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No quick fix

It is a sure sign that a crisis is afoot when the politicians start showing cross-party support for each other. George Osborne, Conservative Shadow Chancellor, and Vince Cable, Liberal Democrat Shadow Chancellor, recently visited the Treasury in a “spirit of co-operation”.

The pair dropped in on Alistair Darling to offer their support and have committed to working with the Government to strengthen the economy and attain financial stability. Cable says he believes the Chancellor will be true to his pledge that he will do whatever is necessary to support financial stability.

So where are we in terms of the state of the mortgage market? Whatever I say will no doubt be out of date by the time you read it given the unprecedented pace of change in global economic sentiment that impacts the UK mortgage market on an almost hourly basis. It is better, therefore, to look at the longer-term implications for the sector rather than to attempt to offer any meaningful insight into what may happen over the next few weeks.

Given that the global economy is driven almost entirely by sentiment at the moment, most of it negative, I will exercise my right to dwell on one piece of positive news.

Estate agents are seeing the market beginning to return to form despite the record falls reported by the latest Nationwide house price indices, according to estate agent Spicerhaart. Although Nationwide’s index is reporting a fall of more than 12 per cent, the Spicerhaart is more upbeat.

Russell Jervis, managing director of Haart, says: “While Nationwide’s index is showing annual price falls of over 12 per cent, Haart has already recorded falls of 15 per cent in real time and can now report that the market is beginning to stabilise. Despite the recent financial turmoil, the lower prices are increasing buyers’ appetite to re-enter the market for now and we have seen a surge in applicant numbers in September.”

While I find this hard to believe given the difficulties lenders, brokers and other estate agents are clearly experiencing at the moment, I hope they are right.

I am convinced the housing market will recover but I don’t expect any consistent and widespread upturn until 2010 with perhaps a return to something near 2007 levels by 2012. To put things into pers- pective, although house prices have fallen over the past six months or so, they are only back to 2006 levels. Despite the recent correction, there is no reason why house prices should not start to increase again once the current turmoil and negative sentiment has passed and we have had a period of stagnation.

While mortgage advisers are encouraged to look for additional income streams to help to offset the downturn in mortgage fees, the reality is that we must all dig in for the long haul and accept that the next year or so will be tough. Those that fare best will be the ones that are the most proactive in squeezing every drop of value out of their existing client base as well as attracting new business.

The need for smart marketing has never been so important. Customer service and the quality of advice will still be paramount but at the end of the day it will come down to who best harnesses the power of marketing. After all, the world is full of great advisers that nobody has heard of.

It takes guts to invest in marketing when times are tough, but this is precisely when it is so important, even more so than during the good times when new business, to a certain extent, just seems to fall on our laps.

Sally Laker is managing director of Mortgage Intelligence

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