Advisers need to ‘keep calm and carry on’ in the aftermath of the EU Referendum vote, with pundits suggesting that the fundamentals of the mortgage market are still strong and that intermediaries are in a positive position.
Speaking at the panel debate which took place at yesterday’s FSE Cardiff, John Coffield of Paradigm Mortgage Services said now was not the time for panic. “My advice to advisers is to keep calm and carry on,” he said. “We might expect something of a kneejerk reaction in regard to the vote to leave the EU, and undoubtedly some people will use it to try and profiteer. However, as long as the banks and lenders have the money and appetite to lend, the market is still strong.”
Ian Andrew of Nationwide Building Society agreed that the current period of political and economic uncertainty was not good for the market but felt the situation could have been much worse. “The market will be slightly subdued for some time but I don’t think we’ll see the retrenchment of credit like we did during the credit crunch,” he said. “These are very early days and a period of uncertainty is clearly not good however I think it will settle down. At the moment it seems as good as we could have expected.”
Phil Rickards of Lloyds Banking Group responded to recent suggestions that lenders have ‘gone to ground’ since the announcement of the vote result. “I want to reassure you that from our perspective it is business as usual,” he said. “We are focused on helping Britain prosper and are committed to the various sectors our brands are involved in.”
When quizzed about the potential for future cuts to bank base rate as a result of the vote, Andrew suggested this would not be helpful to lenders. “A drop to 0.25% might not be helpful to lenders as it would put a further squeeze on margins,” he said: “For example, we would be cutting mortgage rates but not necessarily cutting the rates we pay to savers.”
In terms of precipitating a cut to the amount of regulation the mortgage advice sector has to deal with, Coffield suggested advisers should not hold their breath. “We are one, if not the, most regulated financial services’ sectors in the world, and this is driven a lot by the UK government,” he said. “For instance, the MMR had a far larger impact on advisers than the MCD and it was driven by the UK government. I can’t see the vote to leave cutting back on regulation.”
