Speaking at The Mortgage and Protection Event, Clare Beardmore (pictured), director of Legal and General Mortgage Club, said the “landscape of increased interest rates may be here to stay”, noting that the decade of low interest rates was out of the ordinary.
As a result, it is unlikely that mortgage rates of around one per cent or lower will return to the market in the near future.
She continued that the mortgage market was “likely to be a tougher one in 2024 than we have faced over the last few years”.
“We need to adjust our business strategies to remain really successful,” Beardmore noted.
Retrain and upskill
She called for brokers to look at areas where they could retrain and upskill so they can tap into new lending areas and better serve customers.
Beardmore added that evaluating the use of mortgage technology to ensure brokers were “using it to the best of its needs” was also key.
“This will mean that you’re equipped to advise as many clients as possible in a very uncertain economic environment,” she explained.
Beardmore said that “affordability issues” were “leaving many prospective buyers sitting tight as they save for a deposit or wait for mortgage rates to fall”.
“This means that there is no longer any low-hanging fruit so, when it comes to potential clients, we really need to sow the seeds early to nurture a successful year,” she noted.
“Now is the time to work on your business and not just in it.”
Product choice improving but still ‘genuine anxiety’ from customers
Aspiring buyers and existing homeowners “still feel worried about their place in the market” and there was “genuine anxiety out there about whether now the right time to buy”, explained Beardmore.
“People, however, still need to move home, they still need to remortgage and their lives can’t go on hold forever while they wait for the return of the good old days,” she added.
However, she recognised it was “positive” news that the base rate had been kept stable and mortgage rates have started to fall.
She also noted that product availability was widening, with the number of two-year fixed rates rising from 183 last year to around 773 currently.
Five-year fixed rate numbers have grown from 377 to 1,200 in the same period and buy-to-let product choice was also improving.
Beardmore said that the “variety and sheer range of deals” currently available means there has never been a “more important time for customers to receive advice from professional brokers”.
Product transfers still have ‘untapped potential’
Beardmore said that product transfers were an increasingly important part of the mortgage market, with UK Finance figures indicating that around 800,000 mortgage deals will have come to the end in the second half of this year, with a further 1.6 million maturing next year.
She noted that product transfer cases were typically around 20 to 22 per cent per month of cases submitted to Legal and General Mortgage Club, but in recent months this figure had been as high as 34 per cent.
Beardmore continued that her conversations with lenders indicated only around 40 to 50 per cent of product transfer business is coming from mortgage brokers, which she said was surprising.
“The scale of this untapped potential is massive for all of you. As an advice community, I think it’s really important that we reflect on why we’re only capturing half of this business. As a broker it’s within your gift to ensure that that customer chooses you in the future.
“Stay in touch and support a customer and then that customer will return to you for counsel time and time again,” she added.
Remuneration issue
Product transfer remuneration is discussed in “every single” broker and lender meeting she has, said Beardmore.
“We know it’s lower than that that is what is being received for new business but there is good business to be completed in the space, especially given the scale of products maturing.
“What we can never forget and what is so vitally important is in the end, customer needs are paramount and advisers must take care to act in their best interest all times,” she continued.
Beardmore added that procuration fees could really vary between lenders, with some paying the same for new business and product transfers, whereas other do not.
“As an industry, we really need to consider how as an advice community we can be best financially supported to provide quality advice, and still have quality products for all consumers,” she said.
