Mortgage lending rose by only 8.9bn – much less than expected and the weakest rise since September. Also, consumer debt increased by just 498m – half the expected level and the smallest rise since March 1997.
BoE governor Mervyn King must be heartened by these figures and although the Monetary Policy Committee could raise rates again this year, these figures might encourage it to hold off until Q3 rather than going for another rise immediately.
The coming months will also show if house price inflation is starting to slow. Most economic experts forecast house price inflation in the 4% to 6% range this year but it has been well ahead of projections so far.
So 2007 could be a year of two halves, with house prices racing ahead in the first half and slowing markedly in the second. The key point for brokers is that life is going to get tougher. The number of mortgages being taken out is falling and the value of those mortgages won’t be rising at the same rate as it has been. And as proc fees are usually paid as a percentage of the value of loans, brokers shouldn’t expect to see their proc fee income rise at the rate it has been of late.
We all know that the housing and mortgage markets take a long time to slow down, but although brokers can be shielded from what is going on in the market for a while, there is compelling evidence that the ship is slowing. Now is a good time to do something about it.
The obvious course of action is to leave no stone unturned in the search for additional income. Don’t just look to sell more mortgages, also look to increase the value of each mortgage sale. That doesn’t just mean buildings, contents, payment protection insurance and life cover but also essential services such as conveyancing and, in due course, Home Information Packs.
Conveyancing is one of the easiest sales opportunities available to brokers. Most home owners don’t have a relationship with a local solicitor and welcome a recommendation from an adviser. Make sure you can provide your clients with a choice of conveyancers and show them the savings you can make on their behalf. Not only will this help boost your income but it will also strengthen your relationships with clients.
There’s no doubt that you will need to look for ways to boost your income in the months ahead. But before you explore new markets, pin down those that are under your nose and with which you are familiar.