The trend in rising interest rates has restricted availability of some fixed-rate offerings at a time when more borrowers are recognising the risk that rising repayments represent to their finances.
These numbers really do cause significant pain for those who find themselves facing higher repayments. There can be little surprise that more people are finding difficulty in balancing their budgets.
A recent visit to Manchester gave me the opportunity to sample the delights of regional daytime television. My enjoyment of the programmes was hugely curtailed by the content of the advertising breaks – constant repeats of ambulance-chasing, secured borrowing opportunities and quick and easy IVAs.
The target audience was fairly obvious and, recognising the many elements of consumer protection that are built into regulated lending and general insurance, it would seem that some quite important information was not given sufficient prominence, in particular, the stress that additional borrowing can create on finances and the long-term downsides of resorting to an IVA.
I feel sure the target audience for one of these products may well develop into potential clients for another product.
All this drives home even more the importance of ensuring that clients have the best possible access to high quality financial advice and feel free to approach their adviser not only on those glorious sunny days but also when the rain clouds come over. It used to be said that banks only sold brollies when the sun was shining but we know that not to be the case any more. Advisers have access to a range of products to help shelter their clients from the vagaries of the weather and minimise the chances of financial calamity.
Only the most optimistic are predicting a short-term fall in rates and there would seem to be a strong case for borrowers to rein back on their spending. Consumers will decide for themselves how far they are prepared to risk their arms but they do have the right to expect their advisers to share with them some of the financial trends that they may be better informed about.
It is two months since I wrote of the problems inflicting the US sub-prime market. At that time, a potential link to the UK was quickly rubbished by many commentators but concern has now been voiced by Clive Briault of the FSA, who has warned lenders to ensure they are ready for a possible downturn. The figures do not yet appear to be showing a problem but it is clear the market has slowed down and asking prices are frequently proving optimistic. Any sort of collapse would have serious repercussions, not only for lenders but also those people with substantial mortgages. It is only 15 years since the last reversal and many borrowers still bear the scars.
The threatened introduction of home information packs is said to have caused many sellers to bring their houses on to the market early or it may be that agents are not selling property as easily. Either way, the result is a greater number of properties available. Four weeks ago, we were being assured by Hip providers that all was ready. Now we know the truth. None of this is good news for the reputation of the market and highlights the need for professional standards.
Richard Fox is chief executive of the CII Mortgage Professionals Society.