Covid-19 has upended so many aspects of the way we live, work and socialise. Changes that might have taken years have happened in days. The mortgage market is by no means insulated from its influence, and so I’ve been thinking about what the new world could look like.

Challenges abound

The financial impact on our society was immediate and severe. Data from Google Trends shows a sharp spike in searches for mortgage holidays as the country entered lockdown. This week, newly released figures from UK Finance state that lenders have granted 1.6 million payment deferrals to one in seven mortgage holders. Lenders have been inundated with requests for payment deferrals, limiting their operational capability to support new customers.

The ‘Boris Bounce’ became the ‘Covid Crisis’ overnight. Optimism has been replaced by caution as consumer spending power is reduced, restricted or delayed. Data firm Savanta reported that more than a third of respondents to its Covid-19 tracker had felt the virus’s effect on their earning power due to redundancy, furloughs, unpaid leave or reduced hours. Consumer confidence has taken a hammer blow, and currently sits close to its record low in July 2008.

We should all be mindful of potential challenges in the future, too. The threat of a second wave of the virus remains very real as countries exit lockdown, and its impact could mean the move to remote working and video calling is here to stay for the long term.

Challenge equals opportunity

 As humans we tend to overemphasise both how good and how bad things can be at any single point in time. This isn’t to underplay the seriousness of the situation that many households find themselves in – but I believe there are signs that opportunities still exist for our market to help borrowers in the future.

Anxiety about the virus is slowly starting to make way to boredom of the lockdown, and in this quiet time advisers can proactively contact their clients to help them remortgage or guide them on payment holidays.

Advice will still be needed to guide consumers to the right decision on mortgage holidays, even as enquiries to lenders are starting to ease. Just as a normal vacation offers time to relax or spend with the family, a payment holiday might ease the pressure of monthly bills. But there is always a cost. Good advice will be critical to helping borrowers understand what the implications of deferring payments could mean for their finances in the future.

Consumers will (or should!) be seeking the reassurance of face-to-face contact with advisers (Zoom-to-Zoom!) as they remortgage to lock into a new fixed rate or consolidate debt with a second charge mortgage. The value of advice has never been more clear or more necessary.

Advisers will need to use all their experience and all of the tools available to them to support these clients. While helping borrowers remortgage might be a quick win, advisers will need to make the most of every opportunity to thrive in this new normal.

Later life, second charge mortgages or even protection may be areas some advisers might not feel comfortable but learning when to write and refer will be critical to keeping them busy. This includes recognising the potential of tools, such as SmartrRefer, which gives advisers access to a panel of pre-approved specialists and will help their clients get the advice and support they need.

Hidden value?

Under lockdown, more people are getting the DIY bug (myself included!). Data on behavioural changes as a result of Covid-19 shows that more than half of us (53 per cent) are pressing ahead with home or garden improvements. DIY SOS’s aside (!), this should improve the value of these properties and make it easier for these borrowers to secure a better rate as their LTV improves.

Modern advice for a modern market

We are all avid consumers of the news in the new normal – from TV and magazines to YouTube and Twitter, Savanta’s data shows that 86 per cent of people are watching and reading the news. People are seeking and digesting information at a rapid rate as the crisis progresses and there is a chance for advisers to follow this trend by going where the customers are. Useful, informative adviser content like newsletters, guides, infographics and videos will be valued by existing and prospective clients.

Millions of people are relying on video technology to keep in touch with family, colleagues and clients too. A quarter of over-55s are using the technology, according to Savanta – even those we once assumed were tied to paper, telephones and TV are just as well connected through their smartphones and tablets.

A recent Twitter poll also found that advisers were following the trend, with a third of saying that video calling for client meetings was the new normal. The opportunities are ripe for advisers to deliver valued mortgage advice direct to the client using technology.

The new normal is a market that is clearly facing challenges, but one which also presents opportunities for advisers to demonstrate their value. In order to survive and even thrive in this new world, advisers need to seek out these opportunities to help borrowers navigate the mortgage market in the weeks and months to come.

Kevin Roberts, director, Legal & General Mortgage Club