High street lending has bounced back in 2013, according to the latest edition of the Mortgage Efficiency Survey, conducted by Avelo.
The survey, which analysed the responses of lenders comprising 57% of gross lending in 2012, has found that 30% of mortgages are being sold through branches, compared to 22% in 2012 as large lenders leverage the investment they have made in branch networks. For example, lenders with more than 5% of market share in the mortgage market have conducted 47% of lending through their branches.
While the majority of mortgage sales still took place through intermediaries (53%), their market share has fallen by nearly 14% in the last year. Mutuals relied more heavily on intermediaries, with nearly 69% of their mortgage business conducted in this way – although this was 5% lower than a year ago. Overall, banks conducted 39% of sales via intermediaries, compared to the 41% of sales via branches.
However, despite falling market share, the intermediary channel proved most effective for buyers, with 62% of their applications going to offer. Across all channels, on average, 43% of mortgage applications do not proceed to offer.
2013 has also seen the average time for a customer to receive a mortgage offer slow. 22% of lenders take longer than 30 days to produce a mortgage offer on average, compared to just 11% a year ago. At the other end of the spectrum, just 13% of lenders typically produce an offer in less than 5 days, compared to 18 in 2012. Many lenders foresee the time to offer will lengthen further following the MMR, along with more detailed manual and plausibility checks.
The survey found that lenders are generally optimistic on the prospects of mortgage sales following the MMR, with more expecting an increase in sales than a decrease in every channel except via telephone. Seven in 10 lenders are also expecting to see advised mortgage sales increase after April 26th, 2014.
However, as a result of the MMR, around 60% of lenders in the survey believe the mortgage broker population will decline, and over 55% believe the amount of mortgage business they write will also decrease.
Henry Woodcock, principal mortgage consultant at Avelo, said: “So far, 2013 has been the best year for lenders since 2008. Not only is the mortgage market growing, but the largest lenders have been able to take advantage of their investment in high street branches to tap into growing buyer demand.
“The next year brings a host of challenges for lenders as the MMR comes into force. With branches proving key, and advised sales predicted to climb, the question remains whether lenders will have enough qualified staff at branch level, or whether they will need to break up the sales process to allow qualified advice at the right times. The customer experience is vital, and lenders must put that at the heart of their changes for the new regulation.
“With buyers already having to wait longer to receive offers before the MMR has even kicked in, lenders must redouble their efforts to make the process as straightforward and as quick as possible.”