Can it really be a decade since the start of the Credit Crunch? It doesn’t seem like 10 years has passed but looking back, there’s clearly been a huge amount of water that’s flown under all our bridges since 2007 and those early days when news started to filter through about what was (initially) happening in the US mortgage market, and how this might begin to contaminate all our livelihoods.
The ‘run’ on Northern Rock, the lack of capital amongst the biggest of our banks, the Government bail-out, the collapse of Lehman Brothers, the pull-back in lending particularly in the sub-prime sector, and the regulatory powers that be scrambling to shore up the UK’s finances were really just the start – followed by the recession and the age of austerity that we are still living with in 2017. That point in 2007 was really the moment that everything changed and, to a great extent, we have all been coming to grips with it ever since.
Here, however in 2017, for mortgage intermediaries that survived all of the above – or indeed those who have set up since those times – there appears much to be positive about, even if we have the huge challenges of Brexit to face in the future. The tightening of mortgage regulation – specifically the MMR – has effectively provided the advice profession with a significant advantage and it is incumbent upon us to make the most of it.
We may bemoan the tightened affordability measures in place now; we may even rage against the difficulties we have in key sectors, particularly buy-to-let, but it’s important to remember just how far we’ve come in the last 120 months because our position as a profession, and the services we provide, has improved greatly during that time.
Clearly, the continued appetite to lend that lenders exhibit in many (if not all) sectors is a real positive for us as advisers; add in the continuation of record lows in terms of both Base Rate and product rates, a resurgence in remortgaging (if not purchase) plus a willingness by lenders to meet demand in key markets head on, such as later life lending, and the foundations do appear strong and, let’s not forget, that the advice requirements of consumers has grown and grown.
In that sense, we do have the opportunity to look forward with optimism, rather than looking back at a time when everything went down rapidly. Clearly, many advisers fell by the wayside post-Credit Crunch – the estimate is that at least 20,000 mortgage professionals left the sector – but those that did cut their cloth accordingly, did diversify, did take advantage of the support on offer from Principals like ourselves, should be much more stable operations and (one would hope) thriving.
There have also been key strides taken in many areas to embolden advisers – procuration fee levels being just one of them but also retention payments – and let’s be honest, the level of support and resource available to the intermediary sector from networks, clubs, distributors, lenders, master brokers, etc, is probably at an all-time high. Let’s be in no doubt that there are plenty of businesses out there who are set up to support intermediaries and have a great deal riding on the intermediary market being successful.
In that sense, it is often surprising to hear from, or meet, firms/advisers who are not taking advantage of what is on offer to them. Clearly time is required to actually see and advise clients, and write business, but taking the time for instance to attend seminars/roadshows, and the like, plus to engage with those businesses who can help firms in terms of their marketing output, their lead generation, and their ability to make the most of every single case, can make a considerable difference to profit levels.
The fact is that much has changed in the last 10 years, and there was a period when a thriving intermediary mortgage market looked to be many decades away, however the destruction of the sector did not happen, instead we have been placed in a much stronger position that previously, albeit without the £350bn gross lending that marked the years pre-Crunch. However, as AMI recently pointed out, add in the estimated £100bn product transfer market that lenders appear to be dealing with, and we are not so far from that £350bn market. That’s a lot of lending and a lot of cases to advise upon – therefore make the most of what’s on offer, attack the market opportunities and ensure no client leaves your business with their needs unattended to.
Richard Adams is managing director of Stonebridge Group