In uncertain times, give your clients certainty on what you can offer them
With the date for this year’s Autumn Statement inked into the diary for 23 November, we have a very interesting couple of months ahead, both economically and politically, as the new chancellor, Philip Hammond, works out his ‘reset’ of policy.
We already know that a commitment to run a budget surplus by the end of this Parliament has been jettisoned. And in news rather closer to home the proposed privatisation of the Land Registry has been either abandoned or delayed.
In the housing and mortgage markets the post-EU referendum fear factor appears to have been curtailed somewhat, aided undoubtedly by the Bank of England’s cut to base rate and the extra stimulus it has presented.
The latest report from Rics predicted that both activity levels and prices would rise again after the summer, while our own figures revealed an increase in both sale and purchase and remortgage, instructions perhaps suggesting that the mid-year ‘bump’ was not as heavy as anticipated.
Undoubtedly, advisers have been presented with a strong opportunity with the cut to base rate, and the fact that the markets are anticipating further action from the MPC. Our own remortgage instruction levels have continued to grow in recent months and the rate-cut catalyst should ensure this continues.
SVR borrowers should present a real target, as should first-timer buyers, who again continue to be supported by government schemes. The rhetoric coming out of Theresa May’s Cabinet suggests this is likely only to continue and one wonders what further housing-related plans may be unveiled in November. In the meantime, the maximisation of advice services to every single client is (as always) a necessity.
This should be not just about the mortgage, especially when the client will have many other product needs such as conveyancing, protection and the like. In a still somewhat uncertain environment, don’t leave your client with anything other than certainty about the service you’re able to provide.
Harpal Singh, Broker Conveyancing
Seven-year term reflects changing needs and adds to range of options
Two-, three-, five- and even 10-year terms have long been the vogue for fixed-rate deals within the mortgage market, but now we are also seeing the introduction of a seven-year option. The question is: could this length of mortgage deal represent the ‘next big thing’?
The seven-year mortgage obviously helps to bridge the gap between the historic five- and 10-year options, which have previously dominated the longer-term marketplace.
Like any product, demand will inevitably revolve around headline rates, criteria and availability. Having said that, in the midst of current conditions where rates are low and economic uncertainty high, many borrowers – your clients among them – are looking past the hugely popular two-/three-year deals of times gone by in search of greater security and some longer-term deals.
This is a reflection of the ever-changing attitudes, needs and behaviours of a range of borrowers, meaning that lenders have to remain flexible when it comes to their product portfolios.
It is a well-worn phrase but competition really is key to a healthy and vibrant marketplace. And I have no doubt that, in coming days and weeks, we will see many stories of lenders reducing rates, introducing new ranges and evaluating product terms.
But let’s not swerve the question over seven-year mortgage terms. My honest answer is that offering up such a lofty tag as the ‘next big thing’ may be a little misleading. Shorter-term deals have always turned the heads of many borrowers and will continue to do so.
Let’s underline, however, that there is certainly a greater appetite among customers for a longer-term product length that offers an additional and attractive proposition. And anything that arms borrowers and intermediaries with an extended range of options to meet ever-shifting client requirements surely has to be a good thing, doesn’t it?
Craig Calder, Barclays