The slowing down of mortgage completions for the fourth month in a row is widely being attributed to the MMR, but how much of a contributory factor are headlines regarding interest rates rising, branches closing down or how much harder it is for people to get a mortgage?
What’s more, how are brokers to answer questions to unknowns such as when interest rates will rise and by how much?
The talk of interest rate rises has already had an effect, visible in the large numbers of people who have transferred onto fixed rates in the past few months.
Those still on variable rates will fall into three camps; those who took out their mortgage before the credit crunch who will have been used to paying higher rates in the past, those taking out a mortgage since the introduction of the MMR who will have been stress tested and those who have taken a mortgage out in the five years since base rate has been down at 0.5%.
The first two groups should be reasonably prepared for any rise, especially as the governor of the Bank of England has predicted that rates will increase slowly, but there are those in the latter group who will never have known a base rate rise and for whom the first one will undoubtedly cause a payment shock.
The positive of all this talk is that it gives a reason for brokers and their clients to talk to one another, and for those who can afford to switch there is the level of security provided by fixed rates.
But how much better would it be if the stories that we read were about the implications to a family of the loss of the bread winner because they didn’t have any protection, or how the MMR was introduced in order to prevent another credit crunch?
The opportunity for the broker has to be to capitalise on the sensationalised headlines and fill the gaps left by the media.
Toni Smith is sales operations director at First Complete
