Welcome, dear reader, as windswept leaves fall around us like mortgage rates, whirling like dervishes in a cacophony of rebroked applications.
In other words, Q4 is upon us. The quarter where everyone realises that summer is a distant memory, Christmas is nearly upon us (I went there early), and brokers and lenders alike are transformed into business-hungry humanoids, trying to not only hit end-of-year targets and finish strongly but also get a pipeline of business in to kick off the new year with a bang.
A big raspberry to all those who said house prices would fall massively, who have now ‘recalculated’ their predictions again
Q4 can make or break the whole year for us all, and this time it feels especially important. It has been interesting to speak to business owners and brokers recently and listen to what they are saying about the market and how the year has panned out. While many have done well, others are looking back at a year that promised much but, as yet, has not quite delivered.
The stresses and strains we have all felt on both sides of the fence have abated only slightly, and many are already looking forward to the promise of 2025. That said, there is still much to play for and we brokers are nothing if not robust and determined.
I am not normally a bitter man but it was galling to catch a snippet of the ex-PM-but-one — She Who Must Not Be Named — at the Tory party conference, sticking to her usual diatribe of, “I did nothing wrong, and the deep state was against me.”
It made me realise how much Labour has to do to earn back even a smidge of the public’s trust, and why the usual honeymoon period has evaporated in a puff of weak dry ice.
It seems like the summer holidays did not completely dampen demand
The first Budget is a big test and, while we know unpopular decisions probably do need to be made, Labour must be very careful not to go too far and stifle the very prospect of the growth it claims to have a passion for.
Bashing the rich, or perceived rich, is not the answer; destroying landlords is not the answer; and neither is leaving the country in a position where no one wants to grow and sell a business, or those with money for investment leave in search of warmer climes. Inequalities do need to be addressed, but the new government must learn the lesson of our shortest-lived PM and not try to change the world overnight. We do not need a Hammer House of Commons Horror this Halloween.
And, if not Labour, then the cast of potential candidates to take over the blue-party leadership isn’t fooling anyone. I’ve seen a better selection of out-of-date fruit about to be thrown out at Tesco (to be fair, I do like one of them), while the lesser-spotted Farage appears only when it’s time to whip up hatred of something or other.
The usual honeymoon period has evaporated in a puff of weak dry ice
There does at least seem to be a solid base for the new government to operate on, with a sensible centre-left agenda. The UK economy grew by 0.5% in the second quarter, according to official data; slightly lower than first thought but it continued to pull away from a recession, while net mortgage approvals for house purchase rose to the highest level since August 2022.
In other words, it seems like the summer holidays did not completely dampen demand, with lower mortgage rates contributing to this. Some borrowers are also wary of the upcoming Budget and want to lock in to rates now before a potentially turbulent period.
Also, the latest Nationwide House Price Index showed that prices rose by 0.7% in September. This resulted in the annual rate of growth rising to 3.2%, the fastest pace since November 2022. Average prices are around 2% below the all-time high of summer 2022.
For some, this year promised much but has yet to deliver
So, a big raspberry to all those who said house prices would fall massively, who have now ‘recalculated’ their predictions again. No doubt they will come up with something else to distort facts and claim they are right.
As for the cheeky little money markets, they have been our friends of late with three-month Sonia continuing to enjoy its new-found sense of movement by slipping down 0.08% to 5.10%, while swaps have deconstructed themselves down further as two-year money finally falls back below 4%.
Since the previous column:
2-year money is down 0.23% at 3.84%
3-year money is down 0.20% at 3.69%
5-year money is down 0.17% at 3.54%
10-year money is down 0.14% at 3.53%
This gives rise to a legitimate question (answers on a postcard): at the time of writing the best five-year fix stands with the cuddly Coventry at 3.69%, but the lowest 10-year fix is up at 4.54%, yet five- and 10-year money are similar. What am I missing?
Lenders have been busy once more with a plethora of rate cuts, which will help all of us looking for business in this final quarter. But I would like to repeat Ami chief exec Robert Sinclair in the last Connect bulletin.
“The key Ami message for Q4 is that lenders need to consider what advice and distribution mean to them for their future. Some think that tech innovation can replace the broker and bring the consumer direct.
We have an opportunity to come together and rethink the pure protection sector for the good of the consumer
“However, in a world of savvy consumers, advice, value and suitability will trump price and convenience every time.”
There are enough battles without lenders and brokers starting to battle each other. Low-balling brokers and dual pricing online will not end well.
That aside, I have had countless examples of lenders that have been excellent and worked hard to understand some of the issues brokers face, especially remembering that there is a client at the end of the line. So thank you to Aldermore, Barclays, Kent Reliance and Santander, among others.
I was interested to read a stat from MPowered recently: 94% of cases receive a decision in a day. Although an excellent stat, it brought up discussions around: is this all too quick when the actual homebuying process still takes an inordinate amount of time?
There are enough battles without lenders and brokers starting to battle each other
Speaking of streamlining processes for brokers, TML’s broker platform has enhanced its services to offer fee-free AVMs on some residential and buy-to-let remortgages and provide automated income verification on some residential applications. This means TML will no longer ask brokers to provide pay slips or proof of income for a number of their clients at the point of submitting a case, simplifying the overall process.
Elsewhere, a few lenders have enhanced their income multiple, with Nationwide the latest darling to do this for first-time buyers under its Helping Hand product, which will allow borrowing of six times income for a five- or 10-year fix up to 95% LTV. It is also increasing maximum loan sizes, including above 90% LTV, which will rise from £500,000 to £750,000.
Lenders have been busy once more with a plethora of rate cuts
HSBC has improved its policy for foreign nationals, with those on an acceptable visa able to borrow up to 85% LTV and no longer needing one year remaining. To access the 95% LTV range, only one borrower needs to have leave to remain in the UK or EU settled status.
Finally, the FCA plans a pure protection market study that includes commission arrangements, fair value and the strength of competition.
We have an opportunity to come together and rethink this sector for the good of the consumer — something I very much hope we will do.
Hero to Zero
Nationwide for its latest changes, and Coventry for a good offset product
Brokers, BDMs and lenders who go the extra mile to help each other — you know who you are
FCA pure protection review — this should be welcomed as an opportunity
Lenders dual pricing online — it’s just antagonistic and proves nothing
She Who Must Not Be Named — I need to let this one go, don’t I?
What Really Makes Me Smile?
I went to an excellent Pepper Money event recently, where the firm launched its Specialist Lending Study.
Although the contents were stark in places, it highlighted how much we still have to do to educate the public that there are both fabulous brokers, ready and willing to help advise, as well as a whole range of specialist lenders with solutions that really do work.
The passion of everyone in that room to make a difference is one of the things that keeps me from falling over. Things can be tough, it may seem that there is no one to help, but there really is.
Find the majority of good people who are just looking to get through the day and do their job as best they can
Where a client is struggling, there is a caring broker with a solution. Where a broker is struggling, there are forums where other brokers help place your case, and lenders do what they can to assist. When a BDM is struggling, there is always a friendly cup of tea with a broker, to chat away their issues.
Basically, we need each other, and most of us know that.
Ignore those who say things to get a reaction, and find the majority of good people just looking to get through the day and do their job as best they can, with kindness, and with a smile.
Andrew Montlake is a director at Coreco
This article featured in the October 2024 edition of Mortgage Strategy.
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