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Mortgage Efficiency Survey
2016
iress.com
Henry Woodcock - Principal Mortgage Consultant
October 2016
iress.com 2
1. Introduction
2. Key insights
3. Challenges and opportunities
4. Conclusion
Contents
iress.com 3
5th Year £bn Gross Lending
1 Introduction
The following 18 lenders have supported in 2016:
68%
Survey of parti...
iress.com 4
The rise and rise of Buy to Let
2 Key insights
0%
5%
10%
15%
20%
25%
30%
35%
2012 2014 2016
Buy to Let
31.8%
1...
iress.com 5
What have been the key drivers?
2 Key insights
• the lack of social housing continues to increase the
demand f...
iress.com 6
The intermediary channel continues
to be channel of choice
2 Key insights
0
10
20
30
40
50
60
70
80
90
2012 20...
iress.com 7
Challenges in direct distribution
2 Key insights
• Direct lending in branch and by telephony
has dropped acros...
iress.com 8
DIP accepts, refers and declines
2 Key insights
• Over the last three years, the number of
accepts have declin...
iress.com 9
The intermediary market
3 Challenges and Opportunities
• Has market share peaked?
• Competition will be fierce...
iress.com 10
Intermediary demands
3 Challenges and Opportunities
• More intuitive systems, easier to navigate, with intell...
iress.com 11
Declining direct sales
3 Challenges and Opportunities
• Direct lending has dropped over the last three years ...
iress.com 12
Increasing direct sales
3 Challenges and Opportunities
• MCOB + MMR + MCD = ?
• Smarter technology to aid dec...
iress.com 13
3 Challenges and Opportunities
Days to offer
• Over 50% of offers take more than 14 days to be produced
• Com...
iress.com 14
Reducing the number of days to offer
3 Challenges and Opportunities
• In depth review of current processes, t...
iress.com 15
4 Conclusion
• As more lenders come into the mortgage market, many relying on intermediary distribution,
comp...
iress.com 16
4 Conclusion
The winners will be those lenders that
can balance the two ends of the selling spectrum. Using
a...
iress.com
Thank you
1 Kingmaker Court,
Warwick Technology Park,
Gallows Hill,
Warwick, CV34 6DY
M: 07778 178 220
henry.woo...
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Mortgage Efficiency Survey 2016 - Henry Woodcock

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Hi-lights from IRESS Mortgage Efficiency Survey 2016.

This industry survey, now in its fifth year, tracks the developments in the mortgage industry over the past 12 months. It enables lenders to benchmark their mortgage sales and originations systems and processes against the mortgage market as a whole, their peers and the sector they operate in across a variety of key performance indicators.

For the full report view www.iress.com/mes2016

Published in: Economy & Finance
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Mortgage Efficiency Survey 2016 - Henry Woodcock

  1. 1. Mortgage Efficiency Survey 2016 iress.com Henry Woodcock - Principal Mortgage Consultant October 2016
  2. 2. iress.com 2 1. Introduction 2. Key insights 3. Challenges and opportunities 4. Conclusion Contents
  3. 3. iress.com 3 5th Year £bn Gross Lending 1 Introduction The following 18 lenders have supported in 2016: 68% Survey of participants Rest of market market share £150 £70 • Aldermore • BM Solutions • Cambridge Building Society • Clydesdale Bank • Co-operative Banking Group • Coventry Building Society • Halifax • Hinckley & Rugby Building Society • Leeds Building Society • Nationwide Building Society Group • Nottingham Building Society • One Savings Bank • Royal Bank of Scotland • Santander • Scottish Widows Bank • Tesco Bank • West Bromwich Building Society • YBS Group
  4. 4. iress.com 4 The rise and rise of Buy to Let 2 Key insights 0% 5% 10% 15% 20% 25% 30% 35% 2012 2014 2016 Buy to Let 31.8% 14.6% Among the survey participants, Buy to Let saw an increase of 49% compared to last year and an increase of more than 213% over the last five years of the survey. Over £31bn BUY TO LET 49 % COMPARED TO 2015 INCREASE OF 213% OVER THE LAST 5 YEARS
  5. 5. iress.com 5 What have been the key drivers? 2 Key insights • the lack of social housing continues to increase the demand for private rental properties • rising house prices and rents make BTL a compelling investment particularly whilst interest rates remain so low • with BTL in the main being outside of the MMR regulation, cases are relatively easier to process for lenders and according to recent mortgage default statistics, a less risky investment % BUY TO LET 49COMPARED TO 2015 Will the rise in Buy to Let continue?
  6. 6. iress.com 6 The intermediary channel continues to be channel of choice 2 Key insights 0 10 20 30 40 50 60 70 80 90 2012 2013 2014 2015 2016 Intermediary Distribution% Banks Mutuals Mutuals v Banks gap narrowed • Intermediaries had an average of 81.7% market share rising to 90% within Tier 3 lenders • 70% of lenders experienced an increase in the number of applications submitted by brokers and 47% of lenders expect the number of brokers to increase next year
  7. 7. iress.com 7 Challenges in direct distribution 2 Key insights • Direct lending in branch and by telephony has dropped across the last three years by just over half (51.4%) in branches and by over a third (35.3%) in telephony • Over the last three years of the survey, sales functionality such as DIP, Quotation and Offer at POS has dropped by 30% in the branch channel and 20% in the telephony channel Efficiency impacted by MMR • The impact of the MMR is still apparent with the number of offers in 2016 being produced in 10 days or less 37% lower than in 2012
  8. 8. iress.com 8 DIP accepts, refers and declines 2 Key insights • Over the last three years, the number of accepts have declined in all sales channels. Accepts in the branch dropped by 20%, by 18.4% in the consumer, 14.6% in telephony and 9% in the intermediary channel • A significant rise in referrals in the direct channels, by an average of 56% Digital technology offerings increase • Mobile quote and decision in principle have increased over the last year by 185%, case tracking increased by 72% and full mortgage application has increased by 116% • Over 44% of lenders planning to offer more mobile services next year
  9. 9. iress.com 9 The intermediary market 3 Challenges and Opportunities • Has market share peaked? • Competition will be fierce • There are still a number of disconnects in the intermediary mortgage market as highlighted by the IRESS Intermediary Mortgage Survey 2016 • 53% of intermediaries ranked lenders systems as average to very poor for ease of use
  10. 10. iress.com 10 Intermediary demands 3 Challenges and Opportunities • More intuitive systems, easier to navigate, with intelligent questioning - ask once and answer once Intermediaries are looking for: • Up-to-date information and real-time case tracking • Making it easier to obtain a decision in principle by capturing the minimal amount of relevant information required
  11. 11. iress.com 11 Declining direct sales 3 Challenges and Opportunities • Direct lending has dropped over the last three years - the MMR effect • Direct point of sale functionality appears to lacking, a third of lenders not providing quotations and decision in principle • Only 1 in 10 lenders use AVMs and just over half instruct valuations digitally
  12. 12. iress.com 12 Increasing direct sales 3 Challenges and Opportunities • MCOB + MMR + MCD = ? • Smarter technology to aid decisioning - a third of sales are currently referred • Scan and attach at point of sale and by the consumer • Investment in direct to consumer, execution only sales
  13. 13. iress.com 13 3 Challenges and Opportunities Days to offer • Over 50% of offers take more than 14 days to be produced • Compared to 2012, 37% fewer offers are produced in less than 10 days • After an initial dip in 2014 following the introduction of MMR, the percentage of cases going to offer across all time periods has steadily increased but on average is still 30% below the pre-MMR figures.
  14. 14. iress.com 14 Reducing the number of days to offer 3 Challenges and Opportunities • In depth review of current processes, technology and culture • An early yes or no, to reduce referrals and underwriter workloads • Employ workflow technology do some of the heavy lifting so that underwriters underwrite • Remove paper and postal delays through scanning at POS and centrally • Enable process transparency by providing automated alerts to manage exceptions or outstanding requirements and so reduce the hours spent answering calls from applicants and brokers alike
  15. 15. iress.com 15 4 Conclusion • As more lenders come into the mortgage market, many relying on intermediary distribution, competition for customers and distribution will continue to increase • Some lenders have the ‘stack them high and sell cheap’ automation proposition, others look to differentiate with “human” not “robo” underwriting
  16. 16. iress.com 16 4 Conclusion The winners will be those lenders that can balance the two ends of the selling spectrum. Using automation and workflow to drive efficiencies and lower days to offer, with personalisation for those cases and consumers where that will provide the optimal desired level of service
  17. 17. iress.com Thank you 1 Kingmaker Court, Warwick Technology Park, Gallows Hill, Warwick, CV34 6DY M: 07778 178 220 henry.woodcock@iress.co.uk Henry Woodcock Linkedin.com/henrywoodock @henry_woodcock

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