Sally Laker

Looking ahead to 2019. The importance of having a strategy!

2019 – the start of a new year, new plans and a new strategy! There are plenty of opportunities that lie ahead this year and Sally Laker, Managing Director at Mortgage Intelligence, highlights the importance of having a strategy.

Having a clear ambitious but also achievable strategy is essential for every successful business. So here are some top tips to help you make the best out of the year ahead.

Road Map

A strategy is a plan to enable you to get to where you want to be in a specific time scale. Think of it as a road map to get you from A to B, it stops you getting lost and it keeps you on the right track to ensure you reach your destination. 

Decide on your goal

Firstly, decide your destination or goal for the business, what do you want to achieve this year, what are your business priorities, growth plans and areas you want to explore?

Identify potential opportunities and threats

Understand your business, identify the strengths and weaknesses that could hold you back. What are the potential threats and opportunities (SWOT) and have you taken outside factors into account in this changing world? A SWOT analysis is a simple but effective way of jotting down all possibilities that might thwart or supercharge the plan.

Involve key people

It is so important to involve the key people within your business to make sure you have the right information and insight to build your strategy and agree the goal that you want to achieve.

Develop objectives

Once you have agreed on your goal you need to develop some key objectives that should summarise the priorities that will deliver that goal.  They need to address KPIs, resource, and budget requirements.

Once you have agreed the key objectives you will be able to put the meat on the bones, by translating those objectives into action plans for the people in the business that can deliver them. These could also apply to suppliers and third parties. Once these are agreed and geared to deliver the key objectives, you stand a really good chance of delivering your goal.

Create a strategy document

Finally, the most important part, formally create a strategy document, clearly defining the goal or vision for the business, with key objectives needed to achieve that goal, and the action plans underpinning the key objectives. Make sure you clearly define who is responsible for delivering them and within agreed timescales. Share the document with everyone in the business, and review it every month, make it a live document, so that you are not only checking if you are on track, but sharing good news with everyone in the business. Also tweak the plan if you need to, change frequently happens in this industry and you need to be able to accommodate unexpected curve balls! Keeping a close check on progress and pushing forward each month is the key to success.

Whatever your strategy looks like, we’re here to help! We have a wide range of services available for you on Broker Zone, from marketing materials to compliance support exclusive products. Make sure you’re making the most of what we have to offer! Visit

To become a member of our award-winning network or club contact us today on 0345 130 7446.

Double Dip to Double Digit Growth

I am sure for many of you reading this article it feels like we have been on a long journey through the housing market downturn and out the other side.

It was five years ago when the Bank of England lowered the base rate to 0.5%, a historical low. Even now, experts are predicting that it may be next year before we start to see interest rates rising and, in my view; the increase will need to be gradual in order to limit the shock to the system for consumers who have been used to paying such low interest rates for years.

Bank policy makers have been looking at increasing rates since 2011 when three members of the Monetary Policy Committee (MPC) voted for an increase. Things have moved on since then and the UK economy has expanded by 0.8% so far in the first quarter of this year, making that five consecutive quarters of growth. Although higher interest rates will be needed to keep inflation in check, on the assumption that growth continues at recent rates, in my opinion, we are unlikely to see the end point for interest rates for a few years. Even then interest rates will potentially be lower than the average rates before the market downturn.

This is a strong picture compared to 2011 when there were only glimmers of growth, and the favourite phrase at that time was “signs of green shoots appearing”. However, at the beginning of 2012 we were all watching and waiting for a double dip recession and there was also speculation on a triple dip recession reflected by a weaker sterling. Since then there has been a complete turnaround in market conditions and the pound’s 10% surge in the past 12 months made it a top performer amongst the 10 developed nation countries tracked by Bloomberg Correlation-weighted indexes. This all indicates to Britain being on course for a sixth straight quarter in the three months to June, the first since the financial crisis.

We are no longer talking about double dip recessions but instead are talking about double digit annual house price growth. According to Nationwide, there have been two months of double digit house price increases and May was 11.1% up year-on-year and 0.7% up on April 2014. The is lower than April’s month-on-month increase of 1.2% but Nationwide say that the slowdown could be attributed to the new mortgage lending rules which officially started in April. Interestingly, the average house price is now £186,512, the highest figure since records began in 1991.

The Bank of England’s twice yearly Systemic Risk Survey showed that 40% of UK banks, building societies and asset managers said the risk of decreases in house prices posed a “key risk” to the economy, compared with 36% of respondents in November 2013 and just 14% in the H2 2012. The Bank also reported that the perceived probability of a fresh financial crisis had fallen to a new low. Almost two-thirds of the 72 participants considered the risk of a “high impact” event to be “low” or “very low”, while just 3% considered it to be “very high” or “high”, the lowest number since records began in 2008.

We should take comfort in what these key industry indicators show, as after all we want to be moving on from the crisis and looking forward to a healthy market to operate in.

Is the Future Bright for New Build?

With another Conservative government at the helm, it is business as usual for many involved in the new build sector. But it is this area in particular that has been given the biggest shot in the arm from several schemes, designed to re-invigorate a housebuilding market that is still lagging behind required volumes.

So with a government adamant they can now focus on new-build in this upcoming term, does the future look good for this crucial industry sector?

The only way is up…

Building up to the election, things were looking good for the new build market. The proportion of first-time buyers has risen from 35% to 50% since 2006, as a result of high rental costs, increased product choice and schemes such as Help to Buy. Meanwhile lending continues to grow, with the Council of Mortgage Lenders’ estimate for 2015 being £222 billion, the highest since before the financial crash. According to one leading lender, there were 118,760 new build purchases in 2014, up 8% from the previous year. There were also 137,000 new build starts in 2014, up an impressive 10%.

The increasing number of consumers that have used an intermediary for their mortgage is a positive outcome to stricter affordability post-MMR. This is especially true of first-time buyers, as they begin their journey up the property ladder with trepidation, making the expert advice you provide invaluable.

Scheme successes…

First-time buyers are still key to the success of the new build sector, which means things are looking good on the back of several governmental schemes designed to encourage and incentivise. Many schemes have been successful, especially Help to Buy, which saw 60% of all new build sales with a mortgage and over 80,000 purchase completions as a result of the schemes.

The Equity Share Scheme, or Help to Buy 2, has also proved successful and the number of new homes built last year would have been even smaller had this not been available. The Conservatives have already pledged that this scheme would continue until to the end of 2020.

A sunny outlook…

Starter homes are on their way. The conservatives have promised 200,000 by 2020, bringing advantages such as removing buy to let opportunities, earmarked brownfield land and reduced development costs. But some experts are dubious as to whether spending cuts can co-exist with promises such as this, putting even more onus on the private sector to supply.

It also looks like we will continue to see a record low Bank of England base rate for most of 2015, which will surely only be a positive thing as lenders continue to offer low deals and increase demand to spur on housebuilding. Experts believe that there are other factors forecasted to remain positive for the new build sector, such as increasing consumer confidence and stamp duty reductions.

With so many struggling to afford the current large deposits for their first home and the undeniable relationship between house prices and housing supply, it is welcome news to hear that the next Conservative government will focus on the new build sector over the next five years.

True value

As the market continues to be buoyant in the broker space, it is interesting to see how the relationship with the lender’s Business Development Managers (BDMs) is playing a more important role.

The market is exciting and constantly changing in terms of criteria and rates almost on a daily basis. As a distributor we do everything we can to get these messages across to network and club members but that interaction with the lender BDM is clearly adding value.

The feedback we receive is that the broker feels more confidence and trust in the lender when that relationship is good. Unfortunately, a less effective BDM creates the opposite and often a reluctance to use that lender when there are others that are equally suitable.

It’s all about communication and ensuring that the important changes are fed through quickly. Whether that’s at the end of the phone to give clear, correct information or face-to-face, the BDM is of paramount importance.

This sounds pretty simple but the range of service does differ. From a distributor aspect we also find that a good key account manager is a truly valuable asset. They enable us to get messages out to members on time and ensure that they can maximise opportunities. Exclusive products are slowly coming back in vogue and this is a key part of the lender relationship with us, and knowing your customer applies at all levels, and frequently delivers good results.

The new addition to this service is also the increasing ability to speak to underwriters about a case on day one. This is a well received service that can save time; reduce the application to offer time, making the process more efficient and cost effective for both broker and lender. With business levels increasing, it is very important for lenders to continue to look at new ways that they can make their proposition easier to access, as we all know 2015 is all about service.

It’s crazy out there

Just a couple of months ago at our annual conference I was speaking about how this year is the year of the broker, and how everything is in place for brokers to be the key channel for lenders.

We have lived through lender shareholders demanding that more mortgages go through their branch network rather than the broker channel, and employing dual pricing tactics to deliver that result. All symptoms of a crushed market with restricted lending resulting in a ‘feed our own’ policy, and generally leaving brokers feeling unappreciated for all the business they had provided in the ‘boom’ years.

We have to accept that this is all part of changing market conditions and changing circumstances, and right now mortgages are back in favour, they offer good returns and my favourite words ‘market share’ are back. Those words are key to the intermediary sector and the desire to be at the top of the sourcing systems is also back. Despite mixed messages about the housing market, brokers are reporting all time highs in terms of mortgage applications and certainly we are seeing a 20% increase in the number of applications made when compared to 2014, which is significant because the first four months of the year were extremely strong.

It does seem to be across the purchase spectrum, with a few star sectors – first time buyers, especially new build, and buy-to-let with the addition of some promising new contenders gaining traction. Some lenders are already getting close to reaching their maximum ratio to residential lending. Consumer demand is still high for 2-year fixed products at good prices, although even 5-year fixed products are getting a mention if the rate is low enough.

The interesting misnomer is remortgages. Despite the real saving for borrowers who are coasting on lender’s standard variable rates; they are not rushing to the table to switch mortgages. In my view, it is a little bit like cash savings – most people don’t really bother to shop around to switch. If the difference is insignificant, it just isn’t worth the bother. Even though the differential on the mortgage could be far more substantial, apathy still seems to rule. It could be the thought of all that may be required in terms of time and effort to change, it may be on the ‘too much trouble’ pile, and unless the client is contacted specifically to remortgage they may not even think about it.

There is little in the media for consumers about the positives of remortgaging but with interest rates having been low for so long, arrears at an all time low, if people are managing their finances comfortably there is no incentive to investigate the options.

The threat of an interest rate rise has been publicised a number of times now and that has not made much impact apart from keeping fixed rates as the most popular choice for the consumer. So, it looks as though an actual rise is the only factor that will revitalise that sector of the market, which is probably around 25% of current mortgage lending. Such a different place to two years ago, and it is a good place right now.

Why is the right culture important?

Even though the General Election took place over a month ago, many people are still talking about how it was such compulsive viewing, with many staying up until the early hours awaiting the result.

The fascination was watching all of the opinion polls and predictions fall by the wayside as the losing political parties accepted their fate graciously. How did these parties get their strategy so wrong, why did it not deliver the clear objective to win the election with an outright majority?

Commentators gasped as the charts changed to a sea of blue and the Labour party were in shock as they saw virtually all their Scottish seats lost to the Scottish National Party in one night. Surely if the Labour party had been close to their customers and understood what they needed to do to get their vote they would have changed their tactics to secure those votes.

What was their strategy and did they have the right culture within the party to question the tactics to deliver that strategy? How would it achieve the end goal?

If people are afraid to speak their mind and go with the majority to keep the peace that is a culture that doesn’t work in either politics or business. If the public didn’t see Ed Miliband as a strong credible leader, why did the Labour party not see that either? If they were in touch with their customers surely someone would have stumbled across it.

It is the same in business – we set a goal, we put together a strategy to achieve it and then look at the tactics required to deliver that strategy. As always it is the team that you build around you that adds the magic required, they need to feel valued and listened to, their views are important to ensure you get the tactics right.

Once the team understands what is required of them and why their role is so important to deliver the overall strategy you have a good chance of achieving your goal. Setting the right culture is in my view essential, and putting the customer at the heart of the business is a culture that works well and leads to success. We have seen what happens when you don’t!

Mortgage Intelligence Industry Insight: I’m Not a Robot

At Mortgage Intelligence, we invest in the right people and the right technology for both appointed representatives and directly authorised advisers. Sally Laker highlights the importance of maintaining a balance between embracing new technologies and continuing to support a people-based industry.

I recently changed my TV package online as the lure of the next two series of Homeland got the better of me.

The change was the usual story really – my password didn’t match, my e-mail address didn’t match and so I decided it would be easier to pick up the phone and speak to someone about changing the package. And, it was. It made me think about our industry and the need to deal with people face-to-face and over the telephone. The people factor builds trust and relationships as well as providing a valuable service.

The other essential tool is good technology. To provide a valuable record of the advice given to the customer and all the associated documents loaded onto the system. A good Point of Sale (POS) system is so important but like everything it is only ‘good’ if it is kept up to date.

We recently updated our version of the Key POS system to change the way in which we record data and use it. Even though the system is an up to date system, it was a substantial piece of work bringing in contract developers to deliver the changes we required. There are numerous stages, including the specification, which takes time and requires experienced people who understand the system to map out what is required. This then needs to be formatted – a different skill required, so that the specification can be interpreted into ‘developer speak’ to enable the work to commence.

Frequently, there are choices and processes that need guidance all the way through and it is important to consider the impact of any slight change, or you could be back to square one. Once the work is ready, testing begins. You need people who understand the system and will test it and try to break it. Flaws get picked up and then fixes and changes need to be done. That goes back and forth for some time until the upgraded system is ready to be released achieving the desired result. The cycle needs to continue and we regularly look at what the next enhancements will be.

The recent changes we have released were significant and we now have an enhanced system that incorporates the dynamics of today’s regulatory world.

After going through this process, it becomes less onerous as knowledge of the system improves. It was still a challenge, expensive and time consuming but we allocated a six-month timeline which was a tight timescale to keep the focus on the job and complete it.

We have always promised to invest in technology that provides a system that is up to date with mortgage and insurance industry needs and we will continue to do so. We do know that both appointed representatives and directly authorised advisers are not robots and that’s important to us, because although this is a people-based mortgage and insurance industry, we need to be backed up by good technology and not replaced by it.

If you are interested in switching over to join our award-winning Mortgage Network as an appointed representative, or becoming a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.

Mortgage Intelligence Industry Update: Insurance Tax Premium Increase

Sally Laker looks at how insurers’ recent hard work could be undone if they pass on the Chancellor’s premium tax increase to consumers.

Chancellor George Osborne announced in his summer Budget that, from November, insurance premium tax would increase from 6 per cent to 9.5 per cent. This is a rise of almost two-thirds: a jump that has received a mixed response from industry experts.

Osborne justified the change by highlighting a recent fall in insurance premiums, with the cost of contents insurance alone falling by 8 per cent since 2014. He said that, despite the increase, Britain’s insurance premium tax “is well below tax rates in many other countries”. He assured us the Government would continue to make insurance better value for consumers, claiming the recent fall in the cost of contents cover was due to previous alterations.

The Treasury has suggested that, by 2021, ministers will have accrued more than £8bn from the tax changes. However, by far the biggest concern is that, although insurers pay the tax, the extra cost will be passed on to the consumer. The Association of British Insurers calculates the new rate will add £9.48 to the average annual household insurance policy.

Osborne has confirmed that the increase will be added only to general insurance products, which account for just a fifth of all premiums. However, it is this fifth that needs to be encouraged wherever possible. I am concerned the important cover that consumers need will be further pushed out of reach due to price, and the public will be tempted into not protecting themselves at all.

This change has come at a time when cheaper premiums and more comprehensive value from insurers had started to re-energise the industry. At Mortgage Intelligence, we feel this hard work could all be undone if insurers end up passing on the increase to consumers. UK insurance premium tax may still be relatively low but, with so many under-insured, the need to incentivise remains high.

If you would like to join our award-winning Mortgage Network as an appointed representative or become a member of our Mortgage Club, contact our Broker Support Team on 0845 130 7446 opt 1.

Bucking the Trend

Despite an upturn in the mortgage market, some industry experts have shown concerns that the market could revert back to its pre-2007 state, with mortgage advisers concentrating on mortgages and deserting protection and GI sales.

However, we are seeing a far more entrepreneurial approach, that whilst advisers have to spend more time on mortgages, they actually want to maximise that time, and rather than deserting protection and GI are seeing the current market conditions as an opportunity to take their business to the next level and requesting the necessary help and guidance to do that.

We have worked with a number of AR firms within our network on this, looking at where they want to be and helping them to tailor a business plan to suit each of their own business requirements, as of course each firm has different needs. The difficulty is often in recruitment, rather than a desire to only write mortgages, but we are now seeing results where some brokers have worked with us to train people within their businesses to learn new skills and become the much needed expert required.

My own view is that businesses need to bring people on, give them the chance to wow and show you what they can do. Given the right training and nurturing, the results can be extremely rewarding. Someone that has worked with your firm for some time and seen their knowledge grow every year not only becomes a more valuable member of the team but is often a person with great loyalty because they have been given the opportunity to shine.

We have seen para-planners become specialist protection advisers, checking that clients are not left with a protection gap. We have seen administrators for GI, become GI sales people as their experience and knowledge of the product tailors them to become a good adviser.

Brokers should ensure they look after all of their customer’s needs and in my opinion letting a customer go online for ‘DIY’ GI is a missed opportunity and a big mistake. Leaving a vital piece of the sales process to someone else just doesn’t work long term for either party. If there is a disaster, you want to be the person your customer contacts first, that demonstrates the strength of the relationship. You certainly don’t want to be telling them they are not covered, when they already devastated.

In fact a number of brokers I have spoken to have said that when a friend has rung them to check the cover they have on a loved one, in upsetting circumstances, it has been the point of great relief that they were indeed covered, but also a real trigger to ensure that all clients are also looked after in the same way, should the unexpected happen.

Bucking the trend, we have subsequently seen a significant increase in our protection sales and GI sales where firms have asked us to help them grow their businesses for the long term future and ensure that their customers are protected.

Looking into the Crystal Ball

It will be interesting to see what the mortgage market will look like five years from now and how MMR has changed it. In my view, MMR certainly will have changed the way the mortgage market works.

So far MMR has impacted the market in many ways. Intermediaries have been managing increased business levels at the same time as getting to grips with all of the different lender nuances in affordability calculations and what documents they require.

However, lenders have had to overhaul the way they operate in branch. Their mortgage advisers have all been trained to give fully advised sales and mortgage appointments are taking 2-3 hours for each case, so we are all working in a level playing field. I think it is fair to say that lenders have been surprised at the time it now takes to arrange a mortgage for a customer from start to finish, and appointment booking has been a challenge.

With customers unable to get an instant appointment and possibly having to book an appointment quite far in advance, lenders may well lose that business. Where will this lead? Do the branches sell enough mortgages to provide the lender with the volume they need? And is the process of training and retaining a direct sales team cost effective?

That is yet to be proved but in the current market recruitment is not easy and it takes time and money to train people up to competent adviser status, only to lose some who feel they could earn much more as an intermediary.

In every business, if you are looking at cost efficiencies and improved service you would question the business model. When the cost of operating something in-house becomes too expensive, outsourcing is an attractive option. Many years ago when MMR was just a rumour, I suggested at a conference to a panel of lenders that maybe they should consider outsourcing mortgage advice to intermediaries. Needless to say they felt that shareholders would never consider that, well I am convinced that it may well become an attractive option.

Firstly, intermediaries have the capacity to deliver far more mortgage business than the branches. There are no expensive recruitment costs, no training costs, no perpetual topping up of advisers, and no delays in arranging appointments for the lender.

By outsourcing the mortgage advice, the lender is able to concentrate on delivering the mortgage, selling current accounts, savings accounts, ISAs, credit cards etc., all the services that are becoming more important to banks and building societies. Suddenly we are playing to each other’s strengths and the customer gets a very rounded service ensuring all aspects are covered. There is clarity in who does what and it offers an opportunity for a different relationship between lenders and intermediaries.

Each lender will look at future business differently. Again, it will depend on retention strategies and what they need in their back book, as we have seen a period when lenders needed customers to move on and periods when they need to retain them but that would be possible to agree a solution.

Effectively lenders become intermediary only lenders. It would be easier to manage business levels, manage service and everyone ends up with a satisfied customer. Lenders will have a fully advised sales force of circa 10,000 to provide advice on its mortgages for the cost of a proc fee.

When I suggested this all of those years ago, the feeling was that shareholders wouldn’t like the idea but as we know, everything changes in this industry and some lenders are already looking at such a proposition, so we should all watch this space.