We are now over half-way through September and some might say half a month away from housing market ‘normality – although after the last 12-18 months, what sort of normality will it be?
Certainly, with the end of the partial stamp duty holiday in sight, we can see the pathway back to a market which looks much more like a pre-pandemic one, however with the rather large caveat that so much has changed in the intervening period.
Many are wondering whether we’ll see a big surge in completions through the rest of the month, and while we are likely to get something of spike, I don’t get the sense this will be anything like March or June, which will probably mean we’ll all feel a little less frantic.
Within the sector, October will herald a return to the old if you like, in that there will be no Government-induced deadline to work to and clients should hopefully understand that they’re going to be paying the same amount in stamp duty regardless.
What will this mean for us all? Well, even in the last few months, as we would have come to expect, there is a far greater degree of parity in terms of purchase and remortgage/PT business. Our own figures for August were 56% purchase applications compared to 44% remo/PT, when the previous months had been much more in favour of purchase.
While there is still plenty of purchase demand to work through the system, the big obstacle to completion is clearly going to be stock availability. People want to move but to where? Which may be why the market appears to be much more focused on maturities and ensuring that this repeat business comes back through the advisory channel, rather than losing it to the lenders direct.
It’s an oft-made point but remo/PT is really the adviser’s bread and butter, and given the rates currently being offered in the marketplace, it would not be uncommon for lenders to be pushing these direct to their existing borrowers, with some rather less willing than others to point the customer back in the direction of the original adviser.
Here, it’s highly important to be ahead of the game. Lenders could be writing to clients as early as four-six months ahead of maturity, and they (quite justifiably) might argue this is because they have a duty of care to the customer.
Whether you see this as an infringement on the adviser/client relationship is really a moot point. We know it’s likely to happen, so why not do everything in your power to ensure the borrower doesn’t feel the need to go direct, or perhaps even worse, go somewhere else for their advice.
I say, ‘even worse’, because if you’ve not been in contact with that client over the past two/three, even five, years then how can you say that client is ‘yours’. They might believe you could have gone out of business – a lot of firms have during the pandemic. Indeed, there’s a very good argument to be made that if your contact strategy only involves communicating with clients a few months before maturity, then you can’t be disappointed if you don’t get the repeat business.
In that sense, it’s really important to find an ‘excuse’ to call the client every single year, even if you only recommended a five-year fix in 2020. Indeed, given what rates are doing now and with house price inflation possibly seeing the borrower drop into a lower LTV band, there is every reason to contact even your most recent clients to see if there’s a more competitive offering available.
However, for the most part, even if it’s just simply to remind them that you still exist, that yearly contact – as a minimum – is vital. Within our system, Revolution, advisers will soon be able to set up regular prompts for each client, plus they’re able to pull out data, for example, on those clients who were recommended five-year deals two or three years ago. As mentioned, the market has shifted considerably and, even with an ERC payment, the adviser could be pushing at an open door in terms of getting them a more competitive deal right now.
Of course, through that regular contact, you can set up reviews for the client which don’t just cover the mortgage but also the GI, protection, and any other financial needs. Plus, the opportunity to source referrals from friends and family is always a constant source of business leads.
Many opportunities can flow from a regular contact strategy but it’s not going to kick itself into action. It needs to be a set part of the working week and needs to utilise regular prompts and calls to action in order to follow up with each and every client who might be able to benefit.
If you’re ever short of motivation, think of what the lenders are likely to be doing and how they are approach ‘their’ customers – that should be all the inspiration you need.
Jo Carrasco is business partnerships director at Stonebridge