been out of the spotlight. From its birth in the early 1980s, when banks unleashed new and numerous products, and the new centralised lenders arrived focusing on niche customer segments such as the self-employed, mortgage brokers have gone on to establish themselves as the main distribution channel for nonstandard mortgage customers.
So what next for mortgage brokers? Let's be absolutely clear, lenders like intermediated distribution. It allows them to turn the tap of mortgage applications on and off more quickly than through direct routes and they can rely on their brokers to effectively pre-screen applications. After all, brokers will usually know, from their face-to-face experience, which customers are likely to be successful with which lenders. What's more brokers offer the reassurance and confidence for clients with unusual circumstances or in niche product categories. It's for that reason that niche mortgage products tend to draw upon higher levels of broker support. Finally, the MMR further encouraged lenders to use brokers who, for a modest procuration fee, take on the compliance risk of making an advised mortgage sale.
Many commentators and senior figures in the industry point to digital technology as the gathering storm that will derail the success of face-to-face advice. Certainly, the digital revolution has changed the way we all shop and pay for services. The next generation of home owners may well expect to interact at some point in the process through smart phone apps. But this oversimplifies the complexity of getting a mortgage. To assume a one-size fits all algorithm or decision tree can be sensitive enough to service the myriad of niches that our economy is producing (think First-time Buyer, Last-time Buyer, Self Employed etc) is naive. Self-employed remains the fastest growing employment type in our economy since the credit crisis. Anyone can provide a report and accounts but far fewer can interpret them.
Many parts of the process are automated already but the very beginning of the relationship is the hardest place to achieve this because it is really about knowing your customer and understanding the circumstances and bigger picture of the lending request and lending decision.
All face to face advisers bring this ability to understand some of the 'softer' knowledge aspects that actually inform our real motivations. A good adviser will know which questions to ask to get a sense of the borrower's requirements and how they might change over time. This will give the adviser a sense of the risk the borrower should take and therefore, for example, whether a fixed or variable rate loan is more appropriate. A machine may also be more susceptible to being misled, increasing the risk of fraudulent applications.
Brokers have an opportunity to move the lending debate away from direct technology by understanding their clients' lifetime requirements, particular circumstances, and the opportunity their house offers to deliver financing for their lives. By maintaining their relevance and increasing the depth and quality of their advice, brokers can carve out an unassailable position for the future.
If you have any other queries you'd like to discuss with us, please don't hesitate to get in touch with our Intermediary Support Team by calling 0345 602 2338 or via webchat (Monday to Friday, 8am to 6pm).
This information is for use by authorised mortgage intermediaries only and should not be relied on by customers.