MBT Affordability Insights: What the current market means for different clients

Remortgages and product transfers

All you can do as a broker is assess a client's situation and react as quickly as you can to book a rate. Offers generally last for six months so starting early is always the best policy. Brokers need to accurately assess affordability, criteria and property value when considering a remortgage rather than a PT, which of course you can only set up a maximum of three to four months before the expiry of the current rate. Valuation is important, because if you book a remortgage rate and find out the lender down values the property three weeks later, the rate will have moved again in the meantime.

First-time buyers

This is an interesting area of the market, because first-time buyers don't have experience of a mortgage that would have been considerably cheaper only a matter of months ago. They mainly look at the comparison between buying and renting and whether they can afford the mortgage payments.

Rental properties are likely to become even more expensive, especially as buy-to-let landlords are forced to increase the rent to cover increased mortgage costs. This area of the market could also see an increase in supply as landlords sell properties to reduce their exposure, again faced with increased mortgage costs. So long as we get to some sort of stability on rates soon, then this part of the market, whilst it maybe won't flourish as such, will at least be relatively busy.

Home movers

This will be a tricky part of the market going forward. Many clients will have their current mortgages on low fiver-year fixed rates, perhaps with some time left to run. Not only do they have to consider the increased cost of any additional borrowing to enable the move, but also what rate they might achieve when their current deal expires. So, clients need much more advice than they would have when we had a stable period of interest rates. Whilst mortgage affordability, for the time being, remains strong, especially for higher incomes, that won't be a problem, but the client's actual monthly outgoings are likely to be rather a shock to the system and many will decide to stay put.

Buy-to-let

As rates increase then rental calculations will be stretched to their limit. Existing mortgages are going up substantially, in some cases affecting the viability of the whole idea. Many existing landlords will be looking to increase rent to compensate, but not all will be successful. So, re-balancing a portfolio will become more prevalent, which will probably include the sale of many properties.

This 'doom and gloom' doesn't mean bad news for brokers however, as complications in the market mean that clients need professional advice even more than before. One just has to work harder on each case than in recent times. Lenders may even find that they actually need brokers after all and might have to try a bit harder to help them!