In the midst of a January lockdown, it’s important to look forward with optimism at the opportunities ahead. So, what trends are likely to be in store for mortgage brokers in 2021?
1. Mortgage brokers can expect to stay busy
The second half of 2020 was exceptionally busy for mortgage brokers and the indications are that business levels will remain strong in 2021. A Brexit trade deal has removed one element of uncertainty and Rightmove recorded a record-breaking start to the year. There is also talk amongst estate agents of a secondary market of buyers who are holding off until after the SDLT holiday in the hope they can pick up a bargain in a less competitive market.
For those homeowners who won’t be moving, there is likely to be demand for capital raising for home improvements and, after a period where incomes have been under pressure, there will also be a proportion of customers for whom capital raising for debt consolidation is important.
Buy to Let also presents a big remortgage opportunity. The 5-year anniversary of the 3% SDLT surcharge is coming up in 2021 and thousands of landlords who took out 5-year fixed-rate mortgages to grow their portfolios before the tax came into place will now be coming to the end of their mortgage terms.
Overall, IMLA expects gross mortgage lending to rise to £283 billion this year – a 17.3% increase on 2020.
2. Specialist lenders to the rescue
It’s often said that specialist lenders are there to help customers who have suffered a one-off life event, and there is no bigger one-off life event than a global pandemic.
So, expect a growing number of customers who have missed credit payments, either with or without an agreed payment holiday in place, as a result of cashflow problems during the pandemic.
In addition, the underwriting of self-employed customers is going to become more complex and there will be fewer mainstream options. We have already seen mainstream lenders restricting criteria for customers who are self-employed, and specialist lenders are going to play a bigger role in helping you to find the right solutions for your clients.
3. Service will remain a consideration
Currently, all but the most straightforward of cases go through manual underwriting processes, so that lenders can understand how customers have been impacted by Covid-19. This is leading to substantial delays with some lenders, particularly given the requirements for remote working and social distancing.
However, there are lenders whose people, processes and technology have been up to the task – leading to significant difference in lender turnaround times. Expect this trend to continue in 2021 and look to lenders’ published service levels as part of your research process.
At the same time, the pressure that some lenders are experiencing regarding service puts even greater emphasis on the benefits of correctly packaging a case. Brokers who send all required supporting documents with an application will give their client a better chance of a first-time assessment by the lender and will be in a stronger position to avoid delays.
4. Use technology to your advantage
With so many different considerations, conducting thorough research is becoming more complex, so use tech to make it easier. Aside from traditional sourcing, platforms that enable you to compare criteria and affordability results can help you to carry out more comprehensive research, more quickly.
Very few customers should be turned away just because their circumstances are more complex or they have blips in their credit profile. Tech has made it so much easier to thoroughly research all the options for a client, and there usually is an option. In addition to this, lender BDMs are on hand to help as are the broker helpdesks provided by mortgage clubs, networks and packagers.
Paul Adams, Sales Director at Pepper Money