Happy Christmas and a prosperous New Year – isn’t that what everyone involved in the mortgage industry is hoping for in 2008? As we close the door on 2007, no one would be blamed for referring to it as one of the mortgage industries most ‘annus horribilis’.
With 89 per cent of respondents in a recent Pink survey thinking that the housing market is slowing down, repossessions looking set to jump from 30,000 in 2007 to 45,000 in 2008 and the average house price now standing at £194,895, the outlook for 2008 is challenging to say the least and we look set for many more months of stormy waters, with little promise of calm presiding until what some predict as the back end of 2008.
Repossessions could rise by 50 per cent in 2008, so brokers now need to take a look at how they can generate new business to boost their incomes, while at the same time keeping their customer’s needs firmly in mind in line with ‘Treating Customers Fairly’ (TCF) guidelines.
This may mean that mortgage intermediaries need to start to look outside of their comfort zone to areas of income that they would not otherwise have considered viable, such as critical illness insurance cover and commercial mortgages. Intermediaries may have overlooked these lucrative areas of income, as something they would not normally have dealt with. But now should be the time to look to diversify their income streams to grow their business.
Embracing technology
Technology should play an important part in broker’s lives in 2008. They should be embracing technology to provide their customers with a better understanding of what they may need to do in light of 1.5 million customers coming off fixed rates in 2008 and giving them options to enable them to make a decision.
Customer relationship management (CRM) systems allow brokers to store and more importantly manage customer information. Having that level of information about clients is like gold dust.
At its simplest level, a CRM system can house existing client information so that the intermediary knows when the client’s insurance policy is up for renewal or mortgage product is at the end of its promotional period. The broker is then able to contact the customer within plenty of advance of the renewal date to discuss the client’s options. But not only that, it also allows the intermediary to operate on a more sophisticated level, as for example, the intermediary has the ability to input the client’s redemption period and also if it is stepped, therefore allowing the broker to act in the best interests of the client.
The benefits to an intermediary of having all of their clients’ details at their fingertips, will fundamentally transform the way that they conduct their business on a day-to-day basis. Once in place, the CRM system will enable the intermediary to capitalise on the information they hold on their clients. Knowledge is power and having access to that level of information will provide the broker with a clearer understanding of the dynamics of the family and what their requirements are likely to be. Not just in terms of their mortgage, but in other areas of income, such as conveyancing, Home Information Packs, insurances, including payment protection insurance, general insurance, life and critical illness cover, secured loans, commercial and overseas mortgages.
While some of these areas may be outside the broker’s area of specialism, they should not be discounted, as in addition to being lucrative ways of generating additional income, they also ensure that the client receives best advice and are receiving a rounded level of customer service. At the end of the day it is more cost-effective to retain an existing customer, than to attract a new one and if the customer is happy, then they are more likely to recommend the intermediary’s services to someone they know.
Knowledge is power
With demand in the market slowing, now could be the ideal time to brush up on product knowledge or to build up knowledge in new areas, with the aim of tapping in on new areas of income. Not being one to teach granny how to suck eggs, but knowledge can be built up in a number of ways, such as meeting with providers, attending seminars, utilising providers’ online and hard copy information.
It is easy to get bogged down and caught up in the doom and gloom, but let’s not forget the opportunities that the early part of the year typically present to the market. Historically, the early months of the year see an upturn in remortgage business and secured loans as consumers look to consolidate debts after Christmas and to raise capital to make changes to their property. So, these may be areas to focus on now that the New Year is upon us. Also, as mentioned earlier, an additional 1.5 million fixed rates will be coming to an end in 2008, so there is lots of potential business out there for the taking. Not forgetting those that may be literally on the intermediary’s doorstep, such as the abundance of commercial properties surrounding the brokers business.
Coming back to the point of TCF, as a network services director, I have overall responsibility for compliance at Pink Home Loans and for the network’s appointed representatives and therefore I cannot stress how important this is to any business operating in the current regulatory environment. We all should know that the six TCF outcomes should be firmly embedded into our businesses and with another deadline looming in March, so if this isn’t at the top of the mortgage broker’s agenda, then I would urge that now is the time that it should be.
Scrutiny and bad publicity
Brokers and lenders have recently come under close scrutiny by the Citizens Advice Bureau and have been blamed for contributing to homelessness, with advisers being accused of giving poor advice. This kind of bad publicity could be hugely damaging for the broker sector, so adherence to TCF is crucial. It shouldn’t be forgotten that post-sale service is just as crucial to TCF, and the use of a good CRM will assist the broker in having plenty of reasons to make regular contact with their clients.
As another year in UK mortgages unfolds, let’s raise a glass of champagne and toast to the New Year and new business and let’s make it a prosperous one at that.
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