So what will the world look like in 2025? Will oil be 12p a barrel? Will the price of the average three-bed semi top £12m in the capital? Will darts have taken over from football as the national sport? Will James Blunt be Prime Minister? Or George Clooney be US President? Will Australia become a mere short-haul flight? Will the Bank of England base rate still be at record lows? To be honest I would take one, maybe two over all the others.
In anyone’s book ten years is a long time. Working within financial services where dynamics can change so quickly it almost represents an eternity in terms of trying to predict the future. For many people it can be difficult to even think that far ahead, never mind plan so far in advance.
But inevitably when it comes to managing finances the further we can plan, the more likely we are to benefit. In light of all the recent media coverage I imagine you know where I going next but it’s patently clear that longer-term mortgage deals have certainly captured the attention of consumers and the media at the beginning of 2015.
The much hyped ‘rate wars’ have certainly carried over into the new year and it’s fair to say that Barclays have been well in the mix when it comes to bringing some excellent deals to market, notably the recent launch of our lowest ever 10-year fixed.
Times have certainly changed in the intermediary mortgage market. Ten years ago new business was brisk with brokers churning two and three-year deals as fast as butter. Ten, even five year deals were simply ignored in many quarters. But times have changed. Having said this, the growth of longer-term products has not come overnight. The increased popularity of five-year deals has long been in the offing and there has certainly been some steady acceleration in demand over the past 12 to 18 months, with pricing decreasing accordingly. And it now looks like 10-year deals may follow a similar path. According to Moneyfacts, this time last year there were just eight ten-year deals available in the market. This figure subsequently rose to 22 in October 2014 and just three months further down the line there are now reported to be 77 on offer, with rates continuing to fall fast.
This signifies a big shift and reflects a more European model where the longer term deals have been far more popular both from a lending and borrowing perspective. Further competition within this field is expected, and we’ve already seen some lenders adjust their pricing accordingly in recent weeks. More longer-term products are expected to be launched on a more regular basis over the first half of the year and may well increase even further in popularity when many of the cheaper short-term deals inevitably fall by the wayside as interest rate rises close in.
This additional choice within the market represents great news for both borrowers and also for intermediaries. After all, clients who are in a situation to secure longer-term mortgage payments will invariably be in a stronger position to review other ancillary products and services. Meaning proactive intermediaries will have a stronger, longer-term cross-selling platform to help establish that client, and possibly their family, for life.
There is little argument that the overall advice process has become more sophisticated, you’ll notice that I didn’t say easier, post credit-crunch and it’s those intermediaries offering consistent longer term holistic advice who are now reaping the rewards.
Opportunities have long been available to ensure new and existing clients can secure the best possible short to medium-term financial futures and now with longer term products back in vogue there are even more chances to satisfy longer-term mortgage needs at rates that will continue to stand out – even in 2025. And a new year could well be the perfect time to help such clients assess a variety of financial commitments through new eyes to encourage them to look and plan that bit further ahead then they previously might.