If we don’t talk up the market, then who will?
Bob Hunt is chief executive of Paradigm Mortgage Services
Back in January, I wrote a piece for this very publication entitled, ‘Let’s not blow Fleet and Secure Trust Bank out of proportion’.
It was designed to read as a counter-point to, what I saw, as an almost hysterical reaction to the news emanating out of these two lenders. Secure Trust Bank had said it was no longer going to accept new business and Fleet had pulled its entire product range. All within 24 hours of each other.
Not an ideal start to the year by any means, and added to a few similar announcements from other lenders being made both prior and soon after this, it looked on the surface that a pattern of sorts was emerging.
However, at the time I felt that in some quarters this attempt to construct a ‘Credit Crunch Mark 2’ narrative around these announcements was well short of the mark, pointing out that Fleet, for example, had already stressed it would be back to market relatively quickly, and the reasoning behind the other lenders’ decisions was more to do with greatly increased competition in their product areas, rather than any overt and cross-industry lack of funding.
If anything, this was all about vastly increased competition – in particular, the steady stream of ‘mainstream’ operators who were looking at sectors of the market which might previously have been the preserve of the specialists. That diversification – and the fact many of these ‘new entrants’ could secure cheaper costs of funds – was always going to have an impact and so it has proven the case.
However, over the past few months that ‘Credit Crunch’ narrative has appeared to persist, even though those perpetuating it might have looked at the fact there are over 100 lenders currently operational in the market and there is scarcely a borrower group which we could now describe as ‘underserved’ – mortgage prisoners excepted.
Fleet Mortgages’ return to lending last month therefore might have come at no better time – especially when it is with a new funder, it has over a £1bn to lend and it appears to have resulted in price cuts and enhanced criteria. Good news all round, yes?
It’s therefore been somewhat disappointing to see very few national media organisations, which were so quick to announce a ‘funding shortage’, now jumping over themselves to herald Fleet’s return. Quelle surprise perhaps but it sort of makes my blood boil that many are quick to ‘scare’ borrowers and would-be homeowners into thinking the market is somehow like it was in 2009 and the years following it, when nothing could be further from the truth.
As mentioned, if anything, we have as ultra-competitive a mortgage market as we have seen for some time, with lenders active in all types of sectors and with growing interest in previously niche areas. Rates are low, funding is available, and lenders have an appetite to lend – how often have we seen that particular angle taken recently?
I recently listened to a very good podcast put out by Andrew Montlake of Coreco and featuring three mortgage journalists – one of whom is the Publishing Editor of this very publication. During one of the episodes they talked about whether the advice industry was any good at promoting itself to consumers and discussed who should be charged with putting the positive case forward for the openness of the market, its competitiveness and the role of advisers in delivering for their customers. They suggested that the industry has traditionally not been good at doing this, and I would have to agree.
However, just because we might not have been particularly good at self-promotion in the past doesn’t mean we shouldn’t all be focused on it going forward. After all, if we don’t ‘talk up’ the market, then who will? And this applies even more to the notion of advice, its benefits and why consumers should be utilising the experience of advisers to secure their mortgages. Judging by the Mortgages Market Study, the regulator looks like it has gone luke-warm on advice so again it’s even more important that we, as stakeholders, bang that particular drum.
With a collective effort we can begin to help consumers learn all the positives that currently exist in the mortgage market. At a time of potentially great economic uncertainty, our ability to deliver certainty cannot be questioned – let’s ensure we tell everyone who will listen.