Understanding Clients Is What Brokers Do Best
10th March 2017
Mass home ownership is still a rather recent development, and so is applying for a mortgage. It was not until 1983 that Margaret Thatcher introduced Mortgage Interest Relief At Source (MIRAS) for the first £30,000 of a qualifying mortgage, and began selling council houses to incumbent tenants, with the deregulation of Financial Services, creating the market we recognize today.
Building societies were often the first port of call for local customers who had saved their whole lives with a society and hoped to borrow to fund the purchase of their first home.
We are nearly 40 years on from that norm and the mortgage market has been through some extraordinary highs and lows and considerable change. Technology has transformed the way we do business and interest rates are at an almost unfathomable low of 0.25 per cent - worlds apart from 1979 when Bank of England base rate hit 17 per cent. We have a more flexible, more demanding and more fluid workforce.
But wages are still under pressure following the financial crash, despite it having hit almost 10 years ago. Many people who lost their jobs in the recent recession started their own businesses, began flexible working contracts or took part-time work to make ends meet.
These are just a few of the macro trends that are key to understanding how mortgage brokers can add value for customers today. Large volumes of self-employed, credit repaired, single occupiers are left unserved by larger lenders who are increasingly working on a pile 'em high, sell 'em cheap model.
The upshot is many such lenders are making it harder for an increasingly large number of clients to get a mortgage than it should be but just because this is true for the big banks, doesn't make it true for all lenders. Brokers currently source the vast majority of mortgages and there is a good reason for this. A volume lending approach might work for some borrowers, but it fails to cater for the growing number of people who for whatever reason don't fit their model.
Not only do people's incomes and outgoings come in a plethora of forms, people's expectations of what their home purchase means to them also varies dramatically. From an older couple hoping to build capital value to fund repayment of an interest-only deal, to a young family starting out with a small business to run and nothing to save into their pension whose property purchase forms part of their retirement plan - the value of advice is all too clear. Helping clients to understand that there are options for them, whatever the hue of their financial circumstances and whatever their objectives are for the future is what brokers do best.
Read the full article in Mortgage Introducer here on page 12.
If you have any queries you'd like to discuss with us, please don't hesitate to get in touch with your local Business Development Manager. Alternatively our Intermediary Support Team will be happy to assist on 0345 602 2338 or via webchat (Monday to Friday, 8am to 6pm).
This information is for use by authorised mortgage intermediaries only and should not be relied on by customers.