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TSLE2018: Brokers should diversify to protect against a housing crisis

  • 02/02/2018
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TSLE2018: Brokers should diversify to protect against a housing crisis
The lender panel at The Specialist Lending Event in York concluded that while a housing crisis is unlikely in the immediate future, advisers need to broaden their income streams to “fireproof” themselves against a crash.



Cooling, but not cold

Marie Grundy (pictured), sales director at West One Loans, acknowledged the appearance of a cooling market, though she did not go as far as to say there will be a crash.

“Absolutely the signs are that the property market is cooling. And I think that’s particularly prevalent in London.

“But we’re not at the stage where we’re going to see a crash.”

Grundy also noted that even if there is a downturn, there may still be opportunities to be found – for instance, in the second charge market.

She continued: “One thing we always see, is when the property market cools, people are reluctant to move house, but they’re more willing to improve the home. So there are opportunities there for additional lending through home improvement loans.”

“Second charge is clearly an area which could facilitate that,” she added.


Beyond the seas

David Torpey, managing director of Bluestone Mortgages, echoed the thoughts of the other panellists, but said that given the interwoven nature of the financial markets, a prediction of housing cycles should look also at overseas markets, and not just in Britain.

“It’s highly unlikely that we’ll see any material downturn in the short term,” said Torpey.

“But back in 2006, 2007, none of us were anticipating what subsequently happened,” he continued, “We may think it’s pretty positive in the UK, but often events overseas drive what happens here in the UK as well.

“So that might be my one caveat to the market looking positive going forward.”

It is critical, argued Torpey, that brokers – and especially smaller firms – find more income streams in case of a downturn, such as looking into buy-to-let or bridging loans.

“The important thing is that, when there’s a downturn, business always comes back. So it’s about being capable of withstanding the short-term pain.”



David Whittaker, chief executive officer of Keystone Property Finance, did not see a housing crisis happening unless it were “politically inspired,” because it is currently being propped up by uneven demand and supply.

However, speculating on the outcome should such a crash occur, Whittaker said that those intermediaries with the bulk of their income generated from procuration fees or other brokers would be vulnerable.

Whittaker said: “You can’t think about fee income, it stops in its tracks – and we all went there in 2008 – 10.”

“All you can do is try and diversify your income base, so you can cover your fixed costs when things go wrong,” Whittaker continued, adding as an example networks who have “reignited” themselves by doing general insurance and life insurance alongside mortgages as a prerequisite.”

Similarly, Adrian Moloney, sales director at Onesavings Bank, stressed the strategic value of diversification.

“If you silo yourself into one area of the market, you leave yourself open,” said Moloney

“Don’t put all your eggs in one basket, look at different areas of the market.”

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