Consumers are now finally getting used to the fact that higher interest rates are here to stay. Rather than sitting on their hands and putting their lives on hold, they are considering their options, undertaking research and realising that there are ways they can pursue their goals without sacrificing their existing low mortgage rate.
The availability of information means that consumers are no longer as naïve as they used to be and many have a good idea that there are options that could really help them outside of high street lenders and outside of a simple remortgage.
In short, there’s growing demand for second charge mortgages out there and brokers have an opportunity to help meet that demand.
We are still seeing a lot of enquiries from customers for debt consolidation, and quite often not as a distressed decision but as a means for financial planning for their future. There’s a growing band of borrowers who recognise that they are going to face the prospect of paying much higher mortgage rates in a couple of years’ time and taking the proactive step now to restructure their finances to lower their outgoings and consolidate their debts. However, this area of the market has potential to be much larger.
Other than those taking steps now to manage their finances, there are two further groups. Some customers will recognise that they need to take steps now to manage their finances for the future, but do not know what options are available. They sense that they should do something now, but don’t know what – and they may or may not contact a broker asking for guidance.
The third group will bury their heads in the sand, ignoring the problem until the time comes to remortgage and it’s clear that it is now unaffordable. In situations like this, where a broker is not proactive and a client is naïve, it’s a recipe for disaster.
We have repeatedly said that there is going to be a point when those brokers who fail to take a proactive approach with their clients will begin to see their business dwindle. That time is now.
Proactivity needs to be at the forefront of everyone’s mind – taking the time to conversations with your clients about their financial circumstances and their plans for the future. This is important for broker businesses, but more significantly, it’s important for the financial health of your clients.
The demand for second charge mortgages is out there. All you need to do is decide whether or not you want to meet that demand.