On the face of it, the U-turn by HBOS could be considered by some as embarrassing, but I look at it as proof the mortgage market is working well - and that has got to be good for customers and product providers alike.
If you remember, HBOS posted figures showing their market share had fallen by around 50%. They came clean and said this was due to its retention strategy being wide of the mark.
They also admitted that their products hadn’t been attractively priced of late and as a result lost a lot of business. But they quickly moved to put the matter right by introducing some great deals across their brands to redress the balance over the second half of the year.
There are lessons to be learned here. The first is not to take customers or product distribution chains for granted. For while big players like HBOS can trade on their brand awareness, this can only take you so far and must be supported by a range of competitive products backed up by a robust delivery system.
Both brokers and clients demand a competitive package. Maybe clients are less interested in the size and profile of a lender and more focused on the bottom line. Perhaps as interest rates increase and really start to bite, it will be all about minimising monthly payments.
Personally, I think it will always be a keen rate that sells although brand awareness is important, as it then makes the sale easier. This raises another question. Can lenders achieve high profit margins, fantastic service and market leading rates, all at the same time? This will prove increasingly difficult as clients become more financially aware and as a result more demanding.
We must all rise to this challenge and harness the power of technology to help to achieve this. This is of course already happening and is typified by the fact that average application times have been slashed across the industry. The trend should continue as the industry continues to search for technological solutions in an effort to raise delivery standards.
High service levels will be welcomed by intermediaries as it will help their client retention. From a distributor’s point of view, service matters are important, but only up to a point. This has to be complemented with either market leading products or innovative criteria. For many clients it will always be about the rate.
Sally Laker is managing director of Mortgage Intelligence.
The views expressed in this blog are those of the author and not necessarily the company she represents.
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