The end of May certainly didn’t play out as many anticipated or wanted.
The release of the latest inflation figures started a chain reaction, resulting in widespread product withdrawals, repricing, and for some lenders a formal and total reassessment of their full product proposition.
As I write, an increasing number of lenders are informing us of their plans for their existing ranges and – what will hopefully be – a speedy return to market, albeit at what are likely to be different price points.
While, on the surface, inflation ‘dropping’ looked like a positive, what it ‘hid’ was the fact the underlying core rate had actually risen, and as a result the feeling has grown that not only will the Bank of England feel it has little choice but to raise rates again, perhaps more than once, but the anticipated peak for rates has now crept past 5%.
That has of course sent swap rates on an upward trajectory, and a combination of all these factors resulted in lenders’ existing ranges not being in tune with the market demands or needs, eradicating or squeezing margins, and they’ve had to quickly reassess current offerings and consider alternatives.
Challenging times for advisers
For advisers, it undoubtedly results in a frantic period, with many working to get applications on an existing product submitted before deadlines. As always, intermediaries would have understandably hoped for a longer lead-in time to achieve this, but at the same time we must acknowledge just how quickly market changes happened, and lenders must cut their cloth accordingly, often with little notice.
However, while this will have thrown the proverbial mortgage cat amongst the pigeons for advisers – something we should perhaps be getting used to, given the frequency with which it now seems to happen – there are still positives to grasp for the advisory community.
The fact is the chopping and changing we have seen over the past couple of weeks re-establishes the importance of advisers, and hopefully brings more consumers into the safety of their impartial and expert advice.
That’s because, on their own, with the degree of complexity and product pricing/criteria and options changing, – how can consumers feel comfortable navigating the mortgage market, making sense of it, and securing the most appropriate deal for them at any given time? It doesn’t feel possible, and neither should they feel they have to.
I’ve said before that a benign market with great certainty is not necessarily the best landscape for the advisory profession. Consumers are more likely to think they understand the options, what product pricing looks like, and that the financial impact is unlikely to change anytime soon. Most consumers certainly won’t feel like this in the current marketplace, and it appears to be the dynamic one we’ll have for some time to come.
This could be a strong opportunity for mortgage advisers, not just in terms of increased enquiries, more clients, strong income levels, but in providing the confidence to expand their operations, to bring in more advisers to match increased demand, and to move businesses onto a different level.
Optimism for growth
At the start of the year, talking to many of our AR firms, there was a general reticence about increasing adviser numbers because of uncertainty about all the above. However, in touching base with several of them at a recent forum, there was a distinct shift in tone and a greater sense of optimism – many firms are looking to recruit, indeed we’ve had firms acquiring competitor firms reflecting an upbeat assessment of market prosperity and how they can make the most of that.
This is an area where we provide a considerable amount of support for our AR firms, helping them recruit or with investment and acquisitions to accelerate their growth.
It does feel a little tumultuous in the UK mortgage market but consumers – particularly existing borrowers approaching product end dates – will be feeling it more than anyone, and therefore demand for advice in my view is likely to increase again.
Of course, broker firms and advisers must capitalise on this, and for those within a well-funded and scaled network, they can tap into that resource and support to help deliver their own growth plans. In my view, especially at times of material change in the market, it is always a good time to explore growth plans and making hay.