Mortgage Solutions’ latest poll asked whether brokers had coped with the upheaval caused by the Middle East conflict better, worse or the same as previous events like the mini Budget and the Covid-19 pandemic.
The results were split, with an almost even proportion of advisers saying the way they tackled the challenge had either improved, worsened or was unchanged.
A smoother response
Lee Trett, co-founder and director at Moneyhelpdesk.co.uk, said the challenge had been “rewarding” as it led to a big uptick in enquiries and the number of clients his firm was able to help.
“A lot of extra work and rushing to secure deals before rates were pulled, but we got through and managed to service all clients,” Trett said.
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Michelle Niziol, founder of IMS Property Group, said the conflict did create challenges, but “market uncertainty comes with the job”.
The industry has learned from previous disruptive periods, Niziol said, but added that it was particularly hard to compare recent events to the Covid-19 pandemic because people were “caught off-guard” and there was “so much uncertainty around the future”.
She praised the industry for the way it coped, however, and said “every period of uncertainty has sharpened how we work”.
After a decade in the sector, James Dawes, founder of James William and Co Capital, has learned that “uncertainty is the only constant”.
“What changes is how well-prepared we are to meet it or factors out of our control start to bite or are framed by people at different stages of the journey. It’s clear the average first-time buyer feels a very different pinch than a 20-portfolio landlord, for example,” he said.
A “specific kind of volatility” was introduced by the Iran conflict, Dawes said, as it was geopolitically driven, fast-moving and hard to model.
By comparison, the pandemic “forced brokers to operate on almost no information”, Dawes continued, saying changes were made overnight with little communication, valuations stalled and “no one had a playbook”.
The mini Budget was “arguably more damning”, he added, because it “shook lender confidence at a structural level”, leaving criteria and appetite “genuinely unpredictable for months”.
This time around, “we have navigated this period more confidently than either the pandemic or the mini Budget, and the reasons are practical rather than lucky,” Dawes said.
Trett suggested that the sector seemed better prepared than in previous times, probably because the events were still fresh in people’s minds.
“Lenders’ portals were able to manage significant increases in enquiries, and business development managers (BDMs) were very proactive in getting the message out about impending rate changes. This was smoother than we saw during Covid and in response to the mini Budget,” Trett added.
Pivoting quickly
For Ellis Shepherd, business owner of All About Mortgages, the Middle East conflict was a “very new position to navigate”, as he was under a PAYE employment structure during the pandemic and mini Budget, and has now been self-employed for three years.
This year started off promising, and although Shepherd remains optimistic, he admitted it had been challenging.
He said: “I’m lucky I have a back book of clients who have needed support in moving on to either larger or smaller properties, despite the ongoing conflict – which I always find odd because there is another conflict occurring, which has been going on for longer – and I have remained busy, but my plans to employ staff have been put on hold for the fear of the unknown.”
Although the market appears to be getting back on its feet, Shepherd said the biggest negative was that the uncertainty had halted his business’ progress as he planned to employ more staff, despite new policies making it harder to recruit.
Despite this, Shepherd said he was fortunate that his business had been holding up well and he had reserves built up in case circumstances became tougher.
Better coping strategies
Dawes said that this time around, the market has been “volatile but not irrational”, with lenders maintaining their appetite for the most part and giving brokers time to react to changes.
Trett said the work done before a case even reached a lender helped the most, which required “deep deal structuring, income analysis done properly, understanding which lenders have real appetite versus those chasing volume”.
When asked how lenders could address future uncertainties, Shepherd said their hands were tied, as they were also businesses and could not operate at a loss.
He said lenders had helped by making many policy changes and “being creative with their offerings”, pointing to less than 5% deposit options from Santander and Halifax, especially at a time when lending at and above 95% might seem tricky.
For Dawes, the answer was simple, as he called for lenders to communicate criteria changes as quickly as rate changes.
He said pricing amendments were commonly announced, but this was not always the case for “appetite shifts, underwriting nuances and risk adjustments”.
“Brokers who are close to their lender relationships pick these up informally. Those who are not can spend weeks working on a deal that was never going to complete,” Dawes said.
Niziol held a similar view, saying excellent communication was key.
Her firm is “fastidious” at keeping clients informed so decisions can be made quickly, but she said lenders only gave a “small window of notice”, leaving advisers working “day and night” to support borrowers.
“Strong communication from lenders is extremely helpful and has made a real difference,” she added.
Trett suggested giving a longer guarantee period for rates, as long as five days, which would make a “huge difference” to securing deals.
In all, Niziol said the “lessons learned from Covid and the mini Budget have helped us navigate this latest period of volatility with greater confidence and give clients the reassurance they need”.
