“I think the people of this country have had enough of experts.”
The response to this ‘intelligent’ vignette from Michael Gove was most likely to be, “Speak for yourself Michael”. Indeed, there is a very good argument to suggest that those in power should have listened to the “experts” a lot more over the past five years and we might not have some of the issues we are currently having to deal with now.
I read recently of an Oxford Union debate on this very issue with three of the ‘brightest’ minds supporting the proposition that ‘This House Has Had Enough of Experts” – two of the three being a ‘journalist’ for the Guido Fawkes website and a Conservative MP. Which probably tells you all you need to know.
So, I for one, am quite willing to keep listening to the “experts”, specifically in our sector and, combined with my own views and business evidence, plot out some potential areas of opportunity in 2021 and beyond.
In this case my “experts” are UK Finance and IMLA and, although they may differ slightly in their views of how 2021 is going to play out, there are of course some common themes, and some avenues to explore for advisers if the next 11 months does pan out how they envisage.
Given the increased number of purchase transactions during 2020 and the expectation this will continue throughout the first quarter of 2021, I was interested to learn what the respective trade bodies thought purchase activity would do throughout 2021, and whether we might see a return to a more dominant remortgage sector as we have been used to over the past four to five years.
UK Finance suggests remortgage lending to owner-occupiers will increase by 4% this year to £71bn, while the corresponding figure for buy-to-let will be £25bn, down by 7%. That gives a total remortgage figure of £96bn, with purchase lending estimated to be £109bn.
IMLA on the face of it seem much more bullish – it is estimating gross mortgage lending of £283bn this year, compared to £215bn by UK Finance. And yet, the total remortgage forecasts are not so different – IMLA says it will be around the £100bn mark, and it’s actually in the purchase space where they see the major difference, putting the total purchase lending figure at £172bn, far in advance of the £109bn set out by UK Finance.
Clearly, there is a difference of opinion here in the purchase activity lending figures, but it’s perhaps the similarity on remortgaging which may be of more interest. Were IMLA’s remortgaging forecast to come true that would be a 18.2% increase on the 2020 figure and would appear to be much more in keeping with where many commentators feel the market might move too. That is, a re-emergence of remortgage activity as the bedrock and foundation of most advisers’ work again.
What is also interesting within this context is, of course, product transfers. Estimated to hit over £180bn in 2021 by UK Finance, what will also determine a great deal in the advisory space is a) what percentage of PT business will continue to go through the intermediary channel, and b) whether there might at some point be a concerted effort by advisers to support clients towards remortgaging rather than a PT.
And, you can add to that, c) whether advisers can convince a big chunk of those existing borrowers, who would ordinarily just tick one of the product boxes offered direct by their lender, to actually bring that option to them where they can review it against the other available products in the space. Plus, of course, they can provide genuine advice based on their needs and circumstances now, not on what they were when they took out the original deal.
That seems like an important message for advisers to be taking to market during the course of this year, especially when you consider what many borrowers might have been through during 2020 and indeed into this year. Those PT direct options offered by the existing lender may not be the most suitable at all, and there is a danger in consumers thinking it’s an easy option to carry on with their existing lender, when a conversation and review with an adviser might put them in a much better place.
Of course, for advisers there is a big motivation and potential income increase to be secured by convincing existing borrowers not to go down the direct PT route. Not only will they be able to carry out that full review, which may illicit more protection and insurance needs, but if a remortgage is the best option, they can also secure the conveyancing business and steer the client away from free legals.
Our own Cashback Remortgage product allows the adviser to earn a referral fee but it also makes sure the client gets represented, not just the lender, and it means they have a much better service from a specialist who works on their behalf and has the quality and skills to get a case through to completion quickly.
There’s no doubting therefore that if remortgage activity is to increase – and advisers’ work in this area is going to determine by how much – then it opens up a number of opportunities to provide quality advice to clients not just on that mortgage but all other financial needs. 2020 was a year like no other but the consumer need for a mortgage advice expert is perhaps clearer than it has ever been. Borrowers have certainly not had enough of experts.
Mark Snape is chief executive officer of Broker Conveyancing