As 2020 draws to a close, most of us are looking forward to ending one of the strangest years in memory and starting fresh in 2021.
With a buoyant housing market and the vaccine being rolled out across the UK, we have good reason to be optimistic about the next twelve months.
Here are some thoughts on what this new year may hold for the mortgage advice sector.
Technology will continue to play a huge role in the way we live and work, and will become central to all businesses. The use of technology has been accelerated during this period and we are unlikely to return to the pre-Covid way of working.
The pandemic has pushed people online in a way that nothing had before and those with the smoothest customer experience have been the most successful.
For financial advisers, clients will have higher expectations about the advice and application process. They will want to be fully digital with as little paperwork as possible and will want to be able to track their applications online.
This will require a shift for some to update their systems and processes to be able to compete with the direct lenders and bigger players who are already investing in this.
Distance sales will continue as Zoom and Teams have become part of our everyday vocabulary. Face to face meetings may not be possible for some time and there is an expectation now that businesses can provide video calls and conduct business at a distance.
It also makes it harder to engage new customers and businesses may need to use engagement tools to generate information from their clients and build a relationship with them. Mortgage advisers may need to adapt their marketing strategy to convert leads from referrers more quickly and engage clients earlier on in the process.
Meanwhile, the housing market has been surprisingly buoyant this year, helped by the Stamp Duty Holiday. We anticipate that purchase activity is likely to continue to be strong in the first quarter of 2021 as buyers take advantage of the stamp duty holiday before it closes at the end of March.
We expect a rush as buyers seek to get transactions through before the deadline and then a lull, until the market picks up again.
There is an expectation that house prices will dip if stamp duty rules revert to how they were, however, this dip is long overdue and there is still such demand for housing that it is likely prices will pick up again in the summer months when the market typically picks up.
Assuming demand continues, there will need to be more focus on supporting conveyancing businesses and other businesses included in the chain of a sale as their resources may continue to be stretched. This may provide an opportunity for intermediaries to increase their referral network and it is worth investing in these relationships for the long term.
We also anticipate that more of the main lenders will return to the market, which will hopefully help drive interest rates down to pre-2020 levels. We can already see more confidence from lenders with the return of the higher LTV products, which is good news for first time buyers. Earlier in the year, many of these products were being launched and then pulled just days later and so it is good to see more stability with these.
At the same time, we cannot ignore the fact that COVID-19 has had a devastating impact on many. Mortgage holidays have helped many get through but as the continued lockdown starts to hit more businesses, we may see more job losses and financial hardship as a result.
With this in mind, we expect that borrowers will demand more support from lenders as employment and income come under strain. It is not yet known whether the government will extend the mortgage payment holidays further, but there is an expectation that lenders will need to continue to help borrowers who face financial difficulty at this time.
No one could have predicted how 2020 would be this time last year and so I would not want to be overly confident in the outlook for 2021.
However, despite such a challenging year, people have continued to re-mortgage and move home, relying on the advice of qualified professionals to navigate them through this process.
One thing I am certain of is that technology will continue to play a vital role in our lives and that businesses will need to continue to invest in their technology in order to succeed and grow.
