Recent data from Nationwide and Halifax have garnered significant headlines as they have pointed to monthly percentage falls not seen for some considerable time.
The fact should not be forgotten however that, over the last couple of years, we have seen double-digit annual growth in house prices. Any further falls in prices will merely take us back to prices seen approximately 12-18 months ago. Some may say, a relatively minor correction.
The other factor to consider here is that, up until the Autumn, the housing and mortgage markets were running along very nicely indeed.
Sudden disruption
In the last few months, we have seen a level of volatility in the mortgage market we could never have anticipated or wanted. This has clearly impacted on many potential customers, and their ability to secure the finance they need, at the cost they can afford.
Purchase demand declined sharply as a result, but my own view is we are already starting to see an element of bounce back. Once the new year kicks in and we see a far greater level of competition in the mortgage market, that will gain even greater momentum.
Let’s not forget that 2022 has been a strong year for property activity. We are not yet at year’s end but it’s likely we will end up very close to 1.2 million transactions having been completed. While we anticipate the first quarter of next year being tricky to predict and navigate, my overall belief is that we’ll still get over one million in 2023: not a small housing market by any means.
Still work to do
Now, as mentioned, this is not to suggest that we will all sail through the next 12 months on a tide of buoyant purchase business backed up by a tsunami of remortgage and product transfer business.
There will be enough opportunity to go round but mortgage advice firms are going to have to work for it, particularly when it comes to their existing client base and generating repeat business, but also in marketing their services to those seeking new mortgage advice.
It seems entirely reasonable to suggest that many firms – particularly smaller ones – are not going to be able to survive purely on mortgage broking income alone. While the reputation of our profession has soared, particularly since the mini Budget, firms are going to need to ensure they deliver holistic advice, particularly in mortgage-compatible areas such as protection, general insurance, and so on.
This is teaching your grandmother to suck eggs territory, but over the years I’m repeatedly surprised to still see so many firms who not only fail to keep in regular contact with existing clients, especially in the lead up to product end dates, but having renewed acquaintance with them, focus on the mortgage advice rather than the customer’s wider financial needs.
If new business levels are harder to maintain let alone grow, it stands to reason that advisers need to work far harder to be as close to existing and historic clients as possible. This could make all the difference when it comes to your income, your profitability, perhaps even the survival of some broker firms. It is that important.
Overall, I am certainly not as pessimistic as some about the year ahead – it has been a dreadful few months; it could well be a tricky period to come. But if you can make the most of all opportunities and all client relationships then my belief is you’ll end 2023 in far better shape than many expect you to start it.
