Our Customer Retention and Partnerships Director, Russell Anderson, talks to The Intermediary about his role, challenges and his outlook of the mortgage market for 2023.

Can you start by giving us a bit of background – how long have you worked at Paragon and what did you do prior to this?

I joined Paragon in April 2022 after previously working at Bank of Ireland as Head of Sales & Distribution for five years.

I have been working in banking for 20 years and within the mortgages sector for the last 15 years.

What does your role as customer retention and partnerships director entail?

Fundamentally, the role is about enhancing the service we provide existing brokers and customers when they are looking to switch to a new rate and/or borrow some additional funds.

We place a large emphasis on strengthening relationships with key distribution partners who we work closely with to gain a better understanding of the product needs of our existing customers. This insight informs the development of our retention and further lending product range.

As part of this I try to get out as much as possible, visiting brokers alongside our regional sales team members. It’s particularly valuable because we can have some pretty open conversations with our intermediary partners who provide honest feedback on what we do well and where we need more work.   

What has kept you busy since starting the job?

While we did see landlords purchasing property in response to continued demand for rented homes, last year’s strong mortgage lending was driven by remortgaging. With five-year fixes seeing a steep increase in take-up from 2017 because of the implementation of the PRA’s new underwriting standards, we knew we’d see lots of landlords with mortgages reaching maturity.

To support these customers Paragon transformed its retention strategy, creating the new Customer Retention Team and making several enhancements to the bank’s proposition. As part of this, customers with mortgages reaching maturity now have six months to switch to a new product (previously three), the ability to overpay and a streamlined process for further advance borrowing. 

During this time, what challenges have you faced?

I think the most obvious challenge has been the transition from a stable, low interest rate environment to one marked by volatility and rising rates.

We all remember the chaos caused by the mini budget, which led to an increase in call volumes and retention requests. This meant that our maturities work took on extra significance.

We wanted to be proactive in giving customers the opportunity to switch to another product and avoid reverting on to SVRs that would in most cases be more expensive. To do this we contacted our customers to make them aware of the situation and the support we could provide.

Conscious that our proactive approach could be seen an attempt to cut brokers out of the equation, we sought to reassure intermediaries that they remain an essential part of our business. Any communication with borrowers actually suggested that they seek advice from brokers, and we put our money where our mouth is by increasing proc fees for those introducing product switches.

What is the outlook for the rest of the year?

With five-year fixes remaining the most popular mortgage for buy-to-let landlords since overtaking two-year products, we know that 2023 will see a lot more borrowers looking to remortgage. As a result, the focus for my team will be supporting these landlords, working hard to ensure they find products to meet their needs and remain Paragon customers.

Since stabilising following the mini budget, swap rates have fallen, gradually bringing down the cost of fixed rate products, but with the Bank of England set to raise base rate as it continues to battle inflation, we anticipate seeing more of a diverse business mix that we have seen in recent years.

I think we’ll see lenders innovate in response, launching products that appeal to those that seek the certainty of fixed rates or the flexibility of variable rate products, or both as offered by our recently launched ‘track to fix’ feature.