Don't overlook product transfers

Bob Hunt

19 February 2021

Go all out for repeat business from clients whose loans mature this year.

If you want an idea of the importance of product transfers in the UK market, let me refer you to the Mortgage Market Forecast issued by UK Finance — to very little fanfare — prior to Christmas.

With the year not quite over, the trade association predicted gross mortgage lending of £233bn for 2020, £215bn for 2021 and £230bn for 2022. However, it anticipated PT business to be a not-insubstantial £174bn in 2020, and predicted it to rise to £181bn in 2021 and £187bn the year after.

Traditionally, the majority of this PT business was hoovered up directly by lenders, but — quelle surprise — ever since these figures were released and we have been able to see just how much lending was at stake, advisers have taken a much bigger share of this space. We don't yet have figures for 2020 but, back in 2019, UK Finance said that, of the £167.4bn of PT business completed, 58 per cent (£97bn) was on an advised basis and 42 per cent (£70.4bn) carried out via execution-only.

If overall gross lending dips this year, the predicted rise in PT business will be even more important to both the manufacturing community of lenders and the advisory community in which consumers are placing increased trust. If we have a competitive market, more of these cases that would otherwise have been straightforward PTs may actually be remortgageable.

It's good that a growing majority of these maturities will go through the full advice process, and at times the best option will be to stay with the existing lender. Whatever the outcome, the value created for your business in continuing to service the client will always be much greater than the proc fee involved: retaining your clients and not being left out of future interactions between client and lender, or possibly missing out on all the ancillary requirements generated by a remortgage — protection, GI, conveyancing and the like.

For business that is going to stay as a PT, lenders will try to generate as much as possible via execution-only. So, getting hold of those cases early, or retaining existing clients in order to provide them with the right advice and recommendation, be that remortgage or PT, is crucial. Simply put, if advisers were able to up their share of the PT market to 60 per cent in the next two years, that would be £108.6bn (2021) and £112.2bn (2022) of lending going through the advisory channel.

This is a big market — remortgage or PT — and will make a big difference to your bottom line. Don't give it up easily.