There’s a bar off Broadway, presumably once full of Wall Street types but these days looking a little jaded. It houses a sign that reads “Do right and fear no man.”
In today’s market, doing right means fighting for survival. We must consign to the history books those halcyon days of the mortgage market when business just fell into our laps. Those days will never come again and to pine for the good old days is a waste of effort. We need to be working much harder for our clients, which means we should be more discerning about those clients we choose to work with. Building relationships that last, rather than processing transactions, is the future for the new model mortgage intermediary.
Three years ago, the mortgage market achieved record gross lending, reaching £362bn in 2007, and there were an estimated 30,000 brokers.
The market has shrunk but the number of brokers is still falling, which is great news for professional mortgage intermediaries committed to a long-term future in the market, as this contraction should result in greater productivity and profitability.
Some mortgage intermediaries are maximising opportunities to continue growing and developing their businesses. These innovative market-makers are the new model mortgage intermediary.
But for others, a dark cloud prevents them from maximising the opportunities. Is it because we are scared by our commitment to remain in the industry when so many have fled? Has the credit crunch and its devastating impact left us lacklustre? Or are we just too cynical to plan for success? I think fear has paralysed progress and it is time that confidence returned. Fear springs from ignorance and there can be very little that we do not know about this market.
After five years of mortgage regulation, what the regulator has not cleaned up has been largely seen off by the credit crunch. I was shocked to read mortgage fraud accounts for 18 per cent of all fraud but take the view that the figure demonstrates the improved detection rates rather than a hike in criminal activity.
If 2009 which began with the deadline to demonstrate to the regulator that we are consistently treating our customers fairly and finished with the mortgage market review on regulations to constrain risky lending and unaffordable borrowing was our opportunity to repair the damage, then surely 2010 provides the impetus to plan for the future.
There are so many encouraging signs it is hard not to be optimistic. From City bonuses to the strengthening of the FTSE, rising property prices rising and signs of life in the buy-to-let market, the headlines are more positive. With an election looming, further stimulus packages to support the property market will appeal to voters.
Without more funding lines, more borrowers will fall into difficulties and more loans will go bad. With the majority of our traditional lending banks under state control, the Government will be under immense pressure to balance the books and restore a new kind of normal.
Gerry O’Brien is chief executive of Home of Choice