The Intermediary – December 2025 - Flipbook - Page 70
T E C H N O L O GY
Opinion
Supply side drives
the technology
agenda
E
arlier this year, the
Financial Conduct
Authority (FCA)
published its
Mortgage Rule Review
discussion paper,
with the stated aim of simplifying
its mortgage rules to support
sustainable homeownership.
In July, three months aer releasing
this first statement, the regulator
removed guidance no longer required
and amended its rules to provide
greater opportunity for innovation
and to make it easier to remortgage
with a new lender, reduce the overall
cost of borrowing through term
reductions and discuss options with a
firm, while still having the option to
seek advice if needed.
The requirement for a full
affordability check when shortening
a mortgage term was removed,
although the FCA still expects lenders
to assess affordability in line with
responsible lending standards and
the Consumer Duty. Additionally, the
modified affordability rules allow new
mortgage contracts with alternative
lenders if the new deal is more
affordable than the borrower’s current
mortgage or any product offered by
their existing lender.
As we near the end of the year,
it’s uncertain whether these rules
have driven significant change in
the market. There is no data to date
showing to what extent lenders have
embraced customers wishing to switch
lenders at remortgage; however, there
has been a general feeling that there
is limited appetite to rely on another
lender’s affordability checks and
mortgage valuations.
Whether a full underwrite is
required or not, this year has seen
a noticeable increase in borrowers
remortgaging away from their
68
The Intermediary | December 2025
HAMZA BEHZAD
is business development
director at Finova
existing lender. Partly this has been
driven by improved pricing, with
large banks competing fiercely to lure
market share.
In this evolving market, service
quality will become a critical
differentiator. For lenders unable to
match high street banks on price,
offering added value will be essential
to persuade borrowers to accept
slightly higher rates. Retention
processes will play a pivotal role
– not only for direct-to-consumer
remortgaging but also for broker-led
applications. Streamlining remortgage
procedures and minimising
complexity is set to become the key
competitive advantage.
Retaining customers at the point of
refinance has been at the forefront of
lenders’ minds for some time now. The
cost of managing a product transfer is
significantly lower than aracting and
fully underwriting new customers.
The question then becomes how to
achieve this in an efficient way.
Upgrading origination and servicing
platforms comes with huge advantages
when it comes to delivery of change
but implementing what you need
when you need it maers just as
much. The trick here is for lenders
to benefit from scale while retaining
their identity and proposition.
Although this is widely understood,
puing it into practice can be difficult.
Building societies have a long-standing
tradition of providing personal
service, both face-to-face and over the
phone, avoiding the frustrations oen
associated with larger organisations
that rely on call centres.
Now, the industry faces decisions
about how these services should
evolve. Most professionals in the
mortgage and savings sectors
agree that digitalising processes is
inevitable. Despite clear benefits,
there remains a cautious approach to
overhauling origination and servicing
platforms in parts of the market.
Big banks may need changes to
accommodate straight through
remortgage, but for building
societies, this may not be appropriate
for borrowers needing manual
underwriting. Following the Budget,
there is likely to be a significant rise in
those requiring such services. For selfemployed individuals, a major change
is the 2% increase in income tax on
dividends, raising rates to 10.75% at
the ordinary level and 35.75% at the
upper level from April next year.
This adjustment will significantly
affect those who typically draw a
£12,750 salary to make the most of
the personal allowance, with the
remainder taken as dividends.
Individuals who find themselves
facing more complex tax
arrangements are likely to opt
for lenders that have the time to
understand their finances. Making
that process as straightforward as
possible will be a key competitive edge
for lenders.
For building societies considering
how to achieve this, a more flexible
approach may be the beer option.
This is playing out in the market
– we are seeing many mid-level
building societies embrace cloudbased solutions, either upgrading
comprehensively or adopting plugand-play options as needed.
Regulatory impetus has been the
driver of change in the industry
since the 2000s. Supply side
change continues to dominate the
technology landscape. ●
