The last massive shake up of the UK mortgage industry was the financial crash and the collapse of Lehman Brothers in September 2008.
The mortgage market has changed a lot in the last decade and is now in a very different place to how it was back then – especially in the sense of regulation and compliance. So, what might change in the coming ten years for mortgage brokers?
The impact of the financial crash on the mortgage market was striking. Before Lehman Brothers collapsed, there were over 6000 mortgage products available in the UK.
Within a few years, that number had fallen to just 800, as scores of lenders failed or fled the market. Regulation and recovery followed slowly, but the market remains forever changed. Last year, it finally managed to peak over the 5000 mark.
Ten years from now, the changes could be more striking still. There is no denying we are currently going through a transitional phase in banking and the mortgage market, that could, in the long run, prove every bit as disruptive as the financial crisis.
The silent disruptors
Unlike the crash, though, there has been no sudden collapse or shock wave to announce its arrival. Like Winter, change is coming. Albeit gradually. But it will be no less profound for that, and for those who fail to respond, the effects could be similar.
Open banking and application programming interfaces (APIs) have huge potential to disrupt the market for the better. In part, that will be the result of smoothing processes and creating a greatly improved experience for existing customers of the big lenders.
The high street banks and building societies that came through the financial crisis will likely emerge from open banking intact and – if they play it right – strengthened.
There will also be new entrants who embrace the possibilities that open banking allows – not just the challenger banks, such as Metro, Monzo and CYGB’s stable. In time, it will probably include at least some technology firms and other outside disruptors, whether that’s Amazon, Paypal, Facebook or one yet to emerge.
What is clear, though, is that whatever does emerge – or at least whatever succeeds over the next ten years – is likely to have a frictionless mortgage journey at its heart. Banks, other lenders and brokers will continue to embrace technology that delivers a seamless user experience for all stakeholders involved in the home buying process, and which results in a mortgage process that lasts not weeks, but a single day.
It is natural to worry about the future. But what will be an absolute certainty is the need for advice and the value of brokers. Technology plays a vital part in this – providing brokers with end-to-end solutions and a helping hand to streamline their business into one place.
From our perspective, that is what the future looks like, and, for once, we can see it coming. It is exciting. We hope to see the mortgage industry use change to its advantage and see more brokers start to embrace technology for the future, starting right now.