FR: For those unfamiliar with Spicerhaart Corporate Sales, tell us a little bit about it.
Corporate Sales is the asset management arm of Spicerhaart, one of the largest estate agency groups in the UK. We work with major banks, building societies and lenders to help manage their property portfolios and provide support with distressed assets. While this can come in many forms, the main focus is delivering a positive outcome for both the lender and most importantly their customers.
FR: What is your view on the current state of arrears and possessions?
It’s been really encouraging to see mortgage arrears continuing to fall across the board, both on a quarterly and an annual basis. It not only shows the improvements we have seen in market conditions, but it also demonstrates the hard work of lenders and how they are supporting customers and ensuring assistance is available, including prioritising early intervention. It’s certainly something we are seeing on the ground as lenders use the forbearance measures at their disposal to keep repossession as the last resort it should be.
Of course, we cannot overlook that repossessions have increased, which likely points to greater difficulties among those in higher arrears bands. There’s no question that these are the customers that urgently need support from lenders, especially as options tend to become more limited the higher up the arrears bands you go. That doesn’t rule out a positive outcome entirely though as lenders continually look to find a solution and where the sale of the property is the only option, look to the likes of assisted sales schemes or other methods to support the customer.
FR: How do you expect this will play out for the remainder of the year?
The positive is that there will be many borrowers now enjoying a rate reprieve rather than a rate shock – as they come off mini-budget era fixed rates onto a more favourable one. We have seen plenty of positive movements on mortgage rates in recent months which certainly helps the overall arrears picture. Although the expected pace and frequency of interest rate cuts has shifted recently – as proven by a hold in June - the consensus is that the direction is still down, which helps too.
Trying to make predictions is still a fool’s errand though, particularly as inflation continues to prove difficult and with both political and economic uncertainty at home and abroad. The latest example being further escalation in the Middle East and U.S. intervention. At home, we are seeing growing pressure in the labour market – not helped by political decisions that came with the new tax year. This is always a worry when it comes to managing arrears and will require lenders to stay close to both individual customers and also their wider mortgage book.
FR: What role do advisers play in minimising the risk of arrears?
In an intermediary driven market, advisers play a critical role in driving the right type of business to lenders, leveraging their deep knowledge of criteria to point clients in the right direction. While not a guarantee, getting this first stage right with a good fact find and proper due diligence not only minimises the very real threat of mortgage fraud, but ensures clients have the best chance of success.
Given their close relationships with lenders, it’s also important that advisers remind clients of the best steps to take should they fall into difficulty. There is such a dangerous narrative out there that as soon as someone falls into difficulty, the lenders will call the bailiffs – which is simply not true. Advisers can help facilitate a much more realistic view where lenders throw their arms around borrowers and provide support as early as possible – all while encouraging borrowers in difficulty to make contact early too. Lenders will take any steps possible to try and support a customer in arrears.
FR: How can lenders ensure repossession does remain a last resort?
This is something that we see clear and measurable examples of on a daily basis from our broad client base. Lenders focus on staying close to their mortgage book to really understand value and determine any potential risks. We’re in a market now that is rich in data, technology and automation to help lenders complete valuations at scale. This is hugely valuable, but doesn’t offer a complete picture – especially if a property is in poor condition. Many lenders are realising this and are working with asset managers and using drive by valuations to get boots on the ground, eyes on the asset and really assess its condition. This not only allows lenders to make an informed decision, but they can act much earlier.
Rather than a full repossession, lenders have the scope to look to the likes of assisted voluntary sale, where an asset manager will market the property to achieve the best possible price in the shortest amount of time. Through this process, it is possible for the borrower to avoid the distress of repossession and maximise equity from the property - generating a positive outcome for the borrower and the lender too. In the world of Consumer Duty, it is a far better solution with winners all round.
