Summertime and earning a living ain’t easy.
That’s the traditional view of the UK housing market which can be rather quite in the summer months and, from a purchase point of view, even if you’ve been able to help those who wanted to be in a new home prior to the start of the new academic year in September, then it’s likely that this business has already been written.
The truth of the matter is that the summer is not often a mortgage adviser’s friend, especially if you’re looking to develop purchase business. In that sense 2017 doesn’t look like it’s going to be any different; however there is a potential saving grace here in the form of the remortgage market and the opportunity to tap into a number of underlying drivers that are fuelling activity here.
First up, is the fact that market competition amongst lenders is clearly still strong. Just recently we saw the statistics for lending figures in 2016 and, by our reckoning, many of those lenders will have to be going some in order to match their achievements last year. This means that, given we’re over half-way through the year, the focus on meeting targets will get sharper, and since many of the larger, mainstream operators can compete on price, this is where there might continue to be plenty of rich pickings for both advisers and their clients seeking to remortgage.
Secondly, during August we have the next meeting of the Monetary Policy Committee (MPC) which, and this is an understatement, will be eagerly anticipated by those who feel we could be seeing the first vote for an interest rate rise in the last decade. Last month’s 5-3 vote was the closest it has been for some time, and even if that increase is just 25 basis points, it is likely that many existing borrowers will be somewhat ‘spooked’ by this, especially if they’re also sitting on SVRs which (in all likelihood) will be raised by the same amount.
In that sense, the remortgage market could see another further push by any move in Bank Base Rate (BBR), and I suspect lenders will be keen to make hay while the sun shines in terms of generating remortgage and product transfer business from it. Advisers of course have a perfect opportunity here to develop their sales messages around any potential increase in BBR and, even if it doesn’t quite come to pass in August, the soundings from various MPC members would appear to suggest it’s going to happen this year rather than be put off until 2018.
The opportunity that will be raised by this doesn’t begin and end with remortgage advice of course, because the chance to re-engage with your clients should ultimately allow you to look at all other parts of their finances. Have their circumstances changed since their last remortgage? It would be unusual if they had not. Are they adequately protected, especially if they are taking on further borrowings, or for example, their family has grown? Will their insurances cover any work they might have had done to the property? Are they getting value for money and a quality policy in terms of GI?
The remortgage enquiry can truly be the open door which allows advisers to undertake a full ‘summer clean’ of all the client’s financial needs. This is a market and economy which feels incredibly uncertain for many people and advisers should not be backward in coming forward in order to deliver some certainty – whether that be through a new fixed-rate mortgage, or ensuring there is adequate protection in place should the worst happen; providing this peace of mind will I’m sure be most welcome and in demand.
Summer might represent six to eight weeks where people want to take a break, however when it comes to the mortgage market, the opportunities that currently exist but which might disappear by September, and all manner of financial needs, it’s often important that advisers do not allow that opportunity to be missed. Touching base before the summer holiday can allow the client to go off knowing that their financial products needs are taken care of – let’s make the most of a market which, like the UK weather, can often be very changeable but which advisers can be the ones to provide a much-needed umbrella.
Richard Adams is managing director of Stonebridge Group