Opportunities to be had
David Jones is director of Click2Check
With plenty of focus, quite rightly, on purchase activity currently, and with the next couple of months likely to be incredibly busy in terms of completions, it seems somehow important not to get lost in the closing of cases, especially when there a growing number of opportunities to be had at the ‘front end’.
Now, of course, everyone in the advisory sector will recognise that it’s only on completion of the mortgage that the procuration fee is paid, but as always, the pipeline needs to be replenished continuously, and looking ahead, it might not be purchase cases which will count for the bulk of that new business.
Many commentators in the marketplace are predicting a drop in purchase activity after the 31 March stamp duty deadline, and logically that seems like a good call.
Indeed, without any tapering or extension, that end of March date marks something of a line in the sand, after which we also have Easter, a period which I suspect many will be keen to use in order to take a well-earned break.
However, while the current purchase cases are working their way (hopefully) towards a pre-deadline completion, the focus might well turn to more ‘bread and butter’ matters.
Just at the end of January, LMS said that its remortgage conveyancing instructions had seen an uplift and its view is that it will be the remortgage sector ‘taking the lead’ throughout the rest of the year, buoyed by a large number of potential maturities and lenders looking to enter sectors, such as high LTV, which were definitely on the poor relation list throughout 2021.
In a way we are returning to some historical norms here, after all it has been the remortgage market, which has been the bedrock of the advisory market for many years, prior to 2020.
And, while there is often little correlation between the Bank of England Base Rate and product rates, the fact that BBR is 0.1% currently, and rates are still relatively competitive, this might well be the time when borrowers sense this is the time to refinance.
Of course, the tricky ask in all this, is a post-pandemic appraisal of the borrowers’ finances, particularly after a year in which incomes might well have fluctuated in a rollercoaster way.
I’ve read a lot about the market for self-employed borrowers currently, and the problems advisers are having in securing remortgage products, specifically in an environment where lenders appear to be holding onto traditional criteria and affordability measures, and perhaps not grasping the nettle around just how different incomes might look now, to how they did during last year’s lockdown.
To fight that good fight – indeed to fight on behalf of any remortgaging client – at the moment requires being forearmed like never before.
How can you provide the right advice and recommendation, and work efficiently in the right lender/product channels, without a clear understanding of a client’s credit-worthiness and a true picture of their financial situation over the last 10 months, how it compares to a pre-March 2020 position, and whether it has now returned to normal?
Having complete clarity via a credit report and online banking statements, via a product such as Credit Assess, means you are in the best position possible to be able to secure that client the remortgage they need, at the most competitive rate.
And, of course, let’s not just consider those clients sitting within your own client bank who you know are coming up for renewal.
I read some recent research from Habito which found that, of 2,000 borrowers surveyed, 27% were on an SVR, while one in 10 knew it, and hadn’t done anything about it because they believed it was impossible for them to get a better deal.
Extrapolate that out and you find a remortgage client pond that is vast and also a level of misinformation about what applying for a remortgage might mean and what it could do for them.
11% of existing borrowers said they hadn’t looked to remortgage because they were concerned about lenders’ scrutinising their finances, even if it could get them a better deal.
The bigger piece here is around education, but that is perhaps one for later.
What advisers can certainly do is use their own marketing channels to target those existing borrowers, to outline what service you offer, the need not to be scared about what it might mean, and the positives that can be delivered.
Armed with total clarity about a borrowers’ finances, you have the opportunity to change many lives financially for the better – at this time, who wouldn’t want to give (or accept) that good news?