John Somerville looks to the future and considers how mortgage advisers can help their clients prepare for the post-Covid economy.
For the last few years, mortgage customers have prioritised low rates. There’s been much talk, and some frustration, at the rise of robo-advice – a computer programme sifting through numbers to find the cheapest deals.
But the ongoing crisis of the Covid-19 pandemic has complicated both the economy and, in turn, the mortgage market.
First there’s the matter of payment holidays, which were extended at the end of May.
The deadline for initial applications has also been extended to 31 October. In the context of 8.4 million people furloughed and rising unemployment, it’s likely more will apply for mortgage payment holidays.
Then there's the buy-to-let market. Landlords are banned from evicting tenants until 31 October, but buy-to-let mortgages aren't technically covered by the payment holiday which presents a big problem.
Why? Because they're not regulated by the FCA.
Even so, some lenders may offer the extensions to their landlord customers too – that would make financial sense. But critically, they're not obliged to.
Mortgage customers in crisis
Mortgage customers have quickly moved from consumers chasing the best deal, to clients with complex needs.
Many will now require comprehensive, professional advice on how best to manage their biggest financial commitment and outgoing – their mortgage.
Others will be confronted with money problems they never expected to face. And very few will be certain about what to expect in terms of jobs and security in the long-term.
This presents us, as mortgage advisers, with a challenge. Our job is, and always will be, to get the best outcome for our customers.
As always, we need to offer detailed, up-to-date knowledge of the market. And of course, we can help customers understand and navigate the various government schemes.
But on top of this, we can give value through our people skills – empathy, patience, integrity. Being a listening ear as well as a problem solver.
Some clients may be embarrassed or distressed by their new financial circumstances. They may find it difficult to acknowledge their problems for fear of losing face. That may cloud their judgement.
This is why it’s so important to establish trust.
Be a trusted professional
A good start is to reach out to your clients now and ask if they need your help. People will always remember those who were there for them through uncertain times.
But trust can take years to build.
Right now, you're unlikely to visit clients or be able to invite them to your office – at least until the track-and-trace technology is up and running.
Even as the lockdown eases, many people will be fearful of going to an office and may be reluctant to meet you in person.
Try phoning them, tell them you're here for them, ask them if they’d like to video call to talk through their options. Seeing someone’s face – and letting them see yours – will build the relationship.
Inevitably, you’ll need to discuss their expectations of future income and expenditure, show them options. You may need to calm their nerves. But you can help your clients see how life will be after this crisis.
That’s the thing about being a human being – and a professional one at that!
At times of crisis a human mortgage adviser can offer so much more than robo-advice ever could. Being more than a set of algorithms is a huge advantage when you’re dealing with people who need your help.
CeMAP Diploma will help you understand more complex mortgage scenarios and to develop your research skills
Some clients may be looking to access the equity in their homes to meet unforeseen expenses.
Find out more about the Certificate in Regulated Equity Release (CeRER)