I cannot remember, in my 35 years in financial services, starting a new year looking at a more confusing picture. There is a whole cocktail of factors that will surely interplay to affect us all professionally and personally in the housing market.
– Richard Angliss, MD @ Home Buyer Systems
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[/one_sixth]Many are excited about the new year and what’s to come for the housing market, whilst others are dreading another year of change and uncertainty – where do your thoughts fit re: 2017?
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I cannot remember, in my 35 years in financial services, starting a new year looking at a more confusing picture. There is a whole cocktail of factors that will surely interplay to affect us all professionally and personally in the housing market. These are predominantly Brexit, the new American administration, inflation, interest rates, the pound and oil prices. All of this will impact on us as individuals and especially our industry in terms of costs of mortgages, levels of employment, house prices, cost of living and so on.
On top of this we have other industry factors such as the impact of the new Buy to Let regulatory changes, housing shortages, the continued fall out of the Mortgage Market Review (MMR) on regulatory requirements, the ending of the Help to Buy scheme.
If we are speaking only of the housing market then this will all look very daunting. If, however, we are talking about the mortgage industry then that is completely different for the simple reason that whether the outlook is doom and gloom or bright and sunny, the mortgage industry has an answer.
For doom and gloom we have remortgages and for sunny and bright we help people move, or get on to the housing ladder. For a mortgage broker things couldn’t be better really. Why?
The Credit Crunch decimated the number of Mortgage Brokers. In 2007 it was estimated there were 30,000 and now 12,000 – a reduction of 60%.
House purchase volumes have recovered and are very close to the pre-Credit Crunch levels.
Conversely remortgage levels have not recovered. Despite recent marked improvement in recent times lending for remortgages is half of what it was in 2007 – there are reckoned to be 3m households on SVR paying an average 4.99%
Regulatory changes have made it much more difficult for new entrants to come in to the industry
The MMR has seriously affected the distribution of mortgages. Pre MMR lenders arrange 60% of all new mortgages and Brokers 40%. Post MMR it is now 30% Lenders 70% Brokers
If you are a Mortgage Broker and you are not extraordinarily busy you have to ask how!!
How Technology Can Improve The Homebuying Process
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[/one_sixth]What do you think are the main sticking points in terms of consumer experience in the home buying and mortgage process? And how do you see developments technology countering these?
[one_sixth][/one_sixth]If you start from the basic premise that people don’t want mortgages (they are the necessary evil that gets what they do want – a home) then it makes answering this question more simple. What they want is to tell you they need one and instantly they have one – of course at the lowest rate and paying the least possible to set it up. Is that ever going to happen? Probably not but we need to strive to get as close to that as is possible.
Arranging a mortgage is a complex business involving your client, lenders, solicitors/conveyancers, valuers, vendors, estate agents, credit and affordability checks, proof of identity and so on. To be frank the main sticking points are this level of complexity and the fact that Mortgage Brokers are brilliant at advising but mostly rubbish at admin and regulation. The use of technology to overcome these difficulties is crucial. In short keep advisers advising and let technology do the rest.
I don’t want to give too much away but the new Open Banking initiative, which comes in to effect this year, is going to have a massive impact on overcoming many issues around affordability, proof of identity and credit checking.
Current Projects
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[/one_sixth]In terms of technology in the banking, mortgage and finance world, can you shed some light on what developments you have ongoing behind the scenes?
[one_sixth][/one_sixth]Again I don’t want to be too specific but if you read my answer above and can tell from the general banding about of just some of the massive research we have been doing, you will get a very good idea.
Is Robo-advice going to take our jobs?
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[/one_sixth]I read a Warren Bennis quote not long ago that in the future that our workforce will be 2 employees – a man, and a dog – the dog is there to guard the equipment, and the man is there to feed the dog. With the recent introduction of robo-advice and some well-known names employing the artificial intelligence of IBM Watson to develop more automated processes, are we likely to have a luddite-style overthrow of the industry anytime soon, where technology takes all our jobs? If so, what can we do about it?
[one_sixth][/one_sixth]Whilst I understand these concerns in the world in general, it does not apply to the mortgage industry. The driving force to employ automated processes is due to two main factors:
- In the Broker sector the huge volumes of business is driving it
- In the Lender sector it is the impact of MMR
Of course as technology improves there are more opportunities to make processes slicker and reduce costs, which in any other business would be the main driver, our industry has more pressing needs.
In our industry I very much see it as an answer to a problem of greater demand than supply. If we were talking about “our jobs” being Adviser’s jobs and a system existing that required a customer to click a button and they instantly get a mortgage, then definitely no is the answer.
Look at the lenders propositions for an answer to this. The MMR destroyed their sales model so part of their response to this is robo-advice. They provide the tools for a customer to do pretty much everything themselves (or that is what they are striving for) but at every step of the way is a button that says “Click Here To Speak To Us” or similar. They know that at some point in the process the customer is going to get to a point where they become uncomfortable and will seek help.
Why does this happen? – because it is such a big deal i.e the single biggest purchase we make with the highest monthly cost – of course at some point they will want to seek help to make sure they don’t make a huge mistake with it.
Development Focus for 2017
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[/one_sixth]What’s been your main areas for focus in 2016? And what will your main focus be this year?
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The Credit Crunch decimated our industry and was massively damaging to our business model. We have been working to establish a new model by developing new systems and Apps to achieve a whole new suite of products to meet the needs of the post Credit Crunch world. This allows us to offer our customers everything from creating leads to efficiently processing their business, and compliantly.
2016 saw the last parts of the big picture jigsaw come together, particularly with our joint venture with Svensoni, the largest paraplanning company in the UK.
We have always been at the forefront of innovation with such things as dealing with Dual Pricing, fee charging, adverse credit sourcing, robust FCA acknowledge compliance sales processes, payment systems and so on. Plus of course choosing Defaqto as our data partner for mortgages has served us well too.
2017 will see us once again add to our impressive track record by bringing to market our latest and biggest innovations in our 22 year history.
Is Now The Time For Robo-Advice?
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[/one_sixth]You’ve been working in the sector for years now. How have the trends, behaviours and requirements of your customers changed over time, in terms of the systems and services they request and need?
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There have been many trends that have come and gone that needed to be coped with such as Adverse lending, Self Certificated lending, Dual Pricing to name but a few.
The constant driver of change though has always been regulation. However, in recent years the emergence of the concept of robo-advice has taken centre stage. This concept means different things to different people in terms of how much or little they want to automate and the volumes they are dealing with.
There is absolutely no doubt that this is here to stay and is not a trend that is here today and gone tomorrow. For all the reasons I have mentioned previously technology has evolved to a point that will allow all the “sticking points” to be smoothed out allowing the inevitable benefits to happen.
