Interview with Bharat Sagar

Bharat Sagar has been in financial publishing since 1986 when he launched Your Mortgage magazine and has been deeply involved in the market ever since. He is currently the chair of the Financial Services Forum Mortgage Special Interest Group and Executive Chairman of AE3 media which includes the publications such as Your Mortgage, Mortgage Solutions, The British Mortgage Awards and Your Money.

You Chair the Mortgage Special Interest Group of the Financial Services Forum - To recognise the specific issues and challenges within direct and intermediary mortgage businesses. What’s the focus of the group at the moment?

We have the British Mortgage Senate and the European Mortgage Summit coming up in the autumn and the focus for these will very much be on the consumer and the changes on the horizon. One of the key questions is how do we best gear ourselves up to serve the consumer over the next 5 years?

The big mortgage market drivers in the last 10 years have not surprisingly been the economy and regulation. But the one big driver in the market hasn’t focussed enough on is the end consumer. Whilst regulation is supposed to be on the consumer’s behalf, lots of development has been undertaken to meet the regulation but it hasn’t really supported the way that consumers want to do business and what consumer’s views of mortgages are. The reality is that MMR was a big issue for the industry but if you ever went out and asked a hundred people ‘did you know mortgages were going to be regulated’, they wouldn’t have known or wouldn’t have cared whether they were or not.

What’s going to be driving the market going forward (the EMCD aside) is the way consumers are going to behave in the future and the choices that they will make. One of the choices that they are making at the moment is to use the intermediary channel heavily. Intermediary business is booming, but the market is actually smaller than previously – but they now have such a share of the market that lenders have to sit up and listen.

But that may change. I think the power is shifting to the consumer and certainly if interest rates go up (and the research says they have to go up two or three times by at least 75bps before people suddenly start worrying) and the remortgage market does pick up, I think the next thing the consumer is going to do is turn to the internet. Lenders are going to have to change their systems and adapt because, looking at it from a pragmatic consumer perspective, if they’re happy with the existing lender they can spend a short time looking at a number of remortgage rates online and do it there an then without spending an hour or two with an intermediary and paying a fee to do so.

I think that this consumer choice will also start to dictate how the market moves. Product switching and not lender switching will be the next remortgage boom. If this happens, Intermediaries have to be aware that it may not automatically come in their direction. The MMR has had the immediately desired effect of driving the consumer to advice, but I think the unintended consequences in the medium term could be to drive consumers to transacting online in a non-advised environment. Clients won’t want to spend another couple of hours going through fact finds and paying for advice in order to change products.