So after six years held at 0.5 per cent, we may finally see a rate increase in the not-too-distant future. Last month Bank of England governor Mark Carney said the decision to raise rates was likely to come into “sharper relief” by “the turn of this year”.
Naturally, the consumer press went into overdrive, with reports of homeowners “bracing themselves” to be hit hard by the rise.
It is not the first time we have seen this sort of reporting about the mortgage market. In the run-up to the MMR we were regaled with stories of Spanish Inquisition-style questioning and mortgages being available to only the primest of prime customers.
We all felt the impact of the MMR and continue to do so but the press scaremongering grossly exaggerated the situation and did little to help market confidence.
And so here we are again. The newspapers say rate rises spell Armageddon for homeowners unless they switch their mortgage now. But what about brokers?
What will any increases in Bank base rate and, subsequently, mortgage rates mean for them?
Intermediaries could be much better off because we are operating in a very buoyant market. The last time rates were above 0.5 per cent, we were either dealing with the aftermath of the credit crunch or were in the midst of the market boom before the crunch, which was both dangerous and unsustainable.
Now we are in a stable and ever-improving market. Lenders and consumers have confidence again but it is a realistic confidence that should result in measured growth.
Consumers are more savvy and aware of their finances. They have seen what can go wrong and take a much more active involvement in their own financial affairs.
As a result, more borrowers will seek to take out fixed rates, whether first-time buyers or homeowners looking to remortgage. Keen to ensure they get the best rate, many will seek financial advice and brokers will reap the benefits.
Banks will struggle to handle the huge volume of work so we may see more lenders pushing for business through their intermediary channels.
Thanks to the buoyancy of the market and the number of products available, cases will be easier to place. So business volumes will increase and, with them, profits.
Brokers who have a decent customer relationship management system will be able to handle many more cases than brokers with old paper files. This means brokers who are utilising good technology systems will get a larger share of the market, as well as being able to service their clients quickly and more efficiently.
Depending on what system you use, you should be able to undertake automated marketing that looks personal to the client, thus increasing your business levels with very little input.
Some systems are able to send automated text messages to consumers who are approaching remortgage, helping you line up your next customer without having to undertake a time-consuming ring-around.
The market is about to get very busy and I foresee huge boosts in business for those ready to take them. Technology will be essential.
This month’s data from MortgageKeeper tells us that, although the volume of lending continues to grow and the top spots are still dominated by Halifax and Nationwide, Halifax has suffered a drop in the number of mortgages.
Santander, meanwhile, appears to have made the largest gain, along with BM Solutions, which has jumped back nicely into the top five.