There is no escaping the fact the mortgage and housing markets face a somewhat challenging future, with the latest Office for Budget Responsibility (OBR) forecasts suggesting fewer property transactions than previously anticipated. However, that does not necessarily mean advisers should be pessimistic about the opportunities ahead.
Indeed, while the October Budget raised a number of questions about whether the Government is doing enough to encourage housing activity, one announcement in particular could provide advisers with an opportunity to establish valuable new client relationships which extend well beyond the initial mortgage.
A challenging market, but opportunities remain
The OBR now expects property transactions across its forecast period to be approximately 4% lower than anticipated in March, largely reflecting higher mortgage rates and weaker growth in housing stock, while its borrowing cost assumptions also suggest affordability will remain a challenge.
Recent Bank of England figures reinforce that cautious outlook, with mortgage approvals for house purchases falling to 53,400 in September, below the previous six-month average of 58,800, demonstrating the purchase market was already facing pressure before the Chancellor delivered the Budget.
However, the Government’s new £4.7bn Your First Home equity loan scheme provides something of a potential counterbalance, particularly for advisers looking to develop their purchase business and establish relationships with customers entering the housing market for the first time.
70,000 potential new relationships
The scheme is expected to support around 70,000 first-time buyer households in England over its lifetime, offering eligible purchasers a 20% equity loan, with deposits starting at just 2.5% and an initial five-year interest-free period.
Pre-registration is expected to open by the end of December, with full applications from February 2027 and the first loans issued from April, meaning advisers have an opportunity to begin preparing for these customers pretty soon.
Of course, we should not assume all 70,000 households represent additional transactions which would otherwise never have happened, but the scheme could help buyers who have previously struggled to overcome deposit and affordability barriers.
For advisers, the real opportunity is not simply the number of mortgages which might be arranged, but the potential to establish relationships with customers at the very beginning of their homeownership.
A first-time buyer today should become a remortgage customer in two or five years, purchase a larger property as their circumstances change, require protection advice or seek other financial services as their needs develop.
That makes the long-term value of these relationships potentially far greater than the income generated by arranging the initial mortgage, provided advisers give customers good reasons to return.
The first experience matters
First-time buyers, by their very nature, are often unfamiliar with the homebuying process, particularly the legal requirements, the different parties involved and costs which sit alongside the mortgage itself, meaning they may need considerably more support than an experienced homeowner.
This is where advisers have an opportunity to demonstrate their value beyond just advising on, and recommending, a suitable mortgage product, ensuring clients understand what happens next and helping them access the services required to complete their purchase.
Conveyancing is an obvious example, because leaving a first-time buyer to find their own conveyancer means asking someone with limited experience of the process to make an important decision without necessarily understanding what constitutes good service or a reasonable fee.
By recommending a trusted conveyancing partner, advisers can help clients access appropriate legal support, understand the full costs involved and benefit from clearer communication throughout the transaction.
There can also be a commercial benefit from conveyancing introductions, although this should always sit alongside the responsibility to recommend services which are appropriate for the customer.
Making every opportunity count
If the OBR’s forecasts prove accurate, advisers may have fewer purchase transactions available than previously expected, making it increasingly important to consider the wider value of each client relationship.
That means ensuring customers have access to the full range of relevant services, including conveyancing and protection, while maintaining regular contact so advisers remain their first choice when future mortgage needs arise.
Additional income from appropriate service introductions could help offset some of the pressure created by weaker transaction volumes, but the greater opportunity is to build a business based on lasting relationships rather than individual mortgage applications.
Your First Home could provide many advisers with an introduction to a new generation of homeowners, but whether those customers remain clients for the next five, ten or twenty years will depend largely on the experience they receive at the beginning.
In a market where every transaction matters, advisers who provide a complete service, maintain strong relationships and recognise the value of conveyancing and other ancillary services alongside the mortgage will be better placed to make the most of the opportunities available.
Harpal Singh is CEO at conveybuddy
