I keep an eye on a number of the adviser forums, the Twitterati and the comments that appear beneath articles and the like, and while the adviser community is certainly in fine fettle, I get the sense there is a degree of disquiet about the current housing market and what might transpire as we reach the end of the year and move into 2019.
I saw a recent forum thread simply entitled, ‘Quiet’ in which a large number of advisers suggested they were currently not at their busiest right now and that, for a number, it was only remortgage/product transfer cases that were ensuring they were just ‘quiet’ and not ‘silent’.
The lack of activity in the purchase sector is not of course universal – there will be a number of regions throughout the UK where purchasing remains relatively strong and this will no doubt be providing extra business in order to back up the remortgage/product transfer foundations. However, as a number of advisers pointed out, there are also regions in the UK where purchasing levels are very flat indeed; the mood music around the housing market is that its rather ‘soft’ but clearly in some areas it appears to be something akin to ‘deflated’.
Judging by the adviser comments, those who are experiencing a low number of purchase clients are still doing okay with other types of business, but there’s no real sense that, for example, next year will kick-off in any different way. If anything, and certainly with the UK’s withdrawal from the EU on the horizon at the end of Quarter 1, there appears to be more chance of potential vendors/purchasers both staying put/not choosing to buy, until there is far more certainty about what will happen and how it might land with the UK economy.
Now, ‘quiet times’ within the mortgage market are nothing new – advisers who have been active for any number of years will know this tends to be a peaks and troughs type of business. Indeed, many advisers in that particular ‘Quiet’ thread were also quick to point out that they had carried out more business in the first nine months of 2018 than they had in the whole of 2017.
We may see a similar pattern in 2019 but, given that we are starting from a different point and we have that rather large EU issue to confront, there are clearly no guarantees that history will repeat itself. If anything, it seems much more likely that it won’t and, when it comes to purchasing, we might not see any real movement until far later in the year, if at all.
Indeed, while the remortgage and product transfer sectors are holding up strongly, might we not also see a point where borrowers’ opting to go for longer-term fixed-rate deals – in order to have that certainty – begins to impact on advisers in terms of their ability to keep securing remo/PT business. A number of commentators within the buy-to-let sector recently suggested that the growing popularity of five-year deals would fundamentally change the advisory sector simply because they would not be seeing clients as frequently as they had in the past, and therefore that type of regular, two-year income might be lost.
We appear to have reached that juncture again where the phrase ‘mortgages are not the only fruit’ can be readily bandied about. It’s a truism of our sector that when mortgage business is all-encompassing, ancillary services and products tend to suffer. When the situation is one of less mortgage activity, then we see a spike in terms of protection, GI, conveyancing, etc, advice being delivered as advisers perhaps have more time to spend with clients on these areas, and they see the value of working in those sectors which are such a natural fit with the mortgage.
I recently read some research from a PropTech firm, OneDome, which asked 2,000 homeowners how they had got their conveyancing recommendation – 25% said they hadn’t received a conveyancing referral from their estate agent, 24% said they’d accepted a referral from an agent because it was ‘easy’ and one in 10 thought they were somehow legally obliged to use the agent’s recommended conveyancer.
It’s such stats that should be providing an ‘open door’ for advisers to walk through because there will clearly be a lot of clients who both want and need conveyancing advice, but won’t be getting it from an agent. This is not just relevant for purchasing for advisers of course, but also remortgaging, and delivers a far bigger client base to target, especially given the rather negative headlines generated by the ‘free legal’ services that are offered.
Advisers should certainly be taking the opportunity that presents itself here and making sure the client is aware not just of the mortgage advice available but the whole range of products and services that can be secured through them. Making the whole process ‘easy’ is what you do best – why not do it for far more than just the mortgage?
Harpal Singh is managing director of Broker Conveyancing