Along with Brexit and the end of the furlough scheme, the stamp duty holiday is winding down and the Help to Buy scheme is transitioning to just first-time buyers; the impact of these events on the mortgage market is still unknown.
So this week, Mortgage Solutions is asking: What market scenarios are you preparing your business and your clients for over the next six months?
I can’t remember a time where there’s been so many things pulling the industry in different directions – from payment holidays and furlough, to the online shopping boom and eye watering property prices.
Little of it, good or bad, is reliable or predictable and whilst we don’t know what to expect we’re certain that to survive retaining cash will be crucial.
As a business we’re in a strong position, having been back at the coalface and had insights I wouldn’t swap for anything. Every penny counts, and we focus on the quickest, low cost wins and shelve the big ideas for another day.
If we can’t justify a return, we don’t make the investment – that’s true of both time and money.
For our customers, I wouldn’t change my advice: Live within your means, get all the protection you can afford, and do what you can to be relevant and useful.
I commented on a LinkedIn post recently where a broker ‘advised’ their customer not to buy, certain that property prices will drop.
I found this odd, not just because they showed no credible evidence of a crystal ball or because they were talking themselves out of business, but because they were so happy to offer ‘advice’ they were dangerously unqualified to give.
Whether one can accurately predict how, where and when prices will drop, or not, advisers need to be clear on their role in the industry and stay in their lane. Consumers need us now more than ever.
I am preparing my clients for a slight drop in price in some areas, but also advising them to buy, especially as I own a property in Swanscombe that was issued with a potential compulsory purchase order from the upcoming London Resorts theme park.
So, I am preparing clients to buy property in the nearby area as potential holiday lets for the future.
I find that first–time buyers are still around but not as much as the investor who wants to draw funds from properties to buy.
I’m not in the 90 per cent market, but I cannot see how a lender can issue a five-year fixed 90 per cent loan to value product with a high rate. Is this not exploitation?
If I were advising on this I would not be urging clients to take these mortgages, instead they should borrow the difference if at all possible and have the bulk of the loan on a lower rate.
Lenders are definitely tightening up. Barclays who were the leader of higher income multiples has now updated its multiples with 4.5 being the highest, so it seems as though they are slowing down too.
Lenders also seem to be stalling issuing offers but we are still seeing clients coming in on the frontline so it would seem the wheels are still in motion.
So, I’m proceeding as normal and remaining cautious and keeping a close eye on things in the coming months.
As an optimistic but realist team of experienced mortgage brokers, in response to coronavirus, we created a business plan in the midst of lockdown.
We anticipated volatility in unemployment, a reduction in property prices and further due diligence by banks and lenders.
We also planned how we would remotely work with our clients and what our approach to an increase in mortgage rates would be.
With experience and the effects of the 2008 recession, comes the knowledge of what to do and what not to do.
Since March we have made it a point to contact all of our clients to provide them with relevant advice and how best they could consider any purchase and remortgage plans they may have for the remainder of 2020 and going into 2021.
As a business, we have set up zoom meetings, a dedicated WhatsApp line and seven-day, 9am – 9pm business openings to ensure our clients can contact us to discuss any property finance matter.