First published by Financial Reporter
Positive news can often be difficult to find but the mortgage intermediary market appears to have plenty of reasons to be cheerful, especially if we can continue to make the case to consumers about the overwhelming benefits of advice.
That’s no simple task of course, but it was positive to see the latest IMLA research results on adviser confidence and caseloads, because they appear to show an overwhelmingly strong level of the former, and a good market mix when it comes to the latter.
95% of advisers said they were ‘very’ or ‘fairly’ confident about the intermediated sector in general and an even greater number – 96% – said they felt the same way about their own business. That should tell us about the strong foundations we have in the intermediary market, and we would undoubtedly echo this, having significant plans to continue developing our own offering and increase the support and resource that our member firms expect from us.
Broker caseloads are still predominantly focused on the residential market (accounting for 66%) but, what may significantly interest the market, is the fact that 25% of that business was for buy-to-let – a sector which many commentators have suggested is on its ‘last legs’ when, quite frankly, nothing could be further from the truth.
There’s clearly no doubt that the sector, and landlords in particular, have been subject to a series of both political and regulatory intervention which (some might say) have been designed to quell further activity in this market. However, the fact of the matter is that the UK requires a strong private rental sector because, without it, the housing gap undoubtedly gets wider and wider.
That, to me, appears to be reflected in these broker caseload statistics, because we know from our own Stonebridge data, that the landlord community is not stepping back from the sector in anything like the numbers some were predicting.
The move to a greater professionalism is reflected in the fact we have more portfolio landlords who not only demand advice for refinancing purposes but are much more likely to be adding to their portfolios especially over the course of the next 12 months.
In that respect, it’s incredibly important that advisers are fully-immersed in the specialist buy-to-let sector because, as mentioned, this is increasingly the preserve of the portfolio landlord but recent research suggests they are now much more likely to be using limited company vehicles in order to make those purchases.
Recent research from Foundation Home Loans revealed that 55% of landlords said they would purchase their next property within a limited company vehicle, and there is now little difference in that intention between those with smaller numbers of properties when compared to larger portfolio landlords.
In other words, advisers are much more likely to be seeing landlord clients active in the limited company space and that requires different technical knowledge and perhaps a sharper understanding of the options available, and the different systems and processes that are involved.
The mood music for advisers in 2019 has been focused a lot on the move to specialist lending and the requirements for advisers in dealing with such clients, and this changing environment in buy-to-let is indicative of that. Indeed, in terms of the IMLA results, the remaining 9% of caseloads is made up of specialist cases, which is a further example of where the market is being focused. Indeed, I suspect a considerable amount of that 9% is focused on areas like later life lending, complex income and adverse.
Overall, there is clearly plenty to be cheerful about in the sector – 91% of advisers said they were confident about the outlook for mortgages despite what may be going on in our politics – and that positivity should not be overlooked because it provides a spring in the step and a strong foundation in order to take advantage of the opportunities that exist to grow business volumes.
From an AR firm perspective, having a strong network partner is absolutely vital in terms of making the most of what is available in the market, ensuring that leads can continue to be generated, and utilising quality technology to ensure repeat business is a priority. If firms are thinking about their options in this sector, then now might be the time to see what is available – not all networks are the same and choosing the right one might well steer you onto a fast-track in order to benefit from the growing demand for advice.
Rob Clifford, Chief Executive of Stonebridge