Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Solutions. Read the original article for full details.
Santander's Morris: Changing broker-lender model would be a 'big own goal'
Change in the mortgage lending and advice markets is "inevitable", but there are risks in moving too far from the current intermediated model, according to comments made at the recent Mortgage Solutions British Mortgage and Protection Senate.
David Morris, head of homes at Santander, told delegates the sector was going through a "very genuine moment of change" and outlined four structural shifts he believes will reshape the market.
Four structural shifts
The first was climate change. Morris noted that loan to value (LTV) is currently the most effective determinant of risk, but it is likely that properties will start to be assessed on their endurance and adaptability. That is directly relevant to inventory clerks, whose property assessments could increasingly feed into how lenders view risk.
Second, Morris flagged a reallocation of wealth. With artificial intelligence (AI) putting jobs at risk, he raised the question of how professionals in the sector would know a borrower's career was truly secure.
Third, the digitisation of home buying would narrow the gap between maturity and remortgage. Morris said a simpler journey would make it "inevitable [that] the nature of advice will change", and that a digital home buying journey would result in faster completions, improved consumer confidence and, ultimately, transaction activity.
Fourth, upfront property information would bring decisions forward and make it likely that mortgage offers would be further embedded in the buying and selling process. Morris suggested this could couple with more sophisticated origination and underwriting to create something that "feels more like the unsecured loan market — something that's straight through, something that's immediate".
Implications for advice and intermediation
Morris said these changes would disrupt how product transfers and remortgages work. An "incredibly easy, slick, legal-free journey" would narrow the gap between maturity and remortgage. For a lender, that has "material impacts" on its economics, which could change how loyalty is measured and engagement is driven.
In his view, the nature of advice will inevitably change. However, he argued that if employment patterns and climate change make lending more complex, a trusted adviser becomes even more necessary. Talking through options, structuring deals and working with the lender would become a value-added process. He added that other needs, such as protection, would grow more important as the world in which homes sit changes.
Morris also noted that more sophisticated lending options, the growth of later life lending and complex products would create solutions that "lend themselves to human conversations that require different skills", in which brokers would thrive.
At the same time, he cautioned that "other parts of the market will shrink". The size of the more commoditised lending segments that brokers currently address would reduce as digitisation produced a straight-through market, and that business could become "dis-intermediated".
Morris said technology would accelerate change further, and that he did not think any industry would escape the impact of AI. "AI will change the advice journey," he said.
Source: Mortgage Solutions