Paul Broadhead of the Building Society Association lays out his plan to revive the mortgage market to Paul Robertson.
Broadhead noted that two years ago, about 90% of mortgage lending was through six or seven lenders.
But we are starting to see more competition in the market. So is this good for the building societies?
He said: “For the last couple of years, we’ve seen banks pretty much have things their own way, and I think that’s stopped.
We’re now seeing building societies come back and offering higher loans-to-value, serving different customer bases, so there’s more shared-ownership lending and self-build lending.
“There are other niche areas which mutuals are very, very competitive in.”
PROFESSIONALISM ON THE UP?
Mortgages remain just about the only area of financial services where the public automatically would seek advice, the majority with advisers with a degree of independence.
In recent years, the number of mortgage advisers has substantially dropped, with a much higher focus on peripheral services such as protection from the remainder.
But has professionalism in the sector increased as a result, and has the average adviser changed due to the recent stresses of the market?
“The professional element of the market – a big part of it – is the one that is still in business. The ones that have gone are those that saw themselves as salesmen rather than advisers, which is good for consumers,” said Broadhead.
“The wider broker market would welcome that because most are very, very professional, want to raise the bar for professionalism within the sector, do everything with due diligence and make sure consumers get the best advice.
“What we’ve seen in the past year or so is the need for the broker market to diversify (some moving away into protection) because we see lenders with different strategies – some very much wanting to use the intermediary market, others preferring at some times to deal direct with borrowers. I think the professionalism in the market is probably higher. It’s the best advisers that are still there.”
To revert to the topic of protection, it is clear that remaining advisers are going to struggle to sell MPPI in future, tainted as it is by the PPI mis-selling saga.
Broadhead pointed out that it is not a product that’s typically bought on impulse in the same way PPI was bought, but added:
“The Competition Commission has captured MPPI in the same regulation, so we’ve got challenges about selling it.
“At this time, we run the risk of the people that need that protection the most not taking it out because they think they’re being sold a pup such as PPI. That’s something we need to address. We’re seeing a shift in the insurance industry towards more lifestyle-type protection policies.”
He accuses the government of fostering a lack of urgency in homeowners when it comes to protection.
Homeowners saw Labour introduce a raft of policies to help people that were getting into mortgage arrears.
They saw changes to the Support for Mortgage Interest (SMI) benefit, so people could claim at 13 weeks from losing their job rather than having to wait 39 weeks.
