You are here: Home - Better Business - Business Skills -

Mortgage market must ensure it deals in Project Clarity – Hunt

by: Bob Hunt, chief executive of Paradigm Mortgage Services
  • 21/09/2018
  • 0
Mortgage market must ensure it deals in Project Clarity – Hunt
Warnings about potentially catastrophic implications for the UK economy as a whole and within certain industries and sectors have come thick and fast in recent months.


However, until recently they have not tended to focus on the housing and mortgage market.

That changed this month with reports suggesting the governor of the Bank of England, Mark Carney, had delivered a stark presentation to the Cabinet suggesting that house prices would fall by 35% over the next three years in the worst case scenario under a no-deal Brexit.

Understandably, given the UK’s obsession with house price levels, this caused a great deal of consternation.

This was especially so when the reports also suggested Carney believed the bank would have little leeway to act to stop this.

Media reports talked of increases in inflation and mortgage rates plus a significant drop in the value of sterling.


Lost in the headlines

Such a fall in house prices, coupled with rate rises, would leave many borrowers in negative equity and increased mortgage costs.

So to suggest this is definitely on the cards clearly leaves many homeowners with a worrying future to ponder.

However, in this case, we are now led to believe that the reality of that Cabinet presentation and the reporting of it, are somewhat muddled.

Because, as Carney clarified the next day, what the Bank of England had actually done was to model a 35% drop in house prices based on a no-deal, not suggest it was definitely going to happen.

Unfortunately, for many homeowners and borrowers, that clarity was lost among the headlines.

I read on Twitter recently that some advisers were already getting calls and emails from clients asking if they should sell their homes now and buy back into the market when prices had dropped by 35%.


More to come

This is clearly worrying in the extreme and suggests the spread of mis-information – especially in the current environment – could well lead to people making their own catastrophic errors when seeking to pre-empt what may (or may not) happen.

Advisers clearly have a huge role to play in countering this and these headlines give everyone a significant excuse to contact their entire client database to outline what has actually happened, and how it might significantly differ from the headlines.

This is not Project Fear but a quest for Project Clarity or Project Common Sense. Alternatively, you might file it under Project Don’t Do Anything.

One suspects there will be much more of this over the coming months, so it’s vitally important you ask your clients to contact you before they do anything based on hearsay.

At the end of the day the future is by no means certain and anyone who thinks it is, undoubtedly needs your advice.


There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.


Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.


Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.


Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
House sales rose 1.3% in August – HMRC

The number of residential property transactions between July and August increased by 1.3% to 101,800 on a seasonally adjusted basis,...