We’re still standing
David Jones is director of Click2Check
With the first full month of lockdown, April, having now passed, we are starting to see a number of statistics and datasets which may give us a clue into how the mortgage market is responding, and whether the doomsday scenario that some commentators were predicting is not being fulfilled.
The good news is that it appears the market has continued to work, albeit with some notable drop-offs in terms of activity, mostly predicated on the fact the lockdown measures seriously impinge on the ability for purchases to move through the process, and indeed a number of lenders can’t move beyond the point of physical valuation anyway.
That said, where possible and with the use of desktop and AVMs, lenders processing cases, although judging from the latest data it is remortgage and product transfer activity which is more likely to be the beneficiary than purchasing.
Signs of a market which has got to grips with lockdown, and is not being cowed into business inertia, are starting to appear. In the last few days, we’ve had LMS revealing an increase in remortgage instructions during mid-April, plus we’ve also had Twenty7Tec’s mortgage market insights which covered the week up to the 2nd May.
Its mortgage search numbers were up 5.36% on the previous week, and a significant 21.32% up on the week before that. Unsurprisingly, we can see the impact being felt most in the purchase sector – a trend that is likely to continue for some time – with purchase mortgages being down at 31.74% compared to the norm of 55-60%, while the bulk of the activity was for remortgages, accounting for 68.26%.
These sets of data, while limited, do appear to show that while the anticipated fall-off in purchasing has materialised – and that always seemed like an inevitable result of lockdown – the rest of the market is doing its darndest to hold up and, where humanly and technologically possible, business is being written and processed.
The scale of the impact will of course be significant, but as we move towards a relaxation of lockdown and a more formal ‘return to work’, the hope has to be that every piece of business, every client contact, every case that can be progressed as far as possible, will set the foundations of what will happen when the more stringent lockdown measures do start to be unwound.
We are all clearly looking forward to that, and given what may be coming over the horizon, there is a lot to be said for getting as many ducks in a row as possible when it comes to working with clients who you might currently only be able to take so far in the process.
One wonders what sort of pent-up demand will be unleashed post-lockdown, but even the most conservative of estimates anticipate that thousands upon thousands of cases are waiting to be proceed, and that those individuals involved have barely changed their mind. Indeed, when it comes to purchasing and moving, the urge might be even greater plus I suspect there will be many who have used their time in lockdown and decided to make a move as soon as they are able to.
Hopefully, those new cases are going to flock to the doors of advisers, so in the meantime there is a lot to be said for pre-qualifying clients and utilising the technology available, such as our recently-launched Credit Assess product, in order to get them to the point where progress can be made at the touch of a button and a market reignition.
Having those individual’s credit reports and banking data, should set advisers up nicely in order to move those cases on, not forgetting of course those who are able to move through the pipes unencumbered by the current situation regarding valuations.
The other good news part of this is the return of lenders to certain product sectors, upping the LTV available and dipping their feet more fully back into the market. A few weeks ago the options might have seemed severely curtailed, but with every passing day it would appear they grow and grow.
Again, if advisers have the necessary client financials, but were seeing slim product pickings a month ago, that situation may well have now changed enough to go back with a more positive recommendation. Having the available data to be able to hone the service and respond to the changing market place is a crucial part of the service, and could make the difference in turning an enquiry into written business.
As I write, we await the second review of lockdown, with the rumour mill suggesting Sunday will see the Government outlining its back to work protocols and guidelines.
That is a positive, if small, step forward and therefore now will be the time to progess existing cases and to hopefully pick up a large number of new ones. Make sure you have the system available to get a full client financial picture as this will make you more efficient and allow you to capitalise on the pent-up demand that should come your way.