As we begin to see the effects of the global pandemic wane, we face a new challenge that will affect us all again: the rising cost of living.
And brokers now have a real opportunity to demonstrate the value of advice.
The term “advice” has never been more widely used than it is today, but that’s probably a good thing.
Their home could be part of a solution rather than a problem
The more people in the UK who are armed with the financial facts of the world around us, the fewer people will be shocked when spending hits new heights, thanks to rising energy bills and inflation , not to mention the tax hikes many will face from April.
It will be a difficult year ahead, with households already preparing for a squeeze on their finances.
One of the biggest expenses most adults will have is their mortgage, and getting advice on whether their home could be part of a solution, rather than a problem, could really help some borrowers navigate this. the next months.
To do this safely and in an advised way, I suspect many will turn to brokers for help.
It could be for advice on how to make their existing mortgage more efficient.
Or it could be figuring out if it’s best to remortgage and calculating the exit costs they’ll incur.
Helping customers consider a number of scenarios will ensure they are well prepared to deal with any impact
Either way, listening to individual situations when needed and advising accordingly will only strengthen brokers’ relationships with their clients.
Understandably, borrowers may start to worry in a rising interest rate environment and, with much talk of recent and upcoming Bank of England rate hikes, this may cause unease.
However, it’s important to remember that around 90% of all borrowers actually have a fixed rate mortgage, so these increases won’t directly affect them for the duration of their deal – a reassuring reminder that we can all give to customers.
Conversely, some borrowers may also still benefit from the increased savings accumulated during the pandemic during the lockdown.
Conversations with these customers may take a different route, such as using the money perhaps to overpay their mortgage – which could be a way to prepare for future crises having built up enough credit to take a payment holiday, e.g. example, later down the line, if needed.
Fewer people will be shocked when their spending hits new heights
There is no doubt that the fallout of the past few years, coupled with the uncertainties of the year ahead, provide brokers with an opportunity to demonstrate the value of advice.
Helping clients consider a number of scenarios will ensure they are well prepared to deal with any impact felt due to the rising cost of living.
Long term benefits
The role of a broker has never been more important than in the past few years, and it shows no signs of changing.
Continuing to support your clients as the cost of living soars this year, with an empathetic and discerning eye on the world around them, will encourage them to come back to you as their circumstances change in the decades to come.
Jeremy Duncombe is Managing Director at Accord Mortgages