After a frenetic year that consistently out-performed expectations, it’s reinvigorating to look at 2022 with a fresh set of eyes and weigh up what the market should be preparing for in the months ahead.
Last year was characterised by soaring sales fuelled by the stamp duty holiday and second-home purchasers. Naturally, this has led to a great deal of speculation as to how 2022 will unfold.
The market needs continued focus from the government and industry to help people access more affordable and high-quality homes
With inflationary pressures and the prospect of further rate rises denting business and consumer confidence, last year’s good weather could give way to darker clouds. However, mortgage rates remain attractively low and, with many deals set to expire this year, borrowers may take this chance to remortgage or decide now is the time to move.
Human connections vs going digital
From recent conversations, it has been inspiring to see growing numbers of brokers and lenders realise the huge potential of technology. The pace of change is quickening at last, with the impact of the pandemic certainly contributing to this shift online. Digital and accessible mortgage processes are no longer a nice-to-have, but a vital necessity to reduce operational costs and eliminate paper-intensive processes.
Rate rises may boost enquiries from first-time buyers
Of course, leveraging technology is key to streamlining the mortgage search journey, but digital tools will never quite replicate the human element of a business development manager (BDM). Lenders should continue to nurture this role.
From helping intermediaries understand criteria and new products, to guiding them through a lending policy, BDMs represent a vital link in the chain. Telephone support has been a lifeline for advisers over the past two years and, while online information and live-chat facilities are a welcome resource, advisers are often keen to verbally explore the nuances of a case.
New rate environment
This year may also be the first in some time in which we have to navigate a higher-rate climate. This presents a different challenge for the adviser community. They will need to adapt and help borrowers secure deals that are well aligned with their financial needs.
Last year we witnessed the unwavering resilience of the mortgage market
Possible further rate rises may boost enquiries from first-time buyers or those contemplating remortgaging. January was another strong month for product maturities and things could start to pick up speed.
As we enter an environment where rising rates become more common, brokers and customers must be given ample notice before the withdrawal of a product in order to manage workloads and expectations. Some lenders provide little notice, causing a problem for advisers who need to accelerate their efforts to complete submissions.
On top of that, this last-minute rush can impact lenders operationally as they are more likely to receive incomplete submissions.
It has been inspiring to see growing numbers of brokers and lenders realise the huge potential of technology
The reason for such short notice often stems from lenders trying to avoid a spike in business, which in a rising-rate environment could be a concern. For instance, if a product is competitive, a lender can receive more than double typical volumes. This can create a knock-on effect on service as the lender comes under pressure.
However, the question remains: how do lenders that give reasonable notice still cope? Most advisers I speak to would appreciate more consistency and longer lead times.
Supply-and-demand mismatch
A recurring theme of the past few years continues to be the substantial shortage of housing. In fact, in a paper reviewing the 2021 housing market and the outlook for 2022, research company Residential Analysts said the supply situation was “severe”, with Rightmove, Zoopla and the Royal Institution for Chartered Surveyors all reporting low levels of stock for sale.
Brokers and customers must be given ample notice before the withdrawal of a product
Their findings epitomise why the market needs continued focus from the government and industry to help people access more affordable and high-quality homes. We have already seen the House of Lords Built Environment Committee call for barriers to housebuilding to be removed, and we must continue to press for ongoing support if we are to avoid many buyers being priced out of the market altogether.
Last year we witnessed the unwavering resilience of the mortgage market. For success in 2022, lenders must continue to work with advisers to help borrowers find the best products, even if the market experiences a few bumps along the way.
Kevin Roberts is director of Legal & General Mortgage Club
