The IRESS mortgage efficiency survey measures and benchmarks key performance indicators for mortgage lenders. This is the third year of the survey so we are also able to look at developing trends over the three year period. In all the participants represent a 66% market share of gross lending equating to just under £120bn of mortgage loans.

1. Mortgage efficiency
survey 2014
iress.com
Henry Woodcock
Principal Mortgage Consultant
October 2014

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IRESS
•IRESS produce innovative, sophisticated solutions for mortgage, wealth management and financial markets participants. We are a global business with operations in Australia, New Zealand, Canada, South Africa, Asia, and the UK.
•Our products and solutions provide transformational business benefits and support a diverse range of roles across front, middle and back-office functions. Our solutions are tailored to suit the individual needs of our clients and we deliver services across all distribution channels and technology devices. In the mortgage sector our solutions include:
•IRESS Mortgage Sales & Originations (MSO) - an end-to-end, multi-channel mortgage solution for lenders. This solution is designed to improve the efficiency and service delivery of our lender clients - currently 25% of all UK mortgages are transacted through it.
•IRESS Trigold - a mortgage sourcing system now used by over 15,000 mortgage intermediaries. Presently 65% of all intermediary mortgage business is being sourced through Trigold.

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Contents
1.IRESS Mortgage Efficiency Survey Overview
2.Key Findings
3.Buyer types & distribution
4.Sales channels
5.Originations
6.Social Media - to tweet or not…..
7.Mobile Futures
8.2015

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Survey overview

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Survey overview
•Purpose – to provide insight into the quality and efficiency over the whole of the mortgage sales and origination process
•In its 3rd year enabling year on year trends and comparisons
•2014 - 10 Participants with over 66% share of gross mortgage lending in 2013 equating to just under £120bn of mortgage loans

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Key findings

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Key findings - channels
Intermediaries
More than half mortgages sold - 51% Banks 63% Mutuals
Branch
Branch sales dropped to less than ¼ - 26% Banks 18% Mutuals
Telephony
Just over 10% sold via telephony - 15% Banks 14% Mutuals
Consumer
On-line sales dropped slightly to just under 5%

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Key findings - originations
DIP
Average accept levels 53% intermediary to 60% telephony & 66% branch
Offer
Highest in intermediary 70%, 64% telephony, 67% branch and 38% consumer
Completion
Highest in intermediary and telephony 89%+, branch 68%, consumer 46%
Trends
FTB and Equity release growing with BTL showing a brief plateau in 2014

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Buyer types

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Buyer types
First Time Buyer
•Banks sold 7% more first time buyer mortgages and nearly 13% more Buy to Let mortgages than mutuals.
•No Mutuals in the survey have sold Equity Release mortgages whereas 9% of bank mortgage sales were for Equity Release.
•Mutuals sold a higher percentage of traditional loans – Moving Home and Remortgage, respectively 9% and 8% more than banks.
•Over the three years of the survey, perhaps not unexpectedly, the First Time Buyer and Equity Release buyer types have increased year on year, with Buy to Let appearing to reach a plateau between 2013/14.
Moving Home
Remortgage
Buy to let
Equity Release
Second Home
1
2
3
4
5
6

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FTB – Banks v Mutuals
0.00
5.00
10.00
15.00
20.00
25.00
30.00
Banks
Mutuals
Tier 1
Tier 2
Tier 3
Total
First Time Buyers
First Time Buyer 2012
First Time Buyer 2013
First Time Buyer 2014
Banks have increased lending by 5% and Mutuals by 4%.

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FTB - Tiers
0.00
5.00
10.00
15.00
20.00
25.00
30.00
Banks
Mutuals
Tier 1
Tier 2
Tier 3
Total
First Time Buyers
First Time Buyer 2012
First Time Buyer 2013
First Time Buyer 2014
The biggest increase has been in Tier 1 lenders with an increase of nearly 10% to just over 25%, with Tier 2 lenders having a minor increase from 2012, but Tier 3 lenders showing a 6% drop.

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FTB – Survey Average
0.00
5.00
10.00
15.00
20.00
25.00
30.00
Banks
Mutuals
Tier 1
Tier 2
Tier 3
Total
First Time Buyers
First Time Buyer 2012
First Time Buyer 2013
First Time Buyer 2014
The overall survey average shows a 4% increase in First Time Buyer lending. Recent figures from the CML continue to show growth in First Time Buyers, across all regions of the UK.

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Distribution

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Distribution
Intermediary distribution remains a key channel for many lenders
with mutuals selling over 63% of mortgage via intermediaries and banks selling 52%.

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Distribution trends
0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
2012
2013
2014
2012
2013
2014
2012
2013
2014
2012
2013
2014
Intermediary
Telephony (Direct)
Consumer (Internet)
Branch
Core Distribution 2012-14
Banks
Mutuals
Total
Looking at intermediary distribution between 2012 to 2014 in overall terms there was a slight dip in 2013, but the striking trends are that mutuals selling via intermediaries dropped by nearly 10% but banks increased intermediary lending by over 12%.

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Sales channels

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Sales channel
Channel capabilities – quote, KFI, FMA, Case Tracking, Offer…. are highest in Intermediary and
Telephony channels in 2014 and across the 3 years of the survey
Cases to Offer
Cases to Completion
Individual lender
best to offer
87%
Telephony & Branch
Individual lender
worst to offer
15%
Consumer
Individual lender
best to completion
94%
Telephony
Individual lender
worst to completion
46%
Consumer

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Sales interview times
MMR Advised Sales - Elapsed Hours
Results from IRESS MMR Lender Analysis 2014
1
2
3
4
Best lender
Worst lender
Review Average
Hours
WAYS TO IMPROVE EFFICIENCY:
•Automate where possible - eID, AVM (remortgage), Address Targeting, once & done data capture, eliminate redundant data
•Auto-generate Reasons Why/Recommendation Letter
•Single advised journey
•Offer self-service and retentions on-line
•Enable brokers to process rate switch, FA, etc.

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Originations
pipeline effectiveness

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Average time to offer
Best individual lender <5 38% <10 65% <14 79% <30 97%
Year
<5 days
<10 days
<14 days
<30 days
2012 Average
26%
52%
78%
94%
2013 Average
13%
35%
56%
78%
2014 Average
8%
23%
44%
80%
2014 Best
38%
65%
80%
100%
Offers
Across the three years, the percentage of cases going to offer has declined across all three bands to 14 days or less.
The average for 10 days and under has dropped from a high of 52% to just 23% this year.
MMR changes and the need for more stringent affordability and plausibility tests are the most likely factors behind the decline.
Some lenders have improved though, with one lender issuing 65% of offers in ten days or less.

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Social media

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Social media usage
Lenders are starting to view social media in a more positive light
2012
2013
2014
Twitter has grown year on year from 10% to 50% of lenders using actively

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Mobile futures

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Mobile futures
Lenders only just beginning to tap into this market

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2015

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Key 2015 questions
MMR
First full year of MMR. Time to offer? Elapsed sales time?
Technology
Will mobile take off, will social media be more than an alerts?
EU MCD
What will be the impact of the EU mortgage credit directive?
Trends
Will trends change - impacts of rate rise, lead up to elections?

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Intermediary systems survey
The survey is comprised of three elements:
1.Lenders - an Intermediary systems survey, designed to benchmark intermediary lender systems in terms of functionality across three elements of the mortgage sales process: the broker extranet home page; quote, apply and submit; and finally post submission.
2.Intermediaries – a survey of core functionality and process
3.Intermediaries – a benchmark survey of each lender’s portal in terms of usability

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In conclusion

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•In the first half of 2014 the effects of regulation and government schemes on the mortgage market have been self-evident. Government schemes such as Help to Buy have certainly boosted the market, in particular for first time buyers. Though some market commentators are unsure if the measures are providing the best outcomes for the market and consumers alike.
•Regulation has impacted the mortgage sales and origination process. The Mortgage Market Review final rules came into force in April and this has produced a short term bump in lending volumes, but also ongoing change in both the elapsed time and complexity of the sales interview process. For some lenders it has also increased the time to provide an offer.
•However, the market continues to grow, with the CML revising their 2014 forecast to £208bn, the first time lending has been over £200bn since 2008.
•As we move toward 2015 and beyond, further regulation will impact the market and consumers in the form of the EU Mortgage Credit Direct. The directive will provide a challenge for lenders with just a bare 12 months to design and implement the required changes.
•Aside from those challenges, it is clear from the findings in this survey, that investment in technology, improvements in efficiency and cost savings will continue to be at the forefront of the minds of lending executives across the market.
•Mobile technology, social media and customer service are converging demands that will require lenders to innovate both technology and process to be successful in this changing mortgage landscape.

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Thank you
M: 07778 178 220
henry.woodcock@iress.co.uk
Henry Woodcock
http://uk.linkedin.com/in/henrywoodcock/
@henry_woodcock