Of course, geologists are already aware of this and some dedicate their time to so-called economic geology – the science of finding comm-odities that can be used for economic purposes in a protean landscape.
Similarly, the tectonic plates of the mortgage market are constantly shifting, never more obviously than in the ongoing liquidity crisis.
With the demise of many high LTV mortgage products and the number of first-time buyers falling to its lowest level for almost 30 years, economic geologists are searching for new reserves to form the bedrock of future business in the mortgage industry.
Part of the problem is that first-time buyers’ enthusiasm is fading fast. Fears about house prices and the state of the economy have convinced almost two-thirds of consumers thinking about taking their first steps onto the housing ladder to hold back.
Indeed, our research has discovered that 67% of them feel their finances are already overstretched. This new consumer thinking leaves a gaping hole for those brokers who rely on first-time buyers for a good portion of their business. But in the search for new reserves, customer retention could be the best bet. Remortgaging activity was expected to in-crease its share of new business approvals as the housing market slowed and the first-time buyer boom of two years ago came to fruition. This reflects the maturity of a substantial block of two-year fixed rate business.
Latest data from the Bank of England shows approvals hit £21.9bn in January – up from £18.7bn in December. But this increase was driven largely by a sharp upturn in remortgage activity.
House purchase approvals totalled only 74,000 in January compared with 72,000 in December and 121,000 in January 2007. By contrast, remortgage loans hit their highest level since November 2003 with 119,000 cases.
Other sources of income may be found in cross-selling. For example, the Association of British Insurers believes as many as one in four homes are uninsured.
And first-time buyers who purchased insurance when they first took out their mortgages will have invested a lot of cash in their homes and contents but may no longer be covered by the original policies.
These are difficult times but financial products besides mortgages are resources overlooked by many brokers. Diversification may be the answer while we wait for the tectonic plates to shift again and first-time buyers to return.