is in a constant state of fl ux and there is much confusion as to what model or strategy will be the one to adopt – the dust has yet to settle. This being so, we fi nd ourselves in an environment where we have to be sharp and well tuned to what the next new thing or challenge will be. Without any clearly defi ned or stable
route to take, in times like these the best strategy any intermediary can adopt is the model being attempted by lenders - try and capture as much distribution opportunities as possible. There is no secret to doing so; it’s called hard graft by networking like crazy and above all, offering an outstanding service to not only eclipse the competition, but also keeping that referral chain fi rmly linked.
The ‘new normal’ has been shaped by a confl uence of powerful forces - some arising directly from the fi nancial crisis and some that were at work long before it began. As McKinsey’s Davis pointed out, for businesses to succeed in the new normal they must focus on what has changed and what remains
£M
Individual protection
2005 2006 2007 2008 2009 2008
2009
Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4
Comparisons
Year-on-year
growth rates Four quarter,
annual growth
Source: ABI
894 905 867 858 883 217 215 226 200 229 214 225 215
%
7.3% 2.8%
basically the same for their customers, companies, and industries. The result will be an environment that, while different from the past, is no less rich in possibilities for those who are prepared.
So is this the new normal we are experiencing now? Opportunities arise
every day and we will, as intermediaries, forever seize on those. Whether today’s business environment is the new normal or not is of little consequence. But we owe it to our clients and also ourselves to make the most of today, planning for the future by focussing exclusively on the present. ■
Charles Haresnape,
group mortgage services director, Connells
Although I do not foresee the mortgage market returning to the conditions we saw in 2007 any time soon, describing it as the ‘new normal’ is a step too far. As we all know, the market is subject to fl uctuation and dictated by changing interest rates so the very idea of a ‘normal’ mortgage market is highly questionable. What recent events have shown, or perhaps reminded us about, very clearly, is that the most successful organisations are fl exible and can adapt quickly and effi ciently to changes in the market. It is, perhaps, those who resign themselves to the absence of normality who are best placed to take the market forward this year.
There is no way of saying whether we will return to the heady days of 2007 but, if this is the direction we are headed, it will be a considerable length of time before we get there. We now operate in more modest and sensible market; lenders are more risk adverse and focused on sustainability rather than volumes. A better market, arguably, than the one which contributed to the fi nancial crisis back in 2007. Growth is happening, but cautiously, and intermediaries that had to reduce cost and headcount in the wake of the downturn are now gearing up for growth once again. Indeed, at Connells we are in the process of recruiting a signifi cant number of additional mortgage consultants in response to green shoots in the mortgage market
and increased demand for these services in our branches across the UK. Interest rates are likely to stay historically low for the next couple of years. Gradual increases in the base rate will boost the remortgage market, with the purchase market increasing at a faster rate.
The housing market will clearly have a signifi cant impact on the growth of the mortgage market this year. At Connells, we are optimistic and our fi gures at the start of 2010 show a marked improvement in the desire to move home this year, refl ected in rising levels of new vendor instructions. Comparing Q1 of this year with the same period in 2009, we see 25% more individuals putting their properties on the market and 70% more fi rst-time buyers demonstrating their interest in getting on the property ladder. With this in mind, I believe steady
year-on-year growth in certainly on the cards for the mortgage market going forward. Having already taken the pain that the recession created, organisations are now in a position to focus on forecast increases in volumes and make sure they have the resources and expertise to take advantage of market growth. Today’s mortgage market bears no resemblance to the market in 2007, buyers now need larger deposits, lenders are more risk adverse and the market for adverse or impaired loans has dried up. It will be a long time before we see anything like the high-risk, pre-recession transactions levels in today’s mortgage market. And as for the ‘new normal’, only time will tell whether we return to the types of volumes three years ago. Whilst the indications are all positive, we must not forget that uncertainty still persists with blips likely along the way.
mortgage introducer MAY 2010 23
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