Fuelled by the demand that had nowhere to go during the first lockdown in 2020, when the housing market was effectively closed, and given some rocket-driven momentum by the Government’s decision to have a stamp duty holiday in July last year, there has been a not inconsiderable number of transactions to work through.
Now, however, as we enter that post-stamp duty holiday period – in England at least – there is a somewhat misguided notion that anyone who wanted to purchase will have done so already. That’s certainly not the case, and I suspect figures for the rest of the year and beyond will continue to be healthy, albeit constrained by the amount of supply there is, or rather, isn’t available.
However, you can sense a shift towards the more bread and butter aspects for advisers and that means a renewed focus on remortgages and product transfers.
Much has already been made that October and November represent a big opportunity in terms of client mortgage maturities, and with the first-charge mortgage market as competitive as it is, there will undoubtedly be plenty of clients who are able to save considerable amounts of money from a combination of ultra-low rates, increased house prices, and potentially a move into lower LTV bands.
And, yet, for every borrower looking to remortgage and potentially include some extra borrowings within their next deal, there could be much to consider, not least the rather pressing factor of lender affordability measures which, given what has happened during the pandemic, could be somewhat changed from the last time the client sought a mortgage secured against their property.
This could prove to be a major stumbling block, especially if the client wants to use the equity accrued in their home to pay off debts, perhaps pay back family members, or to get those much-needed home improvements and renovations off the ground.
With more and more people now likely to be spending more and more of their time working from home, many homeowners are realising that what might have been just about acceptable during a lockdown period is no longer the case.
Whether that is the need to put in place a proper office space or to separate out work from home life more; perhaps that means an extension or loft conversion, perhaps it means a garden office or just a reconvening of the space they already have, there is still an underlying need to secure the finance to do this.
And here is where it’s impossible to ignore second-charge mortgages. It’s also important to point out that we are a long way removed from the ‘old days’ of the second-charge market. Some advisers who have been active in the sector for many years might still have a reticence around seconds but concerns around ultra-high ERCs/rates and fees are not founded in the slightest.
The introduction of the Mortgage Credit Directive and the regulatory robustness this brought to the second-charge market has changed so much and the positive news is that the industry whole-heartedly embraced this change.
As a fully-regulated product within a fully-regulated environment, advisers and their clients have all the protections that they would have come to accept under the first-charge mortgage regime. We certainly want all those that work with us (and their clients) to be confident about what they are getting, and the work that goes into ensuring they have the right recommendation and the right client.
That works both ways as well. We do not want a bad reputation for the sector and we therefore carry out our due diligence on firms and lenders alike, to ensure they are type of businesses we want to be associated with. So, for with our introducing firms we will look into how they work and their record, while for lenders we keep a very close eye on service levels and the way they operate – if they don’t meet the grade they won’t be on our panel.
Overall, therefore there are so many reasons to be positive about the second-charge market and what it can deliver. For those still unsure, work with a trusted partner like ourselves who can take away that fear, and the burden, and ensure your client gets exactly what they need to allow them to fulfil their objectives. Whatever they might be.