We need to ensure that our product offering is evolving to meet their ever-shifting needs.
Criteria are frequently tweaked so that we stay within responsible lending boundaries while ensuring there is enough flexibility to adapt to market, economic, political and regulatory change.
Fluctuating social demographics are also factors which all lenders need to keep a close eye on. You could say these are challenging times but it’s an exciting period for lenders.
These influences also emphasise the growing importance of good, professional financial advice and how it must adapt to changes in lending and borrowing conditions.
This is especially apparent for those adopting a holistic approach in response to the level of criteria and policy changes seen in recent times—a major one being the length of mortgage deals and terms.
Increase in mortgage term length
The growing popularity of longer-term fixed rate deals has been evident over the past 12-18 months. And we’ve seen a marked movement in the length of mortgage terms across all sectors.
Data from Moneyfacts suggested that mortgage terms of 40 years or more are becoming increasingly popular.
More than 50 per cent of the residential mortgage products currently available have a standard maximum mortgage term of up to 40 years. This is up from 42 per cent five years ago.
Since March the number of mortgage products that allow a borrower to extend their mortgage term up to 40 years has increased by 140, from 2,604 to 2,744 products.
That constitutes nearly 55 per cent of all products available to a maximum of 25, 30, 35 and 40-year terms.
It’s a marked uplift and we now appeared to have moved on from a standard mortgage term of 25 years, to 35 or even 40 years becoming more the norm.
Longer term deals have become increasingly attractive for first-time buyers to keep repayment levels low and help with affordability issues.
Of course, this also comes with additional longer-term costs which again only serves to highlight how integral the mortgage advice process really is in the current economic environment.
Brokers ensure clients are protected
In the context of advice, it was interesting to see a poll from Paymentshield and YouGov which stressed the need for mortgage advice, showing that a third of consumers do not read their mortgage terms and conditions.
Important details are often found in the small print and this is where the expertise of intermediaries really comes into its own to ensure clients are protected and fully aware of their responsibilities.
We continue to operate in a complex, dynamic industry and the trend of lengthier mortgage products and terms needs to be integrated throughout the advice process.
With people now having mortgages for longer, intermediaries really need to focus on strengthening existing and new client bonds by getting to grips with their financial situation and maximising ancillary opportunities on offer over the course of what could potentially become longer relationships.
Client retention has always been key to business growth, and this is now even more important in a time when borrowers are looking for a range of short, medium to longer-term financial solutions.