"I think the main challenge for brokers in the coming years is how they achieve more positive outcomes for their niche clients"
We spoke to Stuart Philips, director of BrokerSense, about the firm's mortgage calculator offering and whether the housing market will remain flat in 2020.
FR: BrokerSense recently launched its residential and buy-to-let mortgage calculators – what does the proposition offer and how can they help the mortgage process for both advisers and borrowers?
BrokerSense provides a near instant overview of all of the lenders in the market and how much they will lend; this can differ significantly depending on the client’s income, outgoings and other factors with income multiples ranging from as little as 1.72 times income up to a huge 9.09.
For brokers the benefits are that they can give their clients accurate advice, which considers the whole market, not just a few odd lenders which have easy-to-access calculators. It also means that they can produce results in mere moments rather than having to hunt for calculators on different lender websites or do it manually.
This then allows the client to bid on property with more confidence and get the best home they can afford.
For brokers the advantages of a calculator that looks at every lender in one place are a faster recommendation, less time spent on data entry, an overall better advice process for their clients and a more robust compliance file as they can keep the calculator results on file.
FR: How do you see technology continuing to evolve in the mortgage market and what are some of the positive and negative impacts you see of emerging tech?
Its clear that in the very long-term many mortgage brokers may well be replaced by technology, however it’s not something that’s going to happen in the lifetime for the majority of brokers working today. Like self-driving cars, the technology is the easy bit, the more complex aspect is how that’s applied to regulation, how the commercials work between providers and how it’s received by end users who still want the reassurance of personal contact with an adviser.
I think where BrokerSense’s attitude differs from some of the other commentators in the fintech world is we recognise that the broker is our customer. Many think about the consumer journey essentially dictating how brokers should run their businesses. Having been brokers ourselves however, we know that brokers know their customers, want to be free to differentiate themselves and want to use technology to reduce repetition and increase the time they can spend giving advice. Open Banking is a great example of this. Everyone was talking about how great this would be for the consumer and people built businesses around this new process, but consumers, it appears either don’t care or don’t trust it as uptake has been disappointing.
In terms of positives, I think the fact that API’s are becoming part of the lexicon in the industry is a great thing. Mortgage software has for so long been a walled garden with one platform having to do everything in the process, only some bits were good, others quite poor. In the wider tech world providers can simply focus on doing one very specific thing very well, but making it easy to link to others. An example would be sending invoices and reconciling transactions. Why to try to design a sub-par copy of popular cloud accounting platforms, when you could simply make it easy to link to any of them. BrokerSense therefore has an open API, anyone can send us data and we return affordability figures. CRM platforms, marketing providers and robo-advisors all benefit from this data from calculators.
FR: What are BrokerSense’s main aims or focuses in 2019? Do you have any exciting news or plans you can tell us about?
We are launching an advanced process very soon. We always aimed to ensure that data could be obtained early in the customer journey, perhaps before you have a full fact find from the client and before you have the payslips in front of you, so we kept the input form light deliberately. Our aim was to reduce work for brokers, not create a form that took longer than half a dozen lender calculators!
The key difference in our approach to the advanced section is that we will allow basic searches to be upgraded and will show how many lenders each field will benefit from. Some fields are used by more lenders than others, and BrokerSense will show how many lenders use the data so a broker can see how relevant it is.
With these developments brokers will be able to choose the level of detail based on the stage they are at with the client, and get a quick overview, or a very exact report considering all the factors, and can improve results as they gather more data.
We are also adding more lender spreadsheets to the BTL portfolio manager calculator which can be exported to a broker’s CRM, and we have hired another developer, as we are growing pretty fast which is exciting!
FR: What challenges are facing brokers and lenders in the current financial landscape?
I think the current housing market is going to stay very flat for the foreseeable future and I don’t think house price inflation is going to be as significant as it has been in the past. I also think it’s essential we wean ourselves off the obsession with seeing our homes as investment vehicles if we want wages to catch up with house prices again so that our kids and grandchildren can stand a chance to get on the ladder.
This leaves some challenges in the market as I don’t expect there to be an increase in overall lending volumes for some time. I think the main challenge for brokers in the coming years is how they achieve more positive outcomes for their niche clients, such as those with complex incomes, or who are self-employed, have adverse credit etc. Technology will be key here to help though. There are more than 300 regulated lenders and about sixty of them share about 30% of the lending market, and those lenders are the ones who want to help. We need to find better ways of connecting clients with the lenders who will lend to them.
FR: If you could see one headline about the mortgage market in 2019, what would it be?
“FCA reviews Credit Reference Agencies stranglehold on customer data - deems data owned by consumer and free to view or share”.
That’s the last piece of the puzzle. Once we have open banking, open credit data and support for affordability, criteria and sourcing, it will pave the way to a completely new marketplace for mortgages where lenders bid for clients, not the other way around.