First up, a happy new year to all mortgage advisers – there’s no doubting that this year could be a challenging one but, given your track record, I have no doubts in the ability of the advisory profession to deal with whatever might be thrown at them.
Those who have spent any period of time in this market should be used to the unexpected by now and hopefully have the resilience, nous and entrepreneurial zeal to deal with any potential economic, political and regulatory changes. I think we can all agree that 2019 has the potential to deliver all three with some gusto.
The good news however is that the foundations of the market are strong. Last year advisers cemented their position as the number one distribution channel, even in sectors like product transfers we saw the majority of business written by intermediaries – could we really have anticipated that just a few years ago?
Borrowers and would-be borrowers continue to demand advice from professional advisers with access to the whole of the market – whether that be initially through a ‘robo advice’ offering or a traditional, face-to-face meeting, Joe Public continues to recognise that, when it comes to their mortgage, it pays to secure the best advice possible.
Plus, of course, the mortgage market is opening up in ways we might not have thought possible. The aforementioned product transfer sector – once purely the domain of lenders – is now a major opportunity for advisers, while in areas like later life lending, mortgages for first-time buyers, mortgages for the self-employed, etc, we have a much greater level of competition and complication, which means advice is absolutely vital
We also have the ‘bedrock’ of the market for a number of years, the remortgage sector. Whether it is in the residential sector or buy-to-let, borrowers are keen to remortgage and want to access advisers’ knowledge, particularly in light of the economic uncertainty that exists.
Borrowers’ may be more likely to take out longer-term fixes, which means UK Finance recently suggested the remortgage/product transfer market might drop off in 2020 and beyond, but this year, the strength of those sectors seems undimmed and advisers will be able to ensure that it’s not just the remortgage/product transfer needs of their clients that is looked at, but other income-generating areas such as GI, protection, and the like.
The other important factor for advisers, and their clients, in 2019 is lender appetite and competition. This has grown in recent years, and the anticipation must be that this will continue in 2019. We’ve already seen new lenders entering buy-to-let and established lenders looking at their product options in other sectors – one suspects that the clamour for business will mean rates stay highly competitive and, given this, advisers should be able to choose not just on rate but on service.
That is, of course, depending on how the FCA might view the mortgage marketplace. In a move which, in my opinion, was a retrograde step, last year’s Mortgages Market Study Interim Report focused a lot on price as a determining factor however I hope the Final Report u-turns on that and continues to recognise the importance – often much greater – of service, funding, and all other measures that advisers take into account when making their recommendation. Price is not the only consideration – far from it.
All in all, 2019 – to my mind – comes with plenty of opportunities for advisers. If we are able to have some political certainty as well, then I’m hopeful we can all secure a further boost. On that point however, I’m not holding my breath.
Richard Adams is Managing Director of Stonebridge Group