Yesterday we talked about the changing face of the mortgage market and how we expect the majority of mortgage interest rates to rise over the next few weeks. Having said that, it was only last month when they were falling so things can change very quickly in the mortgage market at the moment.
So, what do rising mortgage rates mean for mortgage advisors, and more importantly, what will it mean for those currently looking at CeMAP training in order to train as a mortgage advisor?
There have been quite a few mergers and takeovers this year, Northern Rock has been nationalised and it looks like Bradford & Bingley are following suit. That means fewer large players in the market but it doesn’t necessarily mean fewer mortgages overall. Indeed, nationalisation for Northern Rock is likely to be only a temporary solution to keep the bank afloat, keep consumer confidence in the banking system and is likely to be privatised again at some point. This credit crunch and the mergers going on would not normally have been allowed and when the economic crisis is over, it may be that we will see some sales and buyouts.
Rising interest rates are not only bad news for borrowers; they are not good news for mortgage lenders either. They want to make sure that they get borrowers who can afford their mortgage payments (even more so after the credit crunch has highlighted the folly in lending too high) and they want them to be tied in with their mortgage deal.
At the end of a mortgage deal, many borrowers do not realise or feel it is a huge hassle to go out hunting for the best mortgage deal they can get and this is where mortgage advisors have made their business. An indepedent mortgage advisor can search the whole market and find the right deal for their customer’s circumstances and a wise mortgage advisor will keep a note of when that deal will come to an end and make sure they are there for that customer when the deal ends, taking that hassle away from them.
There are other mortgage advisor positions, such as a tied mortgage advisor, who can only advise on mortgage deals from a panel of lenders, or a branch mortgage advisor, who works for a bank or building society. Some customers only feel comfortable taking a mortgage out with their own bank or building society, so they will simply approach their bank directly and take the best deal they can get from them.
Rising interest rates highlight to the customer that they must make sure they have the best deal. In times of low interest rates, customers become lazy and at the end of their mortgage deal, some will be happy to stay on the Standard Variable Rate (SVR), even if that is not their cheapest option. Not so in times like these – every customer wants the best deal they can get, and they will all be talking to mortgage advisors.