Looking at the situation that many people currently find themselves in, you have to wonder whether there has ever been an environment where the need for financial advice has been greater?
Whether this is advice on dealing with and managing debt, or on securing a mortgage if your circumstances have changed throughout the course of 2020, to ensuring the individual and their family are adequately protected or to finding the ways and means to prepare for later life; given what damage the pandemic has potentially wrought, I can’t think of a time when there was a more pressing need for advice.
You only have to consider the case for millions of existing borrowers who have taken mortgage payment holidays, those many employees who have been furloughed and may still be on furlough, those who might have been made redundant or be facing that threat in the weeks and months ahead, or perhaps those on the flip side, who may actually be in a position to purchase or move house, having been given a catalyst by what lockdown was like for them.
Advisers may well find that their services will never be in such demand – I’ve read anecdotally of potential clients having to wait months in order to secure an appointment with an adviser, and while this is clearly not good for clients (or probably those advisers who are missing out on this potential income) it perhaps goes to show what is happening out there.
Of course, perhaps the greater client need is around those who may be feeling extremely worried about their current predicament – as mentioned, there will be many borrowers, perhaps coming to the end of their special deals, who ordinarily would have no problem in securing a remortgage but are now weighing up the possibility that the market they could have stepped into six months ago is very different to the one they’ll find now.
As mentioned, mortgage payment holidays/deferrals may have been taken, their employment could have changed, and despite the assurances around the former not turning up on credit reports/scores, it’s still very likely that lenders are (in some way) going to take these into account and may well make that part of their lending decision.
Then you have the situation with the self-employed, particularly those who are relatively new to being self-employed, and their ability to prove their mortgage affordability, especially if their incomes were severely curtailed during lockdown.
Just this week the second stage of the government’s self-employed ‘support scheme’ got underway, allowing millions of workers to claim for grants, and while clearly a positive, they may also be concerned about how lenders will regard the taking of such grants and what it might mean to their future mortgage prospects.
Overall, it is highly likely that we will see large numbers of borrowers slipping out of the ‘vanilla’ borrowing category – indeed, it is already happening. These could be borrowers becoming self-employed for the first time, or it could be borrowers who – through no fault of their own – were put on furlough/made redundant, or had to miss certain payments during the course of the pandemic.
In other words, the borrower cohort who may no longer meet the requirements of the high-street/mainstream lenders is likely to grow, and not only do these individuals need advice about how to work their way through this new world, but they also need access to lenders and products which allow them to secure finance, and perhaps eventually repair the damage done to their credit record.
It’s why I believe specialist residential lending is going to be an absolutely vital part of our environment in the months and years ahead, and to that end, advisers who can immerse themselves in this sector, access this client base and can secure strong lender relationships, are going to be kept very busy for the foreseeable future.
It will not take a genius to work out how important advice will be to these borrowers – especially those who have never been in such a situation before. Now is the time to sign-post these borrowers to your services and to ensure they are aware the mortgage market is not a closed-shop for them and that they still have options to pursue.
Jeff Knight is director of marketing at Foundation Home Loans