Owner of family-run brokerage reveals where she thinks the market is heading
Last week marked Pam Brown’s 20th year as a broker in the mortgage industry, an event that coincided with another, more widely publicised episode; one that caused the housing market to shudder for the first time since early 2020, when lockdown first came into effect.
Now widely viewed as ill-timed and ill-conceived, Chancellor Kwarteng’s controversial mini budget wreaked havoc, sending lenders scrambling for cover as they rushed to withdraw hundreds of mortgage products, while causing a major headache for brokers throughout the country.
It was no different for Brown (pictured), who had little time to celebrate her achievement. “We were absolutely stacked on Tuesday morning onwards, it was ridiculous,” she told Mortgage Introducer. “Then last Monday morning we saw it was a bit quieter. But by two o’clock that all changed. We had about 11 product transfers to do as their rates were going that night, so we knew we had to get them in.”
Read more: Halifax unveils latest house price figures
Aware that a lender could pull their rates within hours and that it could lead to customers losing out, the team raced to keep up.
“Today we had a client that didn’t get the paperwork back to us in time, so the mortgage is now £280 more a month - and that’s in 24 hours.”
Sky-high rates - at least relative to what they were a few months ago - have caused at least one potential first-time buyer to consider relocating to a more affordable area.
“They’re actually thinking of moving to Wales because it’s cheaper,” she said. “They were renting in Bicester for £1,500 a month and were never going to be able to save. I quoted rates of 6.5% because they only had a 5% deposit.”
The recent cut in stamp duty – one of the few perks for FTBs – will not be enough to offset the rate rise, either, she believes.
“They may be saving a couple of grand, but if you put that 6.5% over a five-year period, that’s a hell of a lot of money,” she pointed out.
But it’s not just brokers and lenders who have reacted to the mini budget. Buyers and sellers are increasingly showing signs of jitters, both about the economy and their future financial prospects, according to Brown.
“I had a £350,000 house purchase that had been going through for the last four months and they were going to exchange tomorrow, but the person at the top of the chain said they didn’t know if they could afford it anymore and asked to have a £12,000 reduction,” she said. “The client accepted - that was my 12 o’clock today.”
While it takes official data somewhat longer to reflect changing trends in the market (the latest Halifax House Price Index reported a marginal -0.1% drop in prices for September, the second time in three months), Brown is in no doubt as to the significance of that episode.
“That’s my first (price drop), but I’ve heard of more as I speak to lots of brokers every day,” she said, adding that an estate agent two doors away from her premises confirmed that more people had been pulling out of deals recently.
“People pull out of deals because they can’t afford their mortgage payments. They are now thinking ‘hold on, should I overstretch myself?’. If you think a £300,000 mortgage has just gone up by £300, with an increase in electricity and gas bills, you’re probably looking at anything between £400 and £600 a month, but that increase is not reflected in a person’s salary.”
Read more: Product withdrawal dash - fallout from mini budget continues
Data released last week showed that the number of people accessing their pension plans - reportedly in response to the cost-of-living crisis – recently jumped by 18%. Meanwhile, rates for two- and five-year fixed mortgages rose again last Friday, jumping to 6.16% and 6.07% respectively.
That can only point to one thing in her view, and that property prices may eventually fall by as much as 10%. It may also feel like Deja vu for Brown, who remembers some parallels with the last financial crisis in 2008.
“The difference is that there was no rate then,” she said. “I remember logging on to my system and trying to do an 80% mortgage and it came up with zero. This time there are 95% mortgages, but they’re just at higher rates.”
Seven years earlier, in 2001, while working as a recruitment consultant, she decided to switch careers, prompted by another event that shook the world’s financial markets – 9/11.
During a fortuitous conversation with her then mortgage broker, she explained that she needed a new job where she could still work from home and earn “a bloody good salary”.
“She suggested working as a mortgage broker and I literally said ‘OK’. The next week I became a trainee mortgage broker - you didn’t need to have a qualification then,” she said.
It may be coincidence that two other family members have ended up working with her at the firm - her 21-year-old son, Joe, and daughter Nina, who deals with the protection side of the business - but the overriding impression is that it was probably planned all along.
“I never wanted five mortgage brokers that were going to do 50 grand a year, it’s never interested me. I always wanted to make sure we filled our boots, just as they are here,” she said.
“Joe’s going to become a mortgage broker in the next couple of months. I waited until he was 21 because I thought nobody would want to see a broker at 19! So there’s the three of us, my old bank manager and my PA.”
Fiercely independent, Brown relies not on a bulging publicity budget but on a far simpler - and cheaper - system to promote her business.
“Everything is word of mouth, and I’m beyond proud of the fact that it was me set up on my kitchen table 20 years ago, and now it’s me with my family in a three-storey building,” she said.
Her charity work is as important to her as her broker business. She recently organized a climb to Ben Nevis, an event that included the participation of the heads of the Halifax and IBM, helping to raise £22,000 for Crohn’s disease in the process.
“That’s probably the proudest thing that I’ve ever done,” she said.
