Hodge has raised its procuration fees from 0.25% to 0.30% for its broker partners.
This increase applies to all mortgage product transfers and is effective immediately.
Emma Graham, business development director for mortgages at Hodge, emphasised the significance of the product transfer market and the value of brokers’ work. She said: “The product transfer market continues to be a hugely important one and as an intermediated lender, we really value the work our brokers put into ensuring their existing customers find the best possible solution upon maturity.
“In the wake of the Consumer Duty, we continue to see an increase in the broker share of the product transfer market which has increased from around 20% to 40%.
“We also appreciate that the full advice process is followed, and hope increasing our procuration fee goes some way to showing our brokers just how much we value their support and recognise their commitment to consistently ensuring the right outcomes for their customers.”
This move is part of Hodge’s continuous adjustments to its range of later life and other specialist mortgage products. These modifications aim to offer greater financial flexibility to high-net-worth individuals and those with complex incomes.
Graham added: “We’re doing all we can to help our intermediary partners navigate these tricky economic times and increasing our procuration fees is the next step in what, for us, is very much a continuous process of improvement when it comes to supporting our intermediary partners, and their customers in the moments that matter.”
Reaction
Andrew Montlake, managing director at Coreco:
“It is great to see another lender recognise the hard work that brokers do and increase the levels of procuration fees paid on a Product Transfer.
“There is a sense that lenders are starting to get the message that for a broker to do their job properly, a PT is not just a quick press of a button, but involves the same analysis, work and advice that goes into any mortgage, especially at a time where rates are changing and the same application is being reviewed several times to ensure the client does not miss out on improving products.
“Hopefully, we will see more lenders follow suit, but not at the expense of procuration fees for other product lines, which would be a mistake and miss the point, as this is all about lenders supporting a source from which they get the lion’s share of their mortgage business, ensuring that adviser numbers are still there when lenders need them to turn the taps on again. This is about more than marketing, it is about true partnership.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“This is a positive move from Hodge, appreciating the amount of work brokers do on product transfers and the value to them of retaining their client book. This is especially true in the more specialist sector of the market that Hodge operates in.
“Whilst this is good news for brokers, Halifax still leads the way in paying brokers the same, whether it is new or retained business, which is the fairest model.”
Adam Smith, founder at Alfa Mortgages:
“An excellent common sense approach that recognises brokers for all the hard work we do.”
Scott Taylor-Barr, financial adviser at Barnsdale Financial Management:
“This is a lovely Christmas present. Thank you Hodge! I think proc fees for PTs are going to be a hot topic in 2024, as what a PT fundamentally is has changed, or is changing. It used to be a simple selection of a new rate with little or no underwriting or post-advice work by the adviser, which was always a large part of the argument for the payment on this business being lower.
“However, in recent years we have seen lender PT systems allow for additional borrowing, changes in mortgage terms and repayment type as well. This type of business then requires the same level of input by the brokers as a full mortgage application. It is no longer the sleek stripped-down process of a genuine PT, yet lenders still maintain the lower PT payment rate to brokers despite the extra workload.”
Ken James, director at Contractor Mortgage Services:
“The value that brokers add to the process of switching a rate can be undervalued by certain lenders. A product switch is a culmination of checking the client’s current and future circumstances, not just a button-pressing exercise. It is refreshing to see a lender recognising the added value we bring and rewarding us accordingly. The same product switch at the moment can repeatedly need redoing as rates change. We actively monitor the state of play for all clients and being paid a sensible procuration fee can only help brokers as they look at time spent against the financial reward of doing the work.”
