The credit crunch continues to have a significant impact on the mortgage advice community and adverse market conditions are rapidly becoming the accepted status quo.
Mortgage lending slumped by 10 per cent in September to its lowest level for more than three-and-a-half years as the housing market slowdown dented demand for new home loans.
The Council of Mortgage Lenders (CML) stated that their members advanced £17.7billion of loans during September 2008, representing a decline of 42 per cent on September 2007.
The CML have also indicated that 2008 is likely to see net mortgage lending fall to approximately a third of the 2007 figure.
Despite the bail outs and the MPC decision to dramatically slash interest rates, lending levels are likely to remain subdued for the foreseeable future.
In such a climate there can be little doubt that mortgage advisers need to consider ways of diversifying their business models.
This is an imperative that was pleasingly recognised by the Association of Mortgage Intermediaries (AMI) this year in the form of their Business Diversification Workshops which I understand will continue throughout 2009.
Tough times
With tougher times ahead, those brokers who distinguish themselves from their competition are likely to reap the rewards, not simply of maintaining business volumes but of actually increasing them.
Attainment of specialised qualifications is a good way not only to gain knowledge of new areas but of demonstrating additional technical expertise and professionalism to both customers and peers alike.
2008 has seen considerable interest in our suite of additional mortgage qualifications other than the industry standard Certificate in Mortgage Advice & Practice (CeMAP®).
This bodes well for the industry as it demonstrates a genuine willingness to look at how additional qualifications might help mortgage advisers expand into new business areas or develop their individual CVs.
Equity release
Equity Release, as I highlighted in the November edition of Mortgage Introducer, is one area that mortgage advisers are increasingly focusing on.
The ifs School of Finance has seen thousands of advisers taking our Certificate in Regulated Equity Release (CeRER®) in 2008 and anticipate no decline in 2009.
The fact Equity Release has been regulated by the Financial Services Authority (FSA) since April 2007, requiring practitioners to have an appropriate qualification, means this is an area where consumers can now have greater reassurance that they are receiving knowledgeable advice from a competent adviser.
Take up of Equity Release has also grown as a result of the increasing innovation in the development of products. For example, no early redemption penalties on some products, flexible drawdowns and optional ring fencing of an element of equity to ensure there is a degree of inheritance for relatives – often cited as a barrier to taking out such plans.
The strength of the Equity Release industry is borne out by figures released by SHIP in October 2008 which showed the total value of new equity release business written for Q3 2008 reached £303.3 million. This represents a 10 per cent increase on the amount released in the previous quarter and encouragingly the number of new policies sold was almost the same as in Q3 2007.
Perhaps of most significance, sales via intermediaries rose by more than 16 per cent on the previous quarter, from £194.7 million (Q2) to £226.7 million (Q3).
However, the choices extend to far more than just Equity Release, as the thousands of advisers specialising in other areas will know.
Commercial
Commercial Mortgages are another good example, as I highlighted in the September edition of Mortgage Introducer. Our Certificate in Commercial Mortgages (CeCM®) developed in close collaboration with the National Association of Commercial Finance Brokers (NACFB) has now been taken by well over 1,000 advisers.
The past few months have also seen an encouraging commitment to TCF as demonstrated by the steady flow of advisers taking our Certificate in Regulated Customer Care® as firms and individuals seek to clearly demonstrate that they have adequate awareness and procedures in place to test whether they are treating their customers fairly.
Additionally, many mortgage brokers are diversifying their business model by attaining qualifications that allow them to move to giving full financial advice. During 2008, the ifs School of Finance has seen substantial growth in the numbers taking CeFA® (Certificate for Financial Advisers).
Mortgage professionals do appear to be taking control of their personal development and long may this continue. Providing the trend continues, the vibrancy and health of the industry will not only be maintained during these challenging times, but enhanced.
No one in the mortgage industry needs me to tell them that 2009 will be challenging. However, there is no reason why advisers cannot equip themselves with the skills to meet these challenges head on and I am sure that many will do so.
