The trade body said that while mortgage firms had ample lending capacity, activity levels were likely to ‘bear the brunt’ of any market adjustment over the next six months as buyers and sellers waited to get a clearer idea of which direction the country might be headed.
Mortgage brokers, known for their resilience in the face of major economic uncertainty, remain confident that it will be business as usual.
This week, our panel of experts, explain how they plan to offset any slowdown in mortgage activity in the coming months.
David Hollingworth, associate director, communications, London & Country Mortgages, says savvy brokers will have strong variety of business streams to compensate for any slowdown.
Andrew Montlake, director, Coreco, acknowledges there has been a softening in some areas of the market and looks to buy to let and remortgaging as opportunities to be positive about.
John Phillips, group operations director at Spicer Haart and Just Mortgages, thinks the imbalance of supply and demand will help to stem any serious decline in mortgage activity.
From the moment the result of the EU Referendum became clear, the questions of just what it might mean for the economy began. Entering into any unknown situation will always raise more questions and when there are few definite answers available, the inevitable outcome is one of uncertainty.
That uncertainty can of course put a dent in consumer confidence and we know that housing can be particularly susceptible to changes in buyer sentiment.
As a result, the initial concern would be the post-Brexit effect on the purchase market. In the immediate aftermath there were certainly cases of buyers withdrawing from their purchase or reducing their offer for fear of what the vote to leave might bring.
Of course, at this stage it’s hard to be completely clear on whether any continued slowing in the level of activity is purely down to the vote. The summer will often see a lull and buy-to-let purchase activity had already calmed following the surge ahead of the stamp duty changes.
Nonetheless, it makes sense to consider where activity may be more predictable, such as remortgaging. Those that have failed to review their mortgage rate recently will find that rates remain very attractive.
The record-low rates and continued competition between lenders means that there has been further improvement in deals, giving borrowers the chance to put some certainty into their own mortgage position.
Protection remains a crucial part of any mortgage adviser’s offering but activity sadly often drops during busier periods. Those who have learnt consistency in bringing protection needs to the customer’s attention are bound to fare better in a softer market.
Here we go again, eh. Just when you think we finally have a nice stable period where us brokers can settle into a nice run, along comes the surprise Brexit vote to slow everything down and put us all on edge again.
That said, we had already seen some areas softening particularly in the London market where the high end was suffering a hangover from Stamp Duty changes and buy-to-let landlords due to other tax changes. The issue now is whether everything will be blamed on Brexit, masking other issues.
The key with any business is never to have your eggs, in this case lead flows, in one basket, which is something we have been very careful not to do at Coreco.
What we have seen already is that while some areas of London experience a softening where purchase business is concerned, other areas such as remortgage business has already grown. People do not like uncertainty and coupled with a new wave of extraordinary rates, borrowers are being enticed back into the mortgage market.
Keeping in touch with your existing clients on a regular basis and not being afraid to ask for referrals is more key than ever.
While specialist sectors have undoubtedly had a wobble, with some lenders concerned about their funding lines in the short term, buy to let has actually remained pretty resilient. In fact, across the board lead levels have stayed constant.
While we could see some future issues as housebuilders get nervous once more about building more units, followed by valuers, and then lenders, around purchase prices and higher loan-to-value loans, overall I have not seen any real indication that demand for property is waning dramatically.
What is more, there are still not a huge amount of mortgage brokers around at present and while bank branches and even big estate agency firms may start to cut back on their training schemes and inexperienced staff, the power will again fall to the experienced mortgage broker who knows how to work and forage in such conditions.
We also still have an Autumn Statement to come that could stoke the fires of demand once more and a potential Base Rate cut to come.
When all is said and done, there are just as many people around who see the current conditions as an opportunity rather than a threat and the smart ones will be making the most of it.
John Phillips, group operations director at Spicer Haart and Just Mortgages
Customers will of course be wary of the economic situation and, as a result, will understandably be more cautious about taking new loans on. Another contributing factor will also be job security. Therefore, as a business, is it important that we remain positive, with the glass-half-full mentality, as we have a habit in the UK of talking ourselves into a downturn.
In fact, it seems that the UK’s housing market is back to business as usual and, with heavy demand outstripping a limited supply, there is no reason why we should see a drop off in demand.
As a business, we are well prepared for any softening in the market, although we have yet to see this, particularly as remortgages are continuing to increase and interest rates remain low. Therefore, during a period of volatility post-Brexit, it is more important than ever that brokers ensure they make the customer feel confident that they are doing the right thing.
We have seen a slight slowdown in purchasers registering in our branches. However, the customers that are registering are serious about getting a mortgage, which means ensuring their requirements are met is more important than ever.