The Interview
Keeping up with the Jones’s
Lloyds Banking Group is the mortgage market’s leviathan and Mike Jones is the man with the task of keeping it all on track. Sarah Davidson finds out where the market leader is headed and whether it plans to make even more waves in the intermediary market
With more than one in every five UK mortgages on its books, Lloyds Banking Group dominates the intermediary market through its multitude of brands and it dominates the high street with the largest branch network of any bank in the UK. Being mortgage sales director of the group then is no mean feat. Mike Jones, a Lloyds branch man through and through, has been in the job for a little over six months - six months in which the bank has endured considerable change including the arrival of a new chief executive and ongoing rationalisation of its brands. “There is a lot of speculation about
what goes on at Lloyds but the truth is we’ve always been committed to our branch relationships and our intermediary relationships,” says Jones. “We have the biggest branch network
in the UK and we have plenty of mortgage advisers within those branches – it would be naive not to make them productive. The gap between how much business they can do and our total appetite to lend is made up by intermediaries. “We know we need both. The critical
thing for brokers to remember is that as the market increases in size and our lending appetite increases, they’ll make up the rest.” Jones says while the proportion of
intermediated business done last year was roughly 60:40, this year he expects the balance to shift and the direct share to rise “a bit”. The balance between branch and broker
is interesting in light of former Santander chief-executive António Horta-Osório’s
44 mortgage introducer MAY 2011
arrival at the group. Santander and Abbey for Intermediaries have been aggressively active in the UK mortgage market over the past three years, leading it to overtake LBG in the volume of broker-based mortgage business it wrote last year, with a broker to branch split at 80:20. “Antonio’s hugely experienced in UK
mortgages and an enthusiastic supporter of mortgage intermediaries,” says Jones. “Coincidentally or not, the group has become more competitive across the whole range of mortgage products since he arrived.” Jones is not giving much away about
LBG’s game-plan for mortgages, indeed, following Horta-Osório’s decision to conduct a “strategic review” of the group perhaps there’s little to give as yet, but he
does underline the bank’s commitment to the market. “We are committed to retail banking and
mortgages very much underpins that,” he says. “We are a relationship bank with a clear emphasis on service, which I hope our intermediaries and customers will recognise.”
STaTuS quo There’s a fashion for talking up the remortgage market and as each month passes and the Bank of England sits on its hands without raising the base rate the risk that rates will rise gets higher. But in its most recent results statement in February, Lloyds revealed that 70% of new mortgage lending in 2010 was for house purchase. Couple that with the revelation that 48% of LBG’s mortgage book is sitting on standard variable rate. As rates rise, and rise they will, that 48% will be hit with higher monthly payments and while some will choose and be able to remortgage to a more affordable rate, others will not. For a bank with £346bn mortgages
outstanding, the threat of decreasing affordability must be daunting. “There’s a lot more safety built into the portfolio than was the case when we entered the troubles of 2008,” Jones explains. “Our customers are in better shape now than they were and that’s coming through in the impairment figures. That said there are a lot of people on SVR who may be hit by rising rates and may also be in homes that are worth less than when they bought. So yes, there will be some trouble in there, there must be.”
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