Lack of liquidity poses the greatest challenge as lenders seek to consolidate their position. This means there will be no easy solution for borrowers, nor for brokers who would traditionally use quieter housing markets to focus on remortgages and debt consolidation.
It is not only lenders who are cautious. Anecdotally, a picture is emerging of ridiculously low valuations which are having a big impact on the funds available to borrow.
From lenders to providers and estate agents to brokers, there have already been casualties as businesses review their models. Again, the greatest casualty is likely to be the first-time buyer. This critically endangered species features high on new housing minister Caroline Flint’s agenda, with more affordable housing being seen as the solution.
I cannot get my head round this thinking. Demand will always outstrip supply and therefore there will be competition – and surely a premium – even for affordable housing. But I digress.
I would urge you to use this period to reorganise your business to enable you to ride out this storm and be more constructive when the market turns. A year that is back-end-loaded can still be profitable if you focus on the core, profitable part of your business and work the whole client bank. After all, there is no one better qualified to support clients who are in the grip of what Breakfast TV described recently as a mounting debt crisis than the professional, experienced mortgage broker. As students of the market, rather than graduate bank employees on fast-track management training, they should be better qualified to advise and support clients who are having credit difficulties.
Today’s trading conditions call for a different skill set, different competencies and behaviours. Debt and credit difficulties lead to embarrassment and you will need to manage your clients more sensitively when probing their liabilities. You will also need to reassure clients about the deal they are getting when they they think a rate cut is just round the corner.
Finally, you need to be ruthless. Make a critical assessment of what you do day in and day out. Then make sure it adds value and takes advantage of all the help available to you, such as the business development support and advice available from your network or club.