"Because of the pandemic and its economic/financial impact, many existing borrowers’ finances might look quite different to what they did when they were last accepted for a mortgage."
As we get closer to the end of the holiday – now just four months away unless the Government announces an extension – we might see purchase demand tailing off slightly as consumers recognise they have less of a chance completing before the 31st March next year in order to secure that stamp duty saving.
Of course, if the industry gets its wish then an extension might well be in the offing, but until that comes then there may well be more focus on remortgage and product transfer business.
And, according to recent data from CACI, this month could be lining up to deliver a glut of potential business in that regard. It recently said that it expects ‘product maturities’ worth £33.18bn in the final month of 2020, while ‘fixed-rate maturities’ for three months next year – April, June and October – are predicted to be £26bn, £26.5bn and £38.9bn respectively.
It won’t need me to point out that this is a significant chunk of business that could potentially be rebrokered, and I suspect having that information, will be good news for advisers and will no doubt be the catalyst for a significant appraisal of their existing client database to make sure they’re aware of where they should be going for advice prior to those products maturing.
This, of course, is a hugely competitive part of the market with lenders targeting their existing customers like never before in order to secure the repeat business, and potentially cut the adviser out of the deal. Some borrowers receive product offers anything up to six months before the end of their current rate ending, and advisers need to be on their ‘A game’ when it comes to client communication and securing that remo/PT business.
What may actually aid advisers however is the added complexity that many existing borrower cases might now entail. There appears to be no doubt that, because of the pandemic and its economic/financial impact, many existing borrowers’ finances might look quite different to what they did when they were last accepted for a mortgage.
How many of those borrowers might have been placed on furlough during the year? How many might have taken mortgage payment holidays? How many might be showing significant ups and downs in terms of incomings and outgoings over the course of the year? Indeed, how many might have changed their mortgage arrangements as a result of hits to income?
Add in the potential for even greater complexity if the borrower is self-employed, a contractor, a freelancer, someone reliant on bonuses or commission, a limited company director with no State support, etc, and you can see why advisers might have much more work to do when attempting to get these clients through a remortgage journey ‘safely’.
Before going into bat for a client seeking a remortgage/PT it’s going to be more important than ever to have full clarity when it comes to their existing financial situation, what has occurred during 2020, whether this has returned to a more ‘normal’ state, and whether any missed payments, etc, have impacted their credit score, even if they weren’t supposed to.
I think we’re all acutely aware that, despite protestations to the contrary, individuals who have missed payments are having this taken into account by lenders, as they seek to marry up their responsibilities in keeping people in their homes with their responsibilities to keep their levels of risk down when issuing mortgages.
It all adds up to a potentially difficult puzzle to solve, and advisers need to use a product like Credit Assess which can given them the full credit report and the banking data upfront. Having that information ensures they can set a clear path in terms of what is achievable and which lender(s) might provide a solution to the customer.
Without that, there is a real danger of running up blind alleys, wasting time, resource and money in doing so. Clearly, there are a lot of rebroking opportunities in December and beyond – the important point is to ensure you have all the information to help those customers who can be helped.
