We are now well into the final quarter of the year, and while we all remain focused on what is happening right now there is of course a sense of ‘what happens next’, as we perhaps understandably think about what 2024 will bring.
In a true sense of course, next year starts right now as it’s fairly likely that the business advisers are writing in the weeks ahead won’t complete until the new year, certainly not when it comes to purchases but also refinancing.
The latest sentiment and statistics are, as you might expect, somewhat downbeat and again, in that regard, they are perhaps no different to what we have all been living with for most of the year.
The latest UK residential survey from RICS, for example, released earlier this month shows sentiment all remaining in negative territory when it comes to housing demand, sales instructions and prices.
There are however a few positives in amongst this, perhaps not in terms of the here and now, but certainly in terms of the short-term outlook which surveyors do not believe will ‘significantly worsen’ from here.
Not exactly a hugely positive sentiment to cling onto, but perhaps the best we might hope for right now, particularly in terms of purchasing and sales which continue to falter due to a combination of factors, not least the significant increase in interest rates we’ve seen over the last 12 months.
That increase in rates is of course a very serious consideration for existing borrowers who are looking to refinance in an environment likely to be very different to the one in which they secured their last mortgage.
In that context, for both borrower and adviser, the remortgage opportunity now looks even more important. Recent data analysis suggests £94 billion of residential and £13.9 billion of buy-to-let mortgages are coming to the end of their terms during the last four months of this year, so you can understand why this amount of business is worth pursuing right now.
Advisers have a strong opportunity here to take those borrowers through the mortgage process and to make sure they are not paying more than they need to for their mortgage, even if it could be more than their last deal.
According to the Bank of England, by the end of 2026 almost one million UK borrowers will be paying at least more than £500 a month in order to cover their mortgage payments, and clearly anything advisers can do to keep that amount down is going to mean a great deal to those homeowners who find themselves in such a situation.
The same figures – and perhaps of more immediate concern – reveals that, of the four million homeowners who are expected to change mortgage deals over the next three years, the majority will be paying up to £220 more per month in order to cover their mortgage by the end of this year.
It is, in anyone’s language, a sizeable increase for the average mortgaged homeowner and if an adviser is able to mitigate these increases in any way, they are likely to have a strong relationship set up with that client for a long time to come.
Of course, mitigation might come in other areas – a remortgaging client presents advisers with an opportunity to look at all their financial wants and needs, not just the remortgage, and from an business income standpoint, they can also cover off other areas such as protection, GI, conveyancing and the like.
As I write this, we are two and a half months away from the end of the year, and it is the activity carried out right now that will not just determine how the rest of 2023 unfolds, but what sort of platform is being built for the start of 2024. The remortgage opportunity is huge, but so is the ancillary sales one that is generated via these clients – no-one should underestimate how important it is to take advantage of both.
Mark Snape is CEO of Broker Conveyancing