Offering their insight in this week’s Market Watch are:
Martin Reynolds, chief executive of SimplyBiz Mortgages
Mike Fitzgerald, sales director of the Emba Group
Gemma Harle, managing director of Tenet Lime
Martin Reynolds, chief executive of SimplyBiz Mortgages
Whilst the market may be flat this year, there are two key opportunities in the mortgage market.
Buy to let will continue to grow and we have already seen some positive moves by lenders.
Leeds Building Society and Aldermore have increased their LTV bandings, Accord has expanded its criteria and Abbey for Intermediaries has entered the market. I am sure there will be many more changes as the year moves on.
The second area of opportunity is the remortgage market.
This year sees a number of large cessation spikes for lenders, as borrowers come off two-year introductory trackers and fixed rates. Many will be looking for advice and guidance about their next move.
Outside of mortgages, there is always the opportunity to look at something new, but I would still focus on the main ancillary components of GI and protection, where there are two key opportunities this year.
Flood insurance has been in the news during the past week. There will potentially be 200,000 homes that may not be able to get insurance this year due to the risk of flooding.
There will be many people who this will not apply to, but will feel uneasy at the headlines. They all need your help.
This year also sees the introduction of the new EU gender rules in relation to insurance and this is an excellent opportunity to talk to clients about taking out protection now and locking in premiums that will change by the end of the year.
The above are four real reasons to make contact with your clients this year. Making full use of your existing client bank by ensuring all their needs are met is the best way to get new clients. Once reviewed, don’t be shy to ask for referrals.
Mike Fitzgerald, sales director of the Emba Group
Many economists and financial commentators have already told us that 2012 is going to be flat and that the recession is to go on for some time. Lenders have also issued statements stating that this year will be similar to 2011.
With that in mind how can brokers help to improve their prospects? There are several ways that might help to keep business levels up.
Remortgaging in 2011 was quite difficult, because once a client came off a fixed rate the standard rate of many lenders was still quite low and there was no incentive to move lenders.
This situation has slowly started to improve and brokers should spend some time researching better deals for their clients.
Many brokers have now seen that selling protection products such as life, critical illness and family income benefits can be very rewarding and will ensure that their clients will be better protected.
Even if a brokers has sold life cover to a client several years ago, it might still be worth revisiting that client to see if a better or more suitable deal is available.
Another reason to revisit a client with life cover is to see if the policy can be written in trust.
This will give brokers a chance to really examine a client’s situation and help to keep the proceeds of a life policy out of the client’s estate for inheritance tax purposes. In addition, the broker may need to see the trustees of the trust and that is another opportunity to sell.
Finally, after many false dawns, I feel that equity release will start to become more popular and brokers should look out for this type of business, even referring the case if they are not qualified.
Gemma Harle, managing director of Tenet Lime
The economic outlook is far from rosy for the housing market, but brokers have other strings to their bow.
Since the credit crunch, many successful brokers have re-engineered their business and now sell more general insurance and protection business than mortgages in many cases.
Doing this has delivered cash flow benefits and enabled brokers to embed real value into their businesses.
Of course, claw backs remain a risk for protection business and brokers need to be aware of the perils of up front indemnity payments, but diversification of this type can only strengthen broker businesses in the longer term.
Crucially, the EU mandated gender neutrality directive will mean any clients considering protection options will be well advised to act this year before the price rises of 2013.
It is not all rum in the mortgage market.
Buy to let continues to attract investors of all sizes, as the volatility and under performance of other asset classes such as shares, pensions and derivatives continues to worry those looking for something more than retail deposits.
Buy to let will remain a vibrant and important part of the housing market for some time to come and, with interest rates set to remain at this record low for most of this year, the only issue will be pressure on rents from a faltering economy.
If unemployment and confidence improve the rental sector will remain robust especially in the South.
Finally, the other area of growth is equity release. While this will not provide significant volumes this year for brokers, it is a policy option that ticks many government boxes for financial provision in later years going forward.
Use this year to plan for its move into more mainstream lending over the coming three to five years.
