What’s hot and what’s not in the mortgage market? That’s a question that most advisers are able to answer. But, what’s going to be hot in the future? Now that’s the million dollar question that most people would love to have insight into.
In March, we launched Freestyle Plus, a series of online video guides aimed at providing consumers with a wealth of mortgage information in a simple and easily accessible format. Freestyle Plus has been a huge hit with consumers, and the viewing figures give us an invaluable insight into the hot topics for mortgage hunters, while also acting as a snap shot of the wider mortgage industry.
Bingeing on buy-to-let
The user data collected from our video guides shows a demand among would-be borrowers to find the solutions to help secure their financial future. Buy-to-let has attracted the majority of Freestyle Plus visitors and accounts for more than 60 per cent of the total viewings. The interest in the buy-to-let videos mirrors the currently vibrant buy-to-let market, a sector that shows little sign of waning.
With the UK house price indices showing upward curves, this positive growth continues to tempt potential investors to enter the buy-to-let market, or spur existing buy-to-let investors into expanding their portfolios. Presently the buy-to-let market owes its success, in part, to strong rental demand, as increasing household break-ups, growing number of students and an increasing number of workers from EU countries help swell the ranks of the renting community.
Buy-to-let could also owe some of its rise in popularity to the fact that more and more consumers have realised earnings on successful buy-to-let projects can be significant, and as such, are using this type of investment as a means of bolstering future savings, and potentially building a nest-egg for later life.
Our figures show that, of our video viewers, one-in-seven was interested in how buy-to-let could help them retire. For advisers, having information about buy-to-let ready and on-hand could see them one step ahead of the game – by using tools such as our video guides as an interactive sales aid, intermediaries can explain mortgage jargon, products and features in a way that is easy for clients to understand.
Attraction to the added extras
Many mortgage hunters are keen to make their home loan work harder for them and are eager to embrace facilities such as cash reserve and offsetting. One-in-six of the Freestyle Plus viewers accessed videos on making their mortgage work harder for them, showing a genuine desire among the public to uncover more about mortgages than just the basics. The implication of mortgage hunters becoming knowledgeable and more adventurous in their product tastes offers a great challenge and an even greater opportunity for lenders and advisers alike.
Fixation with fixed rates
The mortgage industry is well aware of the public’s preoccupation with fixed rate products – with April figures from the Council of Mortgage Lenders (CML) stating that 71 per cent of all loans for house purchase and remortgaging were fixed rate products. With the Bank of England warning rates are likely to rise over the coming months because of surging energy prices boosting inflation, this is bound to push fixed rates as a safer bet. This is reflected in our user data – with 14 per cent choosing to view the fixed rate video compared to 9 per cent of discount rate video spectators.
In addition to this, we recently commissioned a report from the University of Edinburgh exploring the advantages of looking to the long-term for increased value and security. The report found remortgaging to discounted rates benefits just 5 per cent of homeowners and that the majority of consumers taking out short-term discounted mortgages, with a view to remortgaging, will not save money. This is due to the fact that although many consumers may like the idea of remortgaging to a discounted mortgage every two years, the reality of doing this often enough to make it financially worthwhile (around 12 years is needed – i.e. six successive two-year discount periods) is not attractive – and over time, doing this repeatedly becomes a lower and lower priority.
Keeping up with the consumer
A more informed and demanding mortgage hunter can only be good news, not just for advisers, but for the industry as a whole. Lenders, while being kept on their toes, are benefiting from a new audience and more cost-effective ways of reaching them. For advisers, a well-researched client frees up time to look at other earning revenues and there’s the chance to incorporate more ‘active’ financial products into their clients’ wider financial plans, and the opportunity to cement longer-term relationships.
