The market has gone through a choppy time following the government’s disastrous mini Budget.
The rapid fall in the value of the pound and expectations of sharp base rate increases saw lenders across the sector withdrawing their products, often with very little notice, before relaunching them at substantially higher interest rates.
And brokers have told Mortgage Solutions that the turmoil has highlighted the need to communicate regularly with clients throughout the term of their deal, as well as to ensure they understand precisely what mortgage terminology actually means.
Call six months in advance
Anil Mistry, director of RNR Mortgage Solutions, said that since the Bank of England started increasing base rate more frequently in the summer, he has been proactive with his client bank to push them to review their mortgage around six months ahead of the end date.
He added: “Thankfully, this has saved some of my clients from the large rate increases since the mini Budget. So, this is something I will carry on doing and I have no regrets about contacting my clients six months in advance.
Remember: Context is king
This was echoed by Dominik Lipnicki, director of Your Mortgage Decisions, who said that the recent turmoil had thankfully been “less critical” than during the financial crisis of 2008, but said it had nonetheless been a real challenge for mortgage advisers.
Lipnicki suggested that the biggest lesson is the importance of maintaining contact with your existing client bank throughout the term of their existing deal, adding: “If we are finding it stressful, imagine being the borrower. Customer service is king.”
Lipnicki added that while rates have risen significantly of late, the reality is that the mortgage deals on offer now are still competitive, so it’s important for brokers to present them within the right context.
He continued: “More than ever many clients need to act but act sensibly, without panic and that’s where we as advisers come in and are needed more than ever to provide sensible, ethical advice.”
Educate your clients
The debacle has shown that brokers need to do a better job educating people around the terminology and processes involved in a mortgage, according to Lewis Shaw, founder of Shaw Financial Services.
He added that it has become ever crucial to stress to clients that a deal cannot be sorted until all of the relevant documents are in.
“There’s a big problem with some customers wanting to know what rates they can get and not understanding that unless we’ve done a proper assessment of their circumstances, just telling them what the rates are is utterly pointless because we can’t know they’re going to be eligible for that particular deal.”
There are no crystals balls
Rob Gill, director of Altura Finance, said that he wished he had the “foresight” of those who supposedly knew that all of this would happen, and that it was “inevitable”.
He added: “I’m very jealous, they must all have made a fortune and I look forward to seeing them all in a British version of The Big Short very soon.”
Prepare for deeper conversations
Mistry noted that the next big challenge will be in supporting those borrowers whose products are ending in the next six to 18 months, and how they will deal with such big jumps to their interest rate, and with it the size of their repayments.
“Due to the large difference between a tracker and fixed rates, a more in-depth conversation needs to happen than previously before, on the risk appetite of borrowers when it comes to reviewing their mortgage needs,” he continued.
