Jeremy Duncombe, director Legal & General Mortgage Club
As the days get shorter and colder, it’s usual for the mortgage market to see an uplift in customers looking to buy homes or re-mortgage.
Their focus has moved from holidays and sunshine to being in the right home for Christmas and tidying up their finances to ensure they have the best possible deals in place.
Compared to the same period last year however, the opportunities for mortgage brokers are huge as the market has re-discovered its appetite and customers need advice and help more than ever before. So, what’s changed this year to fuel the optimism, and where should you be concentrating your efforts to cement your place as the mortgage professional that customers need?
Lenders have money to lend, and mortgages make profit. The Funding for Lending Scheme (FLS) allowed access to cheaper funds, and this in turn led to swap rates coming down – which are how most fixed rates are funded. And with interest rates likely to stay relatively stable fixed rates below 2% for two years and 3% for five years are available.
My tip would be to take advantage now by reviewing all your previous clients and pointing out the “perfect storm” of historically low rates and increased availability. Longer term rates may be a good idea, as rates can only go up over time – and two years may see rates finishing just as rates have increased.
Remortgages are often missed as the purchase market takes off and brokers get busier. Don’t let a competitor or a lender take advantage of your apathy.
Lenders are increasingly recognising and rewarding the quality of introduced business. I regularly hear from lenders that the quality of introduced submissions are at least on a par with branch business, and this means that we are seeing more products designed in favour of brokers. Santander’s 7 day specials,
Natwest’s 1.79% two year rate, and various exclusives via building societies are all examples of better products being available via a broker.
Consumers are voting with their feet, with recent CML figures showing that 57.5% of mortgages were via intermediaries in Q2, compared to 53.5% in Q1. This will only continue if the quality of submission continues to improve – particularly with MMR on the horizon.
At Legal & General Mortgage Club we heavily promote quality via our daily communications, top tips, workshops and forums and I would encourage everyone to work closely with your lender BDMs to ensure that every case is submitted right first time.
An extra 10 minutes of checking a case before hitting submit, and cross checking to make sure that the income matches payslips exactly could save days in processing time, and may even help to secure you a higher procuration fee.
We’ve already talked about the success of FLS, but the other Government incentive that has helped increase confidence in the market is Help to Buy.
Whereas New Buy was restricted to a small number of builders and a select group of brokers, Help to Buy is open to everyone – so don’t miss out on being part of it.
The UK has a chronic shortage of housing supply, especially in London and the South East which, if not solved could lead to regional house price inflation above a healthy level.
Only by government, planners, lenders, builders and corporate investors like L&G working together will we build enough houses in the right areas to keep the balance – and all of this means that new build will be a significant and growing market for years to come.
Get advice if you are not in the sector, find out what your Network or Club are doing and help the growing number of first time buyers who need independence advice on their first and biggest purchase.
First-time buyers also need protection – so don’t leave this to someone else to do. A deeper relationship at this stage of their lives could be a relationship for life.
Such a fragile thing, but so important in everything we do. Whether in the success of our Ashes cricketers in the summer, Andy Murray and Wimbledon or Chris Froome at the Tour de France, confidence is the difference between nearly and definitely. The mortgage market is no different.
Earlier in the year low rates, FLS and Help to Buy were still around but the media were talking down the market and saying that initiatives weren’t working. Triple dip was still being discussed and the economy was stalled.
Now, confidence means that the same subjects are being talked up and the public have the confidence to move on. We need to take advantage of the positivity, confidence and opportunities but still remember that we need to have stronger foundations in quality and professionalism than ever before.
The professional advisor is sought by customers, lenders, networks and clubs alike, so make yourself valuable by putting the customer at the heart of everything you do, and the rest will follow.