The Surrey-based mortgage broker says there is plenty of opportunity for brokers to earn a fee in this market.
They have bucked the market trend by successfully pursuing remortgage business this year despite an historically low base rate of 0.5% and lenders’ consequently low standard variable rates.
The remortgage mortgage is still languishing with Bank of England data showing remortgage volumes in July this year at 52% of the volume of house purchase transactions in the same month, as many borrowers shun remortgaging off SVR onto higher rates.
But Martin Wade and Dominik Lipnicki, directors of Your Mortgage Decisions, say that their business made better margins on remortgage business in 2009 than was possible at the peak of the market in June 2007 when borrowers were encouraged to remortgage every two years.
Wade said: “The remortgage market is not dead. In fact, now advisers have a better opportunity to add real value for their clients. It’s about quality not quantity. Many brokers are scared of advising clients to come off a low SVR and choose a higher fixed or tracker rate, but remortgage advice is not just about rates.”
Lipnicki added: “Advisers should be providing a holistic service to their clients and advising them not just on the rate they’re paying today but also helping them to think about their financial situation in two, three, five years’ time. It’s about holistic financial planning for the future as well.”
The pair say quality advice justifies advisers charging a substantial fee, which means that brokers can maintain profitability despite processing a fewer number of cases. Your Mortgage Decisions advisers see an average of two to three clients per week but the conversion rate is one in two – higher than the market average they say is around one in four.
Quality of advice is an “integral philosophy” at Your Mortgage Decisions says Wade, and advisers undertake extensive training and development to ensure that quality of advice and robust compliance procedures are firmly in place.
He said: “We have always encouraged our advisers to charge a fee as we feel the quality of advice and service given sufficiently justifies this. The cost of doing business in this market has rocketed, but firms that adapt quickly and are prepared to invest in the quality of their staff and advice can justify higher fees and remain profitable businesses.”
Lipnicki added: “If you provide a professional service then clients expect to pay a professional fee.”
