At its last rate review meeting, the Bank of England chose to keep the base interest rate at its current level. Since then, there has been a gradual decline of mortgage rates which suggests that lender confidence is slowly returning to the market.
However, despite the recent fall for October, inflation is still high. And if the last 12 months have taught us anything, it is that the market is still prone to sudden periods of volatility.
To manage these challenging economic circumstances, lenders need to be resilient. One way they can set themselves up for success is by nurturing strong, productive relationships with intermediary partners. But why are these relationships so critical, and how can lenders better manage their dealings with brokers?
Customer retention
A broker’s ability to scour the market and find a good deal is a sought-after talent, and a record of successful cases can keep clients coming back or encourage them to spread the good word to other borrowers.
The repeat business that brokers benefit from is something that lenders can capitalize on too, especially if they remain in close contact with their intermediary network. Many lenders don’t stay in regular contact with customers throughout their mortgage term, or even proactively reach out to them when their deal comes to an end. Intermediaries often fill this gap by liaising with customers at this juncture and helping them navigate remortgaging options.
It’s therefore in the interest of lenders to maintain strong ties with brokers, so that they guide retained customers towards a lender’s products, providing they align with the borrower’s financial circumstances and needs.
Responsible and specialist lending
Good relationships between brokers and lenders are also crucial when supporting borrowers with more complex or ‘non-standard’ financial profiles, such as the self-employed or those with credit impairments.
Brokers typically have access to a wider range of products, including some very specialist solutions that target under-served sub-sectors of the mortgage market.
These specialist lenders often rely on the broker to help bring them clients who may otherwise give up on getting a mortgage. This could be due to confusion or challenges with the application process when they have complex needs, or because they’re concerned about getting a mortgage with a credit blip.
Alongside supporting lenders to serve borrowers with niche requirements, brokers also play a key role in enhancing efficiency. Advisers both speed up and strengthen applications. This is supported by recent research from IMLA which found that 58% of lenders thought that applications submitted by an adviser stood an overall greater chance of being approved.
Similarly, 46% of lenders suggested that those who made an application through an adviser were less likely to incur unnecessary delays, reinforcing the adviser’s value throughout the underwriting process.
Technology is key
The argument for maintaining and even deepening close working relationships with brokers is clear, so lenders must turn their attention to how they can put this into practice. Investing in technology is a good place to start.
Lenders have a wide range of digital tools at their disposal that can effortlessly improve intermediary relationships. After all, mortgage tech software providers are constantly developing new tools to help lenders keep track of their intermediary relationships with ease and efficiency.
Broker portals, for example, are in-built platforms that allow intermediaries to track the status of active applications and can be easily integrated into a lender’s software.
Aside from this, lenders can take advantage of highly configurable tech systems to onboard, manage, communicate, and track key broker information. They can also integrate built-in automation to communicate with brokers at various touch points throughout the onboarding journey, to start the relationship on a strong footing.
Building closer relationships with brokers should be an ongoing business priority and something that lenders shouldn’t place on the backburner even during the busiest of times.
Lenders should embrace solutions that can both nurture active broker partnerships and build relationships with new brokers partner at the same time – an essential priority in a highly competitive market.
The commercial value of such lender to broker relationships speak for themselves and for the market to thrive well into 2024, we need both parties to keep working together for the best interests of borrowers.
Chirag Patel is product manager at Finova
