By: John Phillips, CEO of Spicerhaart and Just Mortgages
Former Prime Minister Tony Blair famously said: “Ask me my three main priorities, and I will tell you: education, education, education.” Politics aside, education remains an important priority for brokers too as potential borrowers look to navigate what is an incredibly challenging economic climate.
The upheaval over the past 18 months has left many either with their heads in the sand, or waiting in vain for rates and conditions to go ‘back to normal’. I think it’s safe to say, some brokers are waiting too – much like the majority of consumers, it’s the only environment they know.
As a business, we are continuing to focus on our training to educate our advisers about what is going on and to support those who have not operated in this kind of market. In turn, brokers across our national network report that education remains a core part of their duties, especially as clients try to make sense of changing rates, 14 successive base rate rises and negative headlines in the national media.
Education is vital in helping clients make sense of the market and work out what the ‘new normal’ means to their individual circumstances. As a result, brokers must pound the pavement, engage with their local community and get in front of consumers to increase knowledge, nurture confidence and cut out misinformation.
Rates continue to improve
Brokers can start by sharing positive news of rate reductions across the board, including from many big name lenders. As inflation has continued to ease, swap rates have stabilised and lenders have been able to cut rates – some by as much as 0.75%. In fact, my email inbox in recent weeks has been full of messages from lenders regularly chipping rates.
Education is still necessary as some would-be borrowers wait and hope that rates drop back to the lows seen previously. In reality, rates are likely to improve rather than fall, stabilising at the ‘new normal’ we are now adjusting to. With access to the whole of market, brokers are best placed to share this news and show that while rates may be higher than before, they are improving and there’s still bucket loads of money out there for those ready to buy.
After all, lenders have their own targets and need to lend to make money. With plenty of money to lend and competition for new business, lenders are cutting away to encourage people to borrow. With a lack of high street presence too, lenders are relying on brokers heavily for their business.
If the economic outlook continues to improve and inflation eases further, the hope is the Bank of England will have the confidence to at least pause its rate rising agenda. This will give lenders further cause to open their books, re-evaluate their offering and price more competitively.
Holistic advice
There will of course be those cases that are still far from vanilla and require extra support. As part of our education drive, brokers must highlight the broad range of tools at their disposal to help make the numbers work. This includes restructuring the mortgage, extending terms or exploring niche lenders for example. Furthermore, there’s opportunities available beyond a traditional mortgage, capitalising on low deposit schemes such Shared Ownership, First Homes and Deposit Unlock to make that home move a reality.
In the current climate, it’s no surprise to find so much hesitation and uncertainty in the market. While it’s clearly tough for borrowers and brokers alike, there are still plenty of opportunities out there. Much of this can be resolved through increasing education, ensuring brokers are empowered to help clients gain a clear understanding of the market they find themselves in and the opportunities still available.
