As I read the dataset from L&C Mortgages recently on the number of households both struggling with their mortgage (1.4 million) and who consider their payments to be too high (2.5 million), you couldn’t help but think of the advice process and what it might be able to offer these borrowers.
Indeed, considering that of those more than half have never remortgaged and 2.5 million said they had cut back in order to afford their mortgage payments, then the case for action was made even clearer still.
It will be obvious to advisers the country over that large numbers of borrowers feel they are somehow cut adrift from today’s mortgage market.
The assumption will be that they are locked in; mortgage prisoners destined to sit on their standard variable rate (SVR) for the rest of their mortgage term, watching jealously as others are able to remortgage to some of the most competitive rates in recent memory.
This, unfortunately, is part of the post-Mortgage Market Review legacy – a market intervention I fully support, but whose message of tighter affordability measures and criteria may have resulted in the growth of a borrower demographic who feels they have no chance.
Now, this may only actually be the case for a small section of mortgage borrowers, but the point is surely to reach out to those who believe themselves part of this group and at the very least, confirm their position.
Even with that situation spelt out, it is still the case that the adviser will be able to come back to them at regular junctures and revisit their situation in order to check changed circumstances and see how that fits with current market opportunities.
We all know how competitive the remortgage market is at present, and as the research highlights, with one third of homeowners on an SVR, there are huge numbers crying out for advice and the opportunity to secure some of those much lower rates.
As an advice community, we need to get better at vocalising these mortgage opportunities for clients because there is clearly a level of inertia and misunderstanding that needs to be broken down.
Engage existing clients
At present, there is much talk about what happens next for the mortgage market.
Well, the first thing we should be doing is engaging with these existing borrowers, who might think they are paying too much, who might be cutting back in order to continue making their payments, and who might think that there is no other mortgage available to them apart from the one they’re currently on.
We talk a lot about lead generation and what it takes to get it right – here is the biggest group of potential leads you are ever likely to see.
Let’s get the messaging right and point them in our direction.