I’m a great believer that when positivity presents itself, we should grasp on to it as individuals, firms and as an industry, not least because over the last 12 to 18 months that positivity has often felt like it was in short supply.
That has specifically been the case when it comes to purchase work, with the mortgage market having to rely a great deal on the remortgage opportunity which for many borrowers resulted in them needing to take a product transfer (PT), which of course – for the most part – results in less income for advisers.
Within this context – and indeed the message hasn’t really changed – advisers have needed to look beyond the mortgage opportunity and ensure they are able to provide a much more holistic advice service, focused on ancillary areas such as protection, GI, conveyancing and the like. And that’s before I even mention Consumer Duty.
There is positive news on this front too. Higher rates have set the affordability bar incredibly high for existing borrowers, particularly throughout the second half of 2023, and now we have come off those peaks, advisers should be able to offer clients access to remortgaging rather than simply accept the PT offer from the existing lender.
However, back to purchase business, which as mentioned, suffered in an environment of high rates last year, and I know for some advisers, became as rare as hen’s teeth at some points.
The latest statistics out of the Bank of England earlier this month, focusing on mortgage approval data for purchasing in February, show a strengthening market no doubt fuelled by lower rates, which in turn raises confidence amongst consumers that they are not dipping into the market when it is going to cost them the most.
Those latest figures reveal a real positive move forward, with net mortgage approvals for house purchases rising from 56,100 in January to 60,400 in February.
This is not just a month-on-month improvement but is actually the best figures since September 2022, which as you’ll remember, was when all hell was breaking loose due to the disastrous ‘Mini Budget’ of Kwasi Kwarteng and Liz Truss.
It’s fair to say there’s been some real ups and downs since that point, and the fact it has taken this long to get a figure above that month back in Autumn 2022 tells us a number of things.
Not least the damage that was done, but also the overwhelming impact these political decisions have had on our market, and what they started in terms of consecutive increases to rates.
Overall though, let’s get back to the positive, because there’s no doubting that a rise in purchase activity is to be welcomed on so many grounds, not least for an advisory profession that – as mentioned – has been reliant on supporting existing borrowers for much of its income over the past 12 to 18 months.
We’ve talked before about the different ways advisers can interact with a remortgage client compared to those for whom the end recommendation is a PT.
The same is true for a purchase client, particularly a first-time buyer who will have a whole host of needs, but also a second/third/fourth-stepper who might not have seen an adviser for some time, and are likely to require a wholesale review of their finances, particularly if they are upping their mortgage amount, or just if their circumstances have changed since they were last seen.
Whether it’s a one, two, three or five-year period that has passed, the likelihood is the individual concerned will have seen changes in their life, and as a result their needs are likely to be different.
This leads itself to a review of protection or GI, but it should also encourage advisers to make sure they secure the conveyancing advice opportunity, because – even if the client has been through the purchase process before – they are, in our experience, always open to advice and a recommendation in this area, not least because there are so many options available to them, but they tend not to know where to go for the service.
The default option might be to use a family firm, or someone on the high-street, or take the recommendation of the ‘bloke down the pub’, but when they are coming to you for advice on the mortgage and other financial requirements, why not make their lives easier by steering them in a different conveyancing direction?
One where they’ll be looked after, will be with a specialist, will be taking through the process in a timely manner, and gives them the very best chance of completing within their desired timescale.
It doesn’t need me to also point out the income that can be derived from conveyancing advice, and therefore the opportunity that exists with every single purchase client to provide that full service which doesn’t require them to go elsewhere. Not now or indeed ever.
Keith Young is managing director of Broker Conveyancing
