Experience has always counted in the mortgage market. Brokers who worked through the financial crisis, the Covid pandemic, the Liz Truss mini-Budget and cost-of-living crisis will understand just how important their service is to customers.
Not so long ago, you might have expected one major shock – perhaps two, if you were really unlucky – across your career. But now they seem to be arriving with far greater frequency and leaving less recovery time in between. That can be daunting for someone who is relatively new to the industry.
Earlier this year offered a case in point. Since the start of March, the average two-year fixed rate is up by more than 80 basis points, driven by the escalation in the Middle East. At the height of the volatility, the average mortgage product was on the shelf for just a week, such was the clamour among borrowers to snap a good deal. Brokers knew that once a product reached the top of sourcing systems, it could disappear at any moment.
If that wasn’t challenging enough, this unfolded against one of the busiest refinance markets on record. According to UK Finance, an estimated 1.8 million borrowers are expected to roll off fixed rate deals this year, with around £100bn worth of maturities for July, August and September alone.
So, the question is, the next time things get volatile, how do you manage it while continuing to deliver a high level of service?
MANAGING EXPECTATIONS IS KEY
In a volatile market, managing the expectations of customers is crucial. The last thing you want is to recommend a rate that may not be there in the morning. But at the same time, clients need to understand that acting quickly – and sometimes keeping their options open – can materially affect the outcome.
Most lenders allow existing borrowers to secure a product transfer (PT) three to four months ahead of their deal expiry. PTs have become increasingly popular in recent years, favoured for their simplicity of processing and the fact that the client knows they already have a rate on the table.
However, some lenders allow customers to secure a rate up to six months in advance or waive ERCs to remortgage early. Those extra few months could mean the difference between locking in a competitive rate today or waiting another two months, opting for a PT and ending up with a worse deal.
Faced with that trade-off, many borrowers may decide it is worth switching lenders, even if it means going through underwriting again and paying a new application fee.
As remortgage cases can take longer, it is important that clients have the necessary information ready before a recommendation is made. Have they completed that checklist of documentation needed so there’s a right first-time recommendation, for example?
It is also worth refreshing your knowledge of lenders’ rate-booking processes – for instance, whether a decision in principle (DIP) or a full application is required – so you know what options are available to you.
RETHINKING WHEN PROTECTION CONVERSATIONS HAPPEN
Market volatility and time pressure can often push protection discussions down the priority list for advisers and borrowers alike. That’s because they are focused on securing a mortgage rate before products disappear.
While that’s understandable, the risk is that clients secure a mortgage – sometimes one that is bigger than the one they had before – but leave themselves under protected.
One solution is to build protection into annual reviews, using them to remind clients how limited state support can be, whether through statutory sick pay or employment and support allowance for the self-employed. It is also worth testing assumptions about employer sick pay, as many clients expect to receive full or half pay for longer than their employer’s policy actually provides.
The alternative is bringing the protection conversation forward in the journey. For example, you could engage clients up to nine months before their refinance date, when there is more time and headspace to consider their broader financial resilience. By the time they are six months out, their attention will naturally shift almost entirely to the mortgage itself.
Separating these discussions also gives you time to gather the information and documentation needed for the mortgage in advance, which offers a significant advantage in a fast-moving, pressurised environment. Moreover, your client’s circumstances could have changed significantly since they took out their original mortgage, whether that is starting a new job, getting married or having children. These are all key life stages that heighten the need for a full protection review.
STAYING IN REGULAR CONTACT
It is easy to forget that as mortgage professionals we tend to operate in a bubble. While you may follow market movements closely, most clients do not. Many borrowers experience genuine shock when they see how much rates have increased since their last deal.
Therefore, providing regular, jargon-free communication can help soften that impact. This doesn’t have to be extensive – just simple updates on where rates are headed or what is happening in the wider market. This will leave them better prepared, both from an organisation point of view but also mentally, when it comes time to refinance.
It also helps cement your relationship with your clients, elevating you from someone they may only engage with every few years to somebody who is considered a trusted adviser.
THE RISK OF STANDING STILL
Brokers who continue to adapt and anticipate change are better placed to reduce operational strain and maintain consistent service levels when the market feels chaotic, like it has been recently.
By preparing early, building flexibility into your processes across mortgages and protection and deepening your understanding of lenders’ remortgage policies, you can navigate periods of volatility more effectively.
Most importantly, this approach leads to better outcomes for your clients – which, ultimately, is what matters most of all.
Craig Hall is director of strategic partnerships at LSL Financial Services, the parent company of Primis Mortgage Network and TMA Club
