Working in this sector, and telling people what you do, you’ll always be asked to give an overview of the market, to provide a view on ‘what will rates do next?’, to give certainty to people in terms of house price movements, to give a definitive answer in terms of whether they should ‘do’ equity release, etc.
Unfortunately, most of the time there will be a sense of disappointment from those asking the questions because it’s nigh-on impossible to give such answers, to tell them exactly what they should be doing, or indeed to provide them with absolutes when they very rarely exist.
However – and you’ll have sensed this was coming – it is possible to give a ‘direction of travel’ view, to potentially look at the short, medium and long-term futures and lay out what you hope happens, and what you think might.
Of course, it’s not just consumers who like a steer. Even those, such as advisers, who work at the coalface might look to others to provide a ‘helicopter’ view; after all, your reality is going to be different from the adviser ‘up the street’, let alone those of all other stakeholders.
So, where do I think we currently are in the later life lending space? Well, let’s start with that perennial opening question, about rates and what happens next?
As an aside, isn’t it always interesting that people want to know what rates will do next, when the really important point is what rates are doing now, and what rates will be like doing you/they/we come to the point where they’re looking at borrowing/refinancing, etc.
That said, and I’ve said this many times before, as advisers you can’t be recommending on the basis of what rates might do in the future. You can only work with product rates and LTVs right now, and while we might believe the future looks a little more certain, and there looks to be the possibility of lenders potentially cutting rates a little and raising LTVs, there is nothing set in stone here.
In that sense, you advise at a given point in time and choose from the products and solutions available to you right then. That’s not going to change, regardless of what rates do next.
What I would say, is that lenders do have money to lend, and certainly an appetite to do so, and this is of course partly explained by the fact their transaction volumes in 2023 are likely to down on what they anticipated. But they are not going to suddenly reduce their rates/hike their LTVs to a point where they are a huge outlier in the market, so any change is going to be more of a slow burn, and if I was a betting man, I wouldn’t expect to see any significant movement here until 2024.
Which is probably not what many stakeholders would like to hear, but it’s just a realistic view. That being the case as advisory firms active in the later life lending space, you’ll need to be constantly appraising where you are business wise, and what this means for income right now and across 2023 as a whole.
Let’s be blunt here – and this is some cause for optimism in itself – we are probably in the same market position we were two years’ ago. However, by default, if you are down on the levels you transacted two years’ ago, then you’re more than likely losing market share. And that will need addressing, sooner rather than later.
You’ll need to look at why that might be and you’ll need to take learnings from this, and seek to grab that market share back. Where from? Well, we have a number of big players in our sector who you can target. You can look at local and regional competitors and put yourself in their customers’ shop window.
This is business after all. Nobody, as far as I’m aware, active in the advisory space is a registered charity, and you’ll need to focus on the customers that are available, and if they have been with competitors, then how do you go about tendering for, and gaining, their business.
Other areas you can look at is the speed of completion of your business. How long is it taking to go through the pipelines? The shorter, the better, because you can secure the income quicker, and you can replenish your pipeline to go through that quicker process, in a much faster timescale.
Look at the ways and means by which you can speed up the completion of the transaction – are all your clients using specialist solicitors, for example, because we know that those who don’t will almost always take far longer to complete. Mostly because they’re learning on the job rather than having the skills, staff and experience to just get on with it.
Review your current marketing activity, your advertising, your lead generation, your ability to get yourself in front of potential customers – has this changed and does it need changing if the flow of business from any of these areas has slowed down?
And, as mentioned, don’t be afraid to look at competitors. There are some businesses that will be up this year. How are they doing this? What methods do they use? Are they advanced technologically? Do they work social media/SEO, etc in a way you don’t? Where do they appear and how does their visibility translate into business?
These are all good questions to ask; indeed, if you don’t want to keep seeing business volumes/income fall, then they are non-negotiables. And don’t be afraid to contact us – we have a lot of expertise, resources and support available that can help you flick a business switch. No firm needs to be an island in this market so please reach out to us.
Stuart Wilson is chairman at Air Club