Banging the drum for the advice profession

Our industry as a whole might not think it has ‘bubble status’ but every sector does, and this can be a significant problem, especially if the information we believe to be widely known isn’t actually pushing outside our bubble.

Take those who want to make their first step onto the property ladder. Now, as an industry we are all likely to be aware of the various Government schemes that are in place, we might all know about Help to Buy, the Government guarantee scheme, the stamp duty savings that first-timers can still pick up, plus the wider range of mortgage options available to these new borrowers.

But what is the cut through of this info to those that really matter – the potential borrower? Again, if you’re looking at making that first purchase, you might be delving into the options and opportunities available to you, but even then, can we be confident that what is common knowledge to us industry types, cuts through to the individuals concerned?

In our industry we have made a big fuss about the Government’s guarantee scheme. It has effectively opened up the 95% LTV market to a point which seemed highly unlikely before the scheme was launched. The confidence it has generated has allowed those lenders who wanted to join the scheme, and those that didn’t, to come to market with 5% deposit mortgages, and in the months since launch, we’ve seen competition increase and rates fall.

However, a recent survey by comparison site, NerdWallet, suggested this has made little impression on the very demographic that could, and should, be benefiting from it.

The results showed that only 15% of ‘working age people’ thought the scheme might help them; just 22% of under-25s were aware of the scheme and what it might mean. And over three out of four working age people said they didn’t have ‘a good grasp of the full support available to help them get on the property ladder, including Help to Buy and shared ownership’.

Furthermore, only 17% of under-35s knew that first-timers might not need to pay stamp duty, and only 19% know that lenders consider their day-to-day spending habits in reviewing mortgage applications.

Now, of course, we could break this type of data down, starting from a point where perhaps we would say that a visit, call or email to an adviser would make all this crystal clear to them, and they would get the advice they needed, and recommendations on which route they would go down. And you would be right.

However, we have to consider the fact that, if people are unaware of their options – even in a very general sense, then they may not even get so far as to think about utilising the services of an adviser. They might think: I’ve only got a 5% deposit so I can’t get a mortgage; or I want to purchase a new-build and these are out of my grasp; they might think that they don’t have enough money to put down a deposit and pay the stamp duty; or they might think their previous credit history renders them eligible for mortgages.

Now, all of these thought patterns might actually be wrong and there is a route to purchase for younger buyers, especially now that there is more mortgage product choice at higher LTVs. But, conversely, there could be other factors, circumstances, etc, which do make it difficult for the borrower in order to get on that property-owning journey. And they’re simply not aware of those either.

What will be obvious to all is that, unless these potential borrowers have the right information to hand, then they are unlikely to proceed at all. So, first up, we as an industry need to get better at pushing this information out to a far wider consumer audience. As mentioned, just because these options and information are obvious to us, doesn’t mean they will make it as far as the borrower.

Secondly, we need to keep banging the drum for the advice profession and the support and services you can provide. ‘Get yourself in front of an adviser’ has to be the overwhelming, and really very simple, message to younger wannabe purchasers, because it’s at this point that advisers will be able to take the scales away from their eyes about what is and isn’t achievable.

At this point, commentators tend to suggest there is a lot of mis-information in the market which impacts on first-timers’ ability to make good decisions, etc. But, that’s not the case – there is plenty of information, and it’s valuable. But we need it to hit its target market better initially, and we then need to get that target market the advice it needs. If we can do this, the market opportunities are likely to be many.