While it may not be particularly surprising, the fact estimated gross lending levels in April hit a significant £25.7bn is, without doubt, worthy of comment. If anything it shows just how government and regulatory intervention in the housing market can have a decisive impact, changing consumer behaviours and essentially skewing the playing field.
Of course, there will be large numbers of stakeholders who have done very well in the first quarter of 2016 as a result of the imposition of the Stamp Duty deadline, and these lending figures clearly show that the so-called ‘rush-to-let’ was not just a pithy phrase.
The knock-on effect of landlords pushing to get their purchases completed before the 31 March is that we now face something of an uncertain period, particularly for mortgage advisers who will have been heavily involved in the provision of advice to landlords as well as those who were included in the property chains they helped developed. You can’t build an advisory business on a strong three-month period followed by a fallow rest of the year. Indeed, the objective will be to build on these stronger months, especially during the spring and early summer period which traditionally tend to be busier.
So, how can this be achieved in a market where activity levels might be decreasing? The answer may well lie in diversification, and not just in the traditional routes that advisers will (hopefully) already be covering – protection, GI, conveyancing, and the like.
There is much talk about the new lenders coming to market and looking to secure business from ‘underserved clients’ – a phrase that seems completely over-used in my book – and one of those areas is lending into and in retirement. The latest figures from the equity release market also show the growing demand, but what is perhaps most interesting is the merging of these two areas.
Lenders are cottoning on to the fact that older borrowers are increasingly likely to be taking debts into their retirement, and so are creating hybrid solutions to support the finance needs of these consumers.
Our own experience is that older consumers are increasingly in need of advice and there appears to be an opportunity here for intermediaries to set themselves up as specialists in this sector.
Given the UK’s demographic changes, and the assumption that the number of older consumers needing such advice is only going to increase, one wonders if advisers can’t look beyond the traditional deals and pick up more business in this client area. Certainly, the government and the regulator itself are supportive of lenders innovating in this area and thus we are likely to see more blurring of the distinction between mortgages and equity release.
This being the case then it makes sense to secure a foothold in this expanding niche and make sure you are in the best possible position to offer your services.