The last few months have seen significant positive change in the mortgage market, culminating in the first base rate reduction in over four years at the start of August.
The increasingly positive sentiment has resulted in plummeting swap rates and catalysed a lively ‘rate war’ between UK lenders. Multiple high street lenders are now offering rates below 4%, as they try to spur would-be homebuyers into action.
As the market heats up once again, it provides the industry with an opportunity to reinforce to consumers the importance of making informed decisions. While the fundamentals of the mortgage market are strong, conditions are fast-changing, and these remain some of the more complex conditions we have seen in recent years. As a result, professional advice is critical to ensure the best outcomes for customers.
Lenders should be promoting advice wherever possible and rewarding those who choose to seek it with the best rates on the market.
Experience and perspective invaluable when finding a mortgage
As it stands today, the market is unlike any that most homebuyers will have experienced, particularly given the unusually low rates available throughout most of the last decade.
Professional advisers have a strong understanding of the fast-paced market and can use this to help customers secure the very best deal. Not only do they have their past experience, but they are able to help consumers navigate their mortgage journey successfully, such as locking in deals that can be changed should rates improve – a win-win.
More choice means more confusion
According to Legal and General’s Ignite platform data, product availability for first-time buyers grew 12.4% from the end of Q1 to the end of Q2. While it is great to see growth in the number of products available, it can make finding the right product an even more difficult challenge for customers.
Advisers can help them break down the market, simplify complexities, and help them make a much more informed decision. This includes advising on the mortgage term and repayment method, as well as accessing lenders that don’t offer direct deals to customers.
A mortgage is probably the biggest financial commitment that many will make in their lifetimes, and as such, they shouldn’t be making it without a full understanding of the range of products available.
The mortgage rate is just the beginning
Taking out a mortgage and buying a house goes beyond just finding the best rate. Products themselves are becoming more complicated as lenders try to find alternative ways to attract borrowers. They often have costs, incentives and other features that need to be considered alongside the rate, and these can affect which product a borrower should choose.
This can include things such as arrangement fees, free legals, or free valuations.
Beyond the mortgage, there are also other aspects of the house buying process that are often not considered by consumers, including conveyancing, home surveys and protection. Advisers can ensure that borrowers understand, and are ready to deal with, every aspect of buying a home, and lenders should be encouraging them to consult with a professional adviser to avoid any surprises later down the line.
This is a really exciting time for the mortgage and property industry, with activity set to take off. In fact, the latest data from Legal and General’s Ignite platform shows that mortgage application searches were up 13% in July compared to June.
Advisers and lenders should seize this opportunity to make sure they are promoting the value and importance of mortgage advice. By doing this, they are ensuring the outcomes for their customers are as good as possible and are putting positive foundations in place that can support the industry in the coming year.
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
