Where next the UK Mortgage Market?

My recent study into the UK mortgage market has once again provided real insight into the sales and originations process and best practice. It also unearth lender sentiment as the market moves towards MMR.

Lenders see a return on branch investment

So far, 2013 has been the best year for lenders since 2008. Not only is the mortgage market growing, but the mortgage lender survey shows that the largest lenders have been able to take advantage of their investment in high street branches to tap into growing buyer demand.

The biggest difference in this year’s survey compared to last is the noticeable change in branch lending. Yes, high street lending has made a comeback with nearly a third (30%) of mortgages being sold in branch. For the largest lenders surveyed, nearly half of their mortgage business is now done in branch.

The reliance on Intermediaries remains, particularly from mutuals, where the channel accounts for nearly 69% of mortgage business. I think this reliance is likely to continue and even grow post MMR, particularly given the increase in demand for more complex mortgage transactions such as buy-to-let and equity release.

Channel effectiveness

If you want a mortgage, head to an intermediary! The survey reveals this channel to be the most effective, with 62% of applications going to offer.

Overall however, and regardless of channel, customers are waiting even longer to get that much-awaited offer. Time to offer will surely only lengthen post-MMR, as applications are put through affordability rules and rigorous manual checks, while customers’ patience will only shorten.

Looking ahead to MMR and beyond

The next year brings a host of challenges for lenders as the MMR comes into force. With branches proving key, and advised sales predicted to climb, the question remains whether lenders will have enough qualified staff at branch level, or whether they will need to break up the sales process to allow qualified advice at the right times.

The customer experience is vital, and lenders must put that at the heart of their changes for the new regulation. With buyers already having to wait longer to receive offers before the MMR has even kicked in, lenders must redouble their efforts to make the process as straightforward and as quick as possible. If 2013 was all about the branch, then 2014 is surely all about the technology.