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September 23, 2019
It’s common knowledge that the uncertainty created by our potential departure from the EU has resulted in reduced transaction levels in the term mortgage market.
Data from multiple sources shows that lots of owner-occupiers are sitting on their hands, waiting to see how everything pans out rather than commit to a new home and bigger loan — just in case the wheels come off the economy in the event of a no-deal departure.
There’s also caution, albeit to a slightly lesser extent, in the short-term lending market. While some property investors are taking advantage of the current political chaos, others are sitting tight and the result is reduced deal volumes.
Now while lower deal volumes are a blow for lenders that want to get money out of the door, they are an even harder blow for brokers, as they can have a real impact on revenue and, ultimately, income. When fewer deals are being completed, industry-wide proc fees take a hit.
To rub salt into the wound, the completion timeframes on those deals that are going ahead are also getting far longer.
In short, the uncertainty of Brexit is causing many specialist lenders, lawyers and valuers to be extra cautious when processing applications and as a result loans are taking a lot more time to get over the line.
This growing trend of deals slipping was one of the main themes at our recent roundtable events and we discussed ways to get around it.
To speed up completion times, our valuation, legal and credit experts recommended that brokers and borrowers ask solicitors to carry out their searches much sooner than they would a few years ago. This can cost as little as £200 but save a lot of time further down the line.
Another way for brokers to get to completion quicker (and get paid sooner) is to contact valuers as early into the process as possible. That way, if an early view comes in below what your client was expecting, they can respond accordingly and take action. This could be getting a second opinion from a different valuer or rethinking their strategy more generally if the valuation is likely to be less robust than at first thought.
I suppose what I’m saying is that, in the current climate, brokers need look as far ahead into a transaction as possible and seek to pre-empt any potential road bumps. This can really cut completion time and result in a much quicker payday.
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