In a month in which Mortgage Solutions has reported on a record base rate rise; the end of Help to Buy; and a construction slowdown that could send first-time buyers into the arms of the rental sector, it is unsurprising that borrowers are baffled.
At both ends of the market, recent news has shown that customers need all the help they can get.
At last month’s New Homes Mortgage Senate in Didcot, James Turford, chief operating officer and co-founder of Even, noted that: “I think there’s never been a worse time to be a first-time buyer.” Meanwhile, at the other end of spectrum, a survey from LiveMore showed that only four per cent of over-50s and a mere two per cent of over-80s felt they were able to take out a new mortgage.
With that in mind, Mortgage Solutions spoke to a number of brokers to explore how they were helping their clients in tough times and how they were bridging the knowledge gap.
1. Educating clients
The majority of brokers felt that the key to calming their clients was to educate them in the mysterious ways of the mortgage industry.
Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, said: “Many of my meetings are as much about education as financial advice, which is no bad thing, as making a mistake can be costly.
“It can sometimes be a case of convincing people that what they think they know, or have been told by parents, is no longer current, or in some cases, never was.”
Riz Malik, director at R3 Mortgages, agrees but explains that the method of delivery will be different for different generations.
He said: “I think we need to do more as an industry to increase financial literacy and deliver content in different ways. We need to understand how our clients consume information. Some may like a brochure. Other may learn more from a Tik Tok video.”
And this goes double for first-time buyers.
Patricia McGirr, specialist in distressed debt and term finance at Finanze, said: “First-time buyers in particular are often under informed about what is required and this can lead to unnecessary frustration and delays.
“Often it falls to the mortgage adviser to explain the process in full, and to take flack when there are delays, even when these [delays] are out of their hands.”
2. Being the right teachers
However, for customers to get the best education, they need to go to the right teachers. Brokers have called out social media, ‘the man down the pub’ and a well-known TV face as being culprits in delivering mixed messages.
Rob Peters, principal at Simple Fast Mortgage, said: “Everybody’s a mortgage adviser these days and many clients come to us with a boat load of incorrect advice gifted to them by people they know. This leads to incorrect expectations of the mortgage process and what is possible for them.”
Lewis Shaw, owner and mortgage broker at Riverside Mortgages, points the finger at social media as another guilty party in delivering ‘fake news’ to borrowers.
He said: “In response to the misinformation that’s floating about on social media, we’re telling everyone ‘please only listen to those people qualified to give mortgage advice’.
“Listening to Joe Bloggs at the pub is always a recipe for disaster, so it’s essential to ignore the clickbait, speak to an independent mortgage advisor, and be guided by what they say.”
Meanwhile, Mike Staton, director at Staton Mortgages, identifies an unnamed (but pretty recognisable) financial expert as a potential source of problematic information.
Staton said: “[A recent TV show] was hosted by with a certain financial reporter who many believe to be a qualified mortgage advisor, and while I applaud his efforts to raise awareness of the current mortgage market, his blanket, one-size-fits-all advice could be detrimental for some members of the public who clearly have no understanding of the mortgage industry.
“His actions could cause more people to act on an execution-only basis, leaving them at risk of repossession as they have little to no protection over the products they are taking out themselves.”
3. Delivering the right information
And that idea of delivering the correct information in a sea of disparate data and contrary clickbait is a message that brokers need to get across loud and clear.
Jonathan Burridge, founding adviser at We Are Money, said: “In the current age of the ‘University of Google’, information on mortgages and the housebuying process is prolific. However, turning that information into wisdom is why most consumers prefer to use a broker.
“As they say, knowledge is knowing that a tomato is a fruit, wisdom is knowing not to put it into a fruit salad.”
Shaw agrees, saying: “Currently, the scariest part of the mortgage market is the misinformation floating around on social media; the amount of confusion is terrifying.”
4. Becoming mythbusters
That information and misinformation overload means that brokers not only have to act as teachers, but also as mythbusters.
Peters said: “Our job is to unravel the myths and untruths to give them solid reliable advice to enable educated and informed decisions to be made.
“There will always be those who chose not to want to hear what we have to say, but in the main, this journey builds strong trust-based relationships with our clients who return and recommend us to others.”
5. Gaining broader knowledge
Given the volatility and uncertainty in the economy at present, the role of broker has gone beyond that of adviser and, even educator and into the realm of economist and political pundit.
Bob Singh, founder at Chess Mortgages, said: “Mortgage advisers these days have to be more than advisers. They have to have their finger on the pulse in terms of the economy, politics and external affairs.
“What goes on around the world has some bearing on what happens here at home.
“It’s not all about rates anymore, people want and need advice on the whole process as one wrong move can scupper a deal. The Consumer Duty rules will mean many advisers will need more skills to be able to meet their clients’ needs going forward.”
