Given that this is being written on Friday the 13th you might think I’d be contemplating the most horrifying aspects of today’s mortgage market and wondering how we might all be meeting a potentially sticky end as various political and regulatory factors combine to illicit more terror.
However, what’s the point of all that? Indeed, I happen to think that even if there are a few negatives around the marketplace at the moment, the positives far outweigh them and instead of focusing on the sector equivalents of Freddy or Jason, we should really be looking at the opportunities that exist for us, in what is a very benign market for advisers.
I’m certainly not suggest that advisers have ‘never had it so good’ but it’s obvious that the intermediary community is in a more positive and, dare I say it, powerful position than they have been for many years. While we have a very low interest rate environment to work in, the anticipation of rate rises being not too far away means plenty of borrowers are looking to remortgage and require advice in order to be able to do this.
At the same time, we have a Government who acknowledges that its future success is probably based a lot on what it can do in the housing market – notably its attempts to increase supply for both ownership and renting. There is no doubt, in my mind, that we will see a very housing market-focused administration over the years ahead simply because it is a minority Government, it has to rely on support from others, and increasing housing supply is one area where there is cross-party agreement, even if they disagree on the methods that should be used to achieve it.
While many have bemoaned the regulatory and political interference in the buy-to-let market, the latest lending figures actually hold up well and show stability in both purchase and remortgage that many might be surprised to see. The recent PRA underwriting changes will take time to bed in, and will add a layer of complexity, however I don’t anticipate they will put many professional landlords off, and indeed if the much-predicted exodus of amateur landlords does materialise, I anticipate many professionals still looking to strengthen their position in the sector will add to portfolios.
Again, this complexity plays into broker’s hands and while it may require more work, the demand for advice is not going to trail off. The same can be said for the specialist lending market which is presenting a broader offering to both advisers and their clients, especially as lenders look for other areas in which to compete, rather than attempting to go up against the big boys in the residential/vanilla sectors.
In that sense, clients who just a few years ago, struggled to fit the bill in terms of securing finance, are now finding far greater options especially in areas such as mortgages for the self-employed, contractor mortgages, higher LTV products, etc. Plus let us not forget the growth in the later life lending sector – fuelled in part by the interest-only ‘time bomb’ more borrowers are taking finance beyond traditional retirement ages and are looking at specialist mortgages in order to do this, or increasingly utilising equity release, for example. I don’t think anyone should estimate the latent demand for advice that exists amongst those nearing, or in, retirement, and those advisers who can offer a quality service and market themselves effectively to this demographic, are likely to reap significant rewards.
For networks too, the market holds plenty of positives. There is always a suggestion from some quarters that the days of the AR firm are numbered, with the assumption that every firms aspires at some point to turn DA. That’s not the sense we get from our firms or the market in general – many ARs are acutely aware of what is required as a DA, and what they currently receive as an AR, and I suspect the vast majority are happy with their lot, even if they may always be looking at what other networks have to offer.
And this is no bad thing. As a network we require a competitive arena in which to trade and in order to develop our offering, and improve our services. There is never a time to rest on one’s laurels because there is always more to offer, more relationships to forge, and more opportunities to present members with. Plus of course the technological advancements that are being made makes for not just an interesting time but also the chance to do more in the areas of administration, but also client servicing, marketing, compliance, the list goes on.
So, while today (and Halloween in a few weeks) might exist to terrify us, as advisers there is nothing to be afraid of. The market presents plenty of opportunities and you shouldn’t be scared to move into new sectors and to establish your credentials in order to broaden your client base. This is what we are helping our AR firms do and the message of diversification and grasping those opportunities should be the same for all. Don’t have nightmares, do sleep well.
Richard Adams is managing director of Stonebridge Group