We’re all acutely aware that at the start of the summer, Carney effectively put the nation on hold for a rate rise before Christmas. This subsequently led to a spike in remortgaging to fixed rates for existing borrowers – now however that decision might seem slightly premature.
The reason is that those very full-on rate rise signals given by Carney earlier in the year appear unlikely to become reality. In fact, that first rate rise could be as far away as 2017, although the consensus still seems to be (just) that a rise might come in Q2 next year. Whatever the date, those currently sitting on BBR trackers and variable/discounted rates may feel they are still in a commanding position and the imperative to remortgage is likely to have gone away.
As I read recently, Carney is in danger of becoming like the boy who cried wolf, the argument being that just at the point when he wants everyone to know that a rate rise is inevitable and imminent, he’ll be ignored as borrowers think they’ve heard it all before. Not quite the message the Governor wanted to convey when he first began talking about ‘forward guidance’.
For agents however the big mortgage question may not be around what rate their clients are on, or looking to achieve, but can they get the mortgage in the first place. Certainly the fallout from last year’s MMR is still permeating through the mortgage market, especially if an agent’s typical client is the wrong side of 40 years old. Now, while in the past, agents might have viewed first-time buyers as the trickiest group to secure finance for, and get through the door of a new home, this could be far more of a concern for those individuals who may seem far more credit-worthy for lenders.
Much of the chatter around the mortgage market lately has been on the ability of older borrowers to secure mortgage finance, especially if they are seeking terms that take them past the traditional retirement age. Now, you might consider that this will only really be pertinent to those perhaps looking to move in their 50s and onwards, but that’s being proved not to be the case. There is considerable anecdotal evidence to suggest borrowers in their early 40s, who want 25-year terms, have been turned down because they’re unable to satisfy the lender on the detail of how they’re going to pay the mortgage when they go past 65.
Now, quite rightly, this has been deemed faintly ludicrous by many in the mortgage market – especially advisers – given a lot can change in 25 years and knowing exactly what monthly income you’ll be bringing then in is pretty much impossible. But, for those agents with a high propensity of these clients, then you have to consider if it could well come back to scupper a sale. Also, the affordability measures put in place by many lenders are stringent to say the least – creep up in age and the likelihood of needing to present that retirement income knowledge and be certain of your ability to pay is that much greater.
So, while you may have 50-plus clients who feel somewhat untouchable in terms of their current jobs, their incomes, their mortgage-paying background, etc it still might not be enough to get them through the stricter affordability and criteria measures that lenders brought in post-MMR. The good news is that a number of lenders have recognised they may have gilded the lily somewhat and are pulling back on those measures. Also, the mortgage industry as a whole, and I have to say the regulator itself, has also recognised there has been compliance to the nth degree put in place here and there needs to be both market and industry solutions put forward.
Having a strong introducer relationship with a local mortgage adviser, who you can pass clients on to will definitely be of benefit if they don’t have such an arrangement already in place. Many might feel that securing mortgage finance is the same process as when they last went through it – for those who haven’t done that in the last two years, it most definitely is not. And having an agent who can steer them in the right direction is likely to be appreciated, and could well make the difference between getting the sale made or not.
