There is a lot of talk currently about the ‘pent-up demand’ within – or perhaps I should say, just outside – the mortgage market, as a result (we are told) of the large number of potential purchasers sitting on their hands while they wait out the current political uncertainty.
I think there’s some truth in this and the latest statistics from RICS, which showed new buyer enquiries 16% down month-on-month and new sales 19% down, perhaps shows this trend in full effect.
Looking at the situation from the outside in, you can fully understand why those who might potentially be active in both the housing and mortgage markets are instead adopting a ‘wait and see’ attitude. Politically at least, there is a lot of water to flow under the bridge not just during this General Election period and in the short-term, but right up to a year’s time when the negotiation period for leaving the EU is due to end.
Of course, a hell of a lot can happen before then and, I suspect, that we’ll see a large number of purchasers/borrowers deciding that the time has come for action, regardless of any uncertainty about what might happen next.
For existing or potentially new borrowers however, I do wonder if there are other concerns at play, which might be allayed by advisers allowing them to make their move, or to ensure they can secure a better remortgage deal.
Activity might not just be held back by macro-economic concerns, for example, there are likely to be worries far closer to home which ultimately, with the provision of advice, might not actually be relevant at all.
Take, for instance, the large number of people – whether they currently own their home or not – who will have some level of adverse credit and currently assume that this somehow excludes them from either the mortgage or remortgage market.
Perhaps they’ve been to a mainstream or high-street lender and been turned down – I think, as an industry, we under-estimate just how damaging this can be to some people and how it can put them off even attempting to find mortgage finance elsewhere.
The mainstream/high-street operators are often held up as paragons of mortgage virtue, and without taking professional advice, the borrower might well consider their mortgage days numbered. Either they may feel they have no other option for them to secure the mortgage to pay for a property or feel they have to stick with their current lender until the full term is over.
Given the competitiveness of the mortgage market, and the quality of the mortgages available to those who we might call ‘mainstream misses’, this is clearly not the case for a large number of mortgage customers.
Whether they are the potential first-time buyer who has a mobile phone missed payment or not enough credit to register a high-enough credit score? Whether it is the existing borrower who picked up a non-mortgage arrear a number of years ago? Whether it is someone who missed a credit card payment but immediately caught up with it the next month? The list of those who may have minor blips on their credit record can be very long, but we see absolutely no reason why these borrowers shouldn’t get the mortgage finance they need.
Indeed, our aim is not to ostracise those borrowers who might have a credit blip, but it’s to actively find a solution for them, which perhaps allows them to repair their credit score, or simply gives them access to a range of more suitable and cost-effective deals, that they might previously have thought were beyond their reach.
Far too many people believe the mortgage market is inaccessible to them, but with an advisory and lender community in education mode, we can effectively provide the information and pathway to advice which will show them this is not the case at all. Plus, with a greater degree of flexibility from lenders like ourselves, we can now offer mortgage options to even more borrowers who might fit this ‘credit blip’ definition.
Advice for these types of borrowers is crucial and the sooner we can get the accessibility message out there, the more borrowers we’ll be able to help.
Jeff Knight is director of marketing at Foundation Home Loans