Any half-decent market commentator is conducting a miraculous balancing act, worthy of a Royal Variety Performance at the moment.I could have headed this article ‘survival of the fittest’ but that simply isn’t true.
Although we are facing tough times, and I doubt if there will be many firms expanding, the truth is most will survive. Not just the lean and brutally efficient.
The facts are that most lenders are in the same ball park of £300 billion gross and up to £90 billion net lending for 2008. This will still be the third biggest market of all time, similar to the 2005 market.
And this is where I have to sharply change course on my unicycle to keep this piece on balance and to stop it careering into the front row of the Palladium. 2005 was a big market, record-breaking for its time, but it needed more people to accomplish it than now as technology has significantly progressed since then and more recruits have joined the industry in the mean time.
So, let’s face facts – there are going to be further redundancies.
A fighting chance
However, for the avoidance of doubt, I am not trying to talk the mortgage market down or the country into recession. Quite the reverse.
Realistic early planning gives businesses, in these times, more of a fighting chance of survival. I must credit Alison Hutchinson, former chief executive of Kensington, for the very useful new phrase, ‘frozen in hope’.
We all know the current difficulties are around liquidity caused by both investor sentiment and the reluctance of banks to lend to one another. What none of us know is how long this situation will last for.
If we all sit ‘frozen in hope’ that ‘something’ is being done in the background or liquidity must come back ‘because we’ve always had it’, we could all freeze to death waiting.
So defrost and start taking action.
Don’t wait until it’s too late
Forecast three scenarios of business volumes realistically, pessimistic, realistic and optimistic.
See what that means in staffing terms and take any required business restructuring action quickly – don’t wait until it’s too late. Do you have any staff that are looking for flexibility? Remember if you cut too hard and liquidity comes back you could be at a disadvantage to your competitors.
Look at ancillary product sales
With a burgeoning mortgage market it has been all too easy to blame consumer fatigue on not using the factfind to establish the full extent of your client’s needs and to satisfy them with further product sales. I specifically use the word sale. This is not to suggest that the client is not suitable – that would be a mis-sale – but the mortgage is bought, the ancillaries are sold.
There is a huge protection gap that is waiting to be filled, however it does take the effort and skill of an adviser to ensure that a suitable product is taken. Rarely do customers self-select these products.
Going back to basics and challenging processes
Go back to basics and challenge whether any process or action, no matter how small can be made more efficient or whether it’s even required at all. Can technology be deployed to drive efficiency in your business?
Keep your staff informed of market conditions, changes to working practices and be open with them about the actions you need to take. Invest time with the sales staff, honing their skills in identifying needs, overcoming objections and closing practice.
Manage the client’s expectations. Gone are the times you can call in a favour to get a deal slightly outside of criteria through. Currently it either fits or it doesn’t.
Also some lenders, for whatever reason, are calling in the clauses in their application forms or offer documents allowing the lending to be withdrawn at any time.
It is imperative that you have it on record that you have informed your client that the funding is not guaranteed until completion. Don’t rely on their solicitor to inform them.
Finally, there is a huge amount of work being undertaken to try to break the log jam in liquidity. Central banks around the globe are cutting rates, which should ultimately lead to lower borrowing costs, stimulating some activity.
Some mortgage lenders have secured funding lines for this year and others are finding small pockets of fresh cash. The market will come round again and for those who survive, it’ll be more realistic.
