It’s been a year of ups and downs for the mortgage industry. The property market deep freeze at the height of the Covid-19 pandemic hit the sector hard, but then we saw house sales jump to new heights in the summer thanks to a combination of pent-up demand and the government’s stamp duty holiday.
Thankfully, the positive trend has continued into the winter months. According to the latest Rightmove house price index, sales are up 44 per cent compared to December 2019 and it looks as though there will be a rush of activity in early 2021 as people try to complete ahead of the stamp duty holiday deadline.
All this is good news for the mortgage market, of course. But it doesn’t mean the uncertainties the pandemic has created have gone away, and various important considerations remain for both new buyers and current homeowners.
That’s why having the protection conversation has never been a more essential part of the mortgage process for both new and existing clients. Engaging with them, and ensuring they understand the potential risks of how they and their family can keep a roof over their heads if the worst happens shouldn’t just be an afterthought but a priority for every mortgage broker.
However, the best routes to engaging with clients are also mired in uncertainty and there are various challenges that need to be navigated. Research shows that customers overestimate the cost of protection by a staggering 394 per cent and — according to a recent report by the Association of Mortgage Intermediaries — although 97 per cent of advisers say protection was mentioned in the mortgage process, only 36 per cent of customers remember it being mentioned. This disconnect suggests there is a real perception gap between consumers and the mortgage industry.
Despite these findings, it has been good to see a shift in recent years towards mortgage brokers becoming more aware of the importance of protection and showing a greater willingness to discuss it with their clients — or to refer them to a specialist who can. But more work still needs to be done and we believe technology and better use of data is the solution. By analysing customer data, advisers can truly understand a client’s individual requirements and map out their journey and intent-based moments.
Through our PreQuo solution, for example, advisers are able to determine protection gaps for clients who have taken out a mortgage and then identify those who may potentially need a particular product type, such as income protection for the self-employed.
And our partnership with the Mortgage Advice Bureau shows the power of using technology to crunch the data to gain a better understanding of a client’s specific needs and so create protection portfolios bespoke to them.
Buying a house is a key driver to purchasing protection and advisers should do all they can to make the most of that moment. But it shouldn’t be the end of the matter if a client decides against taking out protection at that particular time.
Customer needs and priorities change, so it’s incumbent on advisers to continually review their client book to identify gaps and look at ways to re-ignite the protection conversation.
The good news is that while this used to be a time-consuming process, technology is now available to do the heavy lifting so advisers can focus on helping more clients become financially secure while growing sales at the same time. It’s truly a win-win relationship.
Paul Yates, product strategy director, iPipeline
